9 min read

How to Measure the 6 Key Auto Repair Shop Metrics in QuickBooks Online

How to Measure the 6 Key Auto Repair Shop Metrics in QuickBooks Online
How to Measure the 6 Key Auto Repair Shop Metrics in QuickBooks Online
8:58

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.

To measure your auto repair shop’s key financial metrics, run a Profit & Loss report in QuickBooks Online and add the % of Income column.

Track six core metrics each month: Parts Gross Profit %, Labor Gross Profit %, Net Profit %, Overhead %, Rent + Advertising %, and Service Advisor Wages as Cost of Sales %.

Compare your results to industry targets (50–55% for parts, 65–70% for labor, 20% net profit) to see where money is earned or lost. Eric Joern from Kaizen CPAs explains how to calculate each one, what healthy benchmarks look like, and how to improve your margins step by step. 

Set Up Your Profit & Loss Report in QuickBooks

We look at two views every month: Last Month and This Fiscal Year to Last Month. We’ll use both to track your monthly performance and your year-to-date trends.

Last Month – to track how you did most recently
Screenshot of report builder in QBO, with last month selected

This Fiscal Year to Last Month – to see your year-to-date progress
Screenshot of report builder in QBO, with fiscal YTD selected

Run the Reports in QuickBooks Online

  1. Go to ReportsProfit and Loss.

  2. Set the Report period to Last month.

  3. Click the Compare to open the side panel

  4. Under Calculations, check % of Income

  5. Click Run report.

  6. Then repeat with Report period = This fiscal year to last month to see your year-to-date progress.

Tip: Click Save customization for each version and title them “P&L Monthly Metrics” and “P&L YTD Metrics” so you can pull them up quickly each month.

Now your report will include a % of Income column next to each line item so you can see how every income and expense category relates to total revenue. We’ll use these reports to measure the six key metrics below.

Note: QuickBooks will calculate these percentages automatically. As long as your chart of accounts is set up correctly, you can read each metric directly from your P&L, with no extra math required.

A screenshot of a computer screen

AI-generated content may be incorrect.

If your Chart of Accounts isn’t set up to separate income and costs clearly, for example, if tech wages and office wages or payroll taxes are mixed together, we’ll clean that up. You need accurate numbers to measure these metrics the right way.

The 6 Key Metrics to Track In Your Auto Repair Shop

1. Parts Gross Profit %

Target: 50–55%

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.

Why It Matters

Our Parts Gross Profit number shows how profitable parts sales are after subtracting what we paid for them. If the margin is too low, it usually means we’re discounting too much, not billing for every part used, or paying too much for inventory.

How We Measure It

We take our Parts Sales, subtract our Parts Cost, and then divide the difference by Parts Sales.

Example:

$853,037.59 – $425,862.99 = $427,174.60

$427,174.60 ÷ $853,037.59 = 50.08% gross profit

A screenshot of a computer screen

AI-generated content may be incorrect.

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.


2. Labor Gross Profit %

Target: 65–70%

Why It Matters

This metric reflects both pricing and efficiency. It shows how well we’re turning labor sales into profit. When it’s strong, we know our labor rate is healthy, our technicians are efficient, and we’re billing accurately for the work we do.

If it’s lower than it should be, it often means we’re underpriced, paying too much in wages for the rate we charge, or losing hours that should have been billed. A healthy labor margin is one of the biggest drivers of profit in any shop.

How We Measure It

We start with Labor Sales, subtract technician Labor Cost, and divide the difference by Labor Sales.

Example:

$1,194,831.37 – $387,821.77 = $807,009.60

$807,009.60 ÷ $1,194,831.37 = 67.54% gross profit

A screenshot of a computer screen

AI-generated content may be incorrect.

We recommend including only employees directly involved in producing the work, such as technicians, apprentices, and shop helpers. Service advisors are excluded.

We use unloaded wages (wages only, without benefits or taxes) so the metric reflects true labor cost. That way, we can compare performance consistently from month to month and across shops.

How to Improve It - Beyond Increasing Prices

  • Calculate your average cost per labor hour
    Divide total technician wages by 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
    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.


3. Net Profit %

Target: 20%

Why It Matters

This is your bottom line. It’s what’s actually left after you’ve covered every expense in the business. It shows whether your pricing, productivity, and spending are working together the way they should. We focus on operating net profit, which reflects how your shop performs day to day. We leave out one-time items like selling an asset or earning interest so we can see your real results.

How We Measure It

When we measure net profit, we start with Total Income, subtract Total COGS and Total operating Expenses, and divide the difference by Total Income.

Example:

$2,124,108.47 – $1,537,032.79 = $587,075.68

$587,075.68 ÷ $2,124,108.47 = 27.64% net profit

A screenshot of a data sheet

AI-generated content may be incorrect.

How to Improve It

If your net profit isn’t hitting the 20% mark, that’s a signal to dig into what’s driving the difference. Here’s where we start when we’re looking at this with a client:

  • Check your gross profit margins on labor and parts. These two set the stage for everything that follows.
  • Look at your overhead costs — things like rent, marketing, and admin wages. Even a few percentage points of savings here can make a big difference.
  • Review your pricing strategy. If sales look solid but profit is thin, your labor rate or parts markup might need adjustment.
  • Confirm owner’s pay. Sometimes what looks like profit is really unpaid salary. We want to make sure you’re paying yourself fairly and showing true profit.

