If you’re putting in the hours but not seeing the profit you should, it’s not your work ethic that’s the problem. It’s what you’re measuring.
The right metrics will show you exactly where profit is slipping and where to focus your energy to turn it around.
In this guide, we’ll walk through the six key metrics every auto repair shop should measure each month. We’ll show how to calculate each one in QuickBooks Online, what healthy targets look like, and what to do if your numbers don’t line up.
We look at two views every month: Last Month and This Fiscal Year to Last Month. You’ll use both to track your monthly performance and your year-to-date trends.
In QuickBooks Online:
Go to Reports → Profit and Loss.
Set the Report period to Last month.
Click the function Compare to open the side panel.
Scroll to Calculations and check the % of Income box.
Click Run report.
Then repeat with Report period = This fiscal year to last month.
Pro tip: Click Save customization and name it [Your Company] Monthly Metrics so you can pull the same layout next month.
Once you’ve done this, your report will include a % of Income column next to each line so you can see how every expense and income category relates to total revenue. This is what you’ll need to calculate the six metrics below.
What It Measures
As a shop, we sell two primary things: parts and labor. To ensure we’re meeting our target gross profit, we measure each one independently. That helps confirm that pricing, product mix, and efficiency are all working together.
Target: 50–55%
How We Measure It
We take our parts sales (for example, Account 302 – $853,037.59), subtract our parts cost (Account 402 – $425,862.99), and then divide the difference by total parts sales.
In this case:
Some shops choose to measure Parts Cost as a % of Total Income. If your parts and labor mix is close to 50/50, then 25% parts cost equals roughly 50% gross profit. This approach is easier to eyeball since it uses the % of income column.
If you’re currently at 30% or 40%, aim to improve in small steps, maybe 5% at a time, until you reach the target. A sudden large increase in pricing can shock loyal customers.
How to Improve It
Review your parts pricing matrix to confirm markups are scaling correctly.
Assess your repair mix. A higher volume of maintenance work usually produces better margins than big-ticket replacements.
Make changes gradually to help customers adjust.
We’ve seen shops move from 42% to over 50% just by tightening their pricing matrix and balancing their mix.
What It Measures
After measuring parts, we move to labor gross profit: the difference between what we pay our technicians and what we charge customers for that labor. This metric reflects both pricing and efficiency.
Target: 65–70%
How We Measure It
In your P&L:Labor Sales (Account 303): $1,194,831.37
Technician Wages (Account 415.02): $387,821.77
Subtract wages from sales:
$1,194,831.37 – $387,821.77 = $807,009.60
Divide that by labor sales:
$807,009.60 ÷ $1,194,831.37 = 67.54% gross profit
We recommend including only employees directly involved in producing the work, such as technicians, apprentices, and shop helpers. Service advisors are excluded.
We also prefer to use unloaded wages (wages only, not including benefits or taxes) so that shops can compare metrics consistently.
How to Improve It – beyond increasing prices
Calculate your average cost per labor hour (total technician wages ÷ total billed hours). Load that into your shop management system so you can see real-time profitability on each repair order.
Monitor technician efficiency. Compare billed hours to total hours worked. A tech producing 60 billed hours in a 40-hour week has a much lower cost per hour than one producing only 20.
Add a labor matrix to apply premiums for complex or time-intensive jobs.
We’ve helped shops boost profit by thousands each month just by improving efficiency and visibility into labor margins.
What It Measures
Net profit percentage shows how much of your total sales you keep after all expenses. This is your true return on the business.
We prefer to measure operating net profit, excluding one-time events or non-operational items like asset sales, investments, or interest. That gives a cleaner comparison across shops.
Target: 20%
How to Improve It
When we work with shops that hit their target net profit, we often shift the focus to net income dollars, because those dollars can reward the owner, fund reinvestment, or support team bonuses.
Once you “outrun overhead,” every new sale above your break-even point becomes pure profit.
What It Measures
Overhead represents all operating expenses not directly tied to producing sales — things like admin, insurance, software, utilities, and office staff.
Target: 40% or less
We’ve seen owners surprised to discover they were spending 10% more on overhead than top-performing shops simply because they weren’t tracking it monthly.
How to Improve It
Why We Combine Them
Rent and advertising often balance each other. Shops in high-traffic areas pay more in rent but can spend less on marketing. Shops in low-rent industrial parks usually need more advertising to stay busy.
Target: 13.5% combined
Examples:
Scenario A: A shop right off the highway with a visible sign may pay premium rent but gets constant calls with minimal marketing.
Scenario B: A shop tucked away in an industrial park pays low rent but needs strong marketing to attract customers.
How to Improve It
Remember that marketing results can take 3–6 months to appear, so give new campaigns time to work.
What It Measures
This metric shows how much of your total revenue goes toward paying service advisors.
Target: 10%
We look for efficient, performance-based structures where advisor pay is aligned with revenue and gross profit growth.
How to Improve It
We’ve seen shops reduce advisor wage percentages by improving training and aligning pay with production goals.
Each month, run your Profit & Loss report with the % of Income column turned on and compare your results to these targets.
Then review your year-to-date trends to see how your shop is performing over time.
Consistent tracking helps you catch issues early, make smart adjustments, and build predictable, sustainable profitability.
You don’t need to guess where your money is going. The numbers will tell you, as long as you’re looking at the right ones.
Tracking these six essential metrics every month gives you a clear picture of what’s driving your shop’s performance and where to focus your attention next.
The best shops don’t hope for profit. They plan for it.
Explore the Kaizen Resource Center for practical tools, articles, and videos that help you run a more profitable, predictable shop.
If you want to see how Kaizen can support your business with clear financials, proactive tax planning, and industry-specific guidance, schedule a call with our team.
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