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.


4. Overhead %

Target: 40% or less

Why It Matters

Overhead includes everything it takes to keep your doors open that isn’t directly tied to producing work, such as rent, utilities, insurance, admin pay, and marketing. When overhead runs high, even strong sales can feel like they are not adding up. The goal is not necessarily to cut costs across the board but to make sure every dollar supports productivity and profit.

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 We Measure It

This metric is pretty simple, but it's one shop owners know. We divide Total Expenses (not including COGS) by Total Income

Example:

$424,051.91 ÷ $2,124,108.47 = 19.96% overhead

A screenshot of a data sheet

AI-generated content may be incorrect.

How to Improve It

  • Evaluate the usefulness of recurring costs. Look at subscriptions, memberships, and services you’re paying for each month. Keep what truly adds value and cut what doesn’t.
  • Standardize processes and automate repetitive tasks. Consistency reduces errors and frees your team to focus on what drives revenue.
  • Know what your overhead dollars are. Set sales and gross profit targets that will cover those costs and still hit your net income goal. 

When we review overhead with a shop, we’re not just trimming costs. We’re making sure your systems, spending, and people are all supporting profit. 


5. Rent + Advertising %

Target: 13.5% combined

Why It Matters

Rent and advertising are two of the biggest controllable costs that directly affect your bottom line. Together, they show how efficiently your space and your marketing dollars are supporting sales. When one increases, the other often needs to come down to keep total overhead in line.

How We Measure It

We look at rent and advertising as a combined percentage of total income. We start with Rent Expense and Advertising Expense. Add them together, then divide by Total Income.

Example:

$112,457.93 + $179,539.41 = $291,997.34

$291,997.34 ÷ $2,124,108.47 = 13.75% rent + advertising

A screenshot of a computer screen

AI-generated content may be incorrect.

Why We Combine Them

Rent and advertising often balance each other. A shop right off the highway with a visible sign may pay premium rent but gets constant calls with minimal marketing, while a shop tucked away in an industrial park pays low rent but needs strong marketing to attract customers.

Different mix, same target. What matters is the total.
Scenario Rent % Advertising % Total
High-rent location with steady foot traffic 10% 3.5% 13.5%
Lower-rent location requiring more marketing 5% 8.5% 13.5%

How to Improve It

  • Track your marketing ROI. If your shop is not full, evaluate your current marketing spend and increase it where it makes sense. Advertising should bring in qualified cars, not just clicks or calls.

  • Evaluate your space and occupancy cost. If your market cannot support your current rent, look at creative ways to fill capacity, such as fleet accounts, subleasing, or relocation.

  • Give marketing time to work. New campaigns often take three to six months to show steady results. Track them consistently before making changes.

  • Keep the balance in check. Rent and advertising often trade off. A higher-rent location might need less marketing, while a lower-rent shop may require more to stay booked. The goal is for the combined percentage to stay in range.


6. Service Advisor Wages as Cost of Sales %

Target: 5-7%

Why It Matters

Service advisors are the link between your technicians and your customers. Their performance has a major impact on car count, average repair order (ARO), and customer satisfaction. Tracking their wages as a percentage of total income helps us see whether compensation aligns with the shop’s productivity and sales volume.

How We Measure It

We divide Service Advisor Wages (Front Office Wages) by Total Income.

Example:

$128,091.32 ÷ $2,124,108.47 = 6.03% service advisor wages

A screenshot of a computer screen

AI-generated content may be incorrect.

We look for efficient, performance-based structures where advisor pay is aligned with revenue and gross profit growth.

How to Improve It

  • Set sales goals per advisor. Each advisor should know their individual targets for car count, closing ratio, and ARO.

  • Ensure the 300% rule is executed on every vehicle. Every issue should be inspected, estimated, and presented — every time.

  • Tie incentives to overall sales or gross profit targets. Pay plans should reward total shop performance, not just individual tickets.

  • Watch the percentage monthly. If advisor wages climb but sales do not, look closer at productivity and staffing balance.

Strong advisors drive both sales and trust. This metric helps us make sure their compensation reflects performance and supports profitability. We’ve seen shops reduce advisor wage percentages by improving training and aligning pay with production goals.

Track Monthly and Review Year-to-Date

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 us catch issues early, make smart adjustments, and build predictable, sustainable profitability.

Wrap-Up

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.

Next Step

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.

 

FAQ: Auto Repair Shop Metrics

 

Auto Repair Shop Accounting: 10 Tips to Stop Hidden Profit Leaks

Auto Repair Shop Accounting: 10 Tips to Stop Hidden Profit Leaks

Running an automotive repair shop isn’t just about fixing cars; it’s about plugging the leaks in your numbers.If your accounting isn’t accurate, your...

6 KPIs Every Auto Repair Shop Owner Should Track for Profitability

6 KPIs Every Auto Repair Shop Owner Should Track for Profitability

If you want to grow your auto repair shop profitably, you need more than cars lined up outside and a gut feeling about how the business is doing. You...

Parts Used vs. Parts Billed: Fix the Leak, Save Your Margin

Parts Used vs. Parts Billed: Fix the Leak, Save Your Margin

If your parts margin looks solid but something still feels off in your numbers... it might be time to take a closer look at the parts you're not...