4 min read

Improve Your Tire Store Profit Margin With These Simple Steps

Improve Your Tire Store Profit Margin With These Simple Steps

If you're not sure why your tire store profit margin matters, let us break it down for you:

  • What is it? In the simplest terms, your profit margin is how you measure your company's profitability by determining what percentage of your revenue is profit. 
  • Why is it important? If you want your tire store to remain financially healthy, you must be able to track and monitor the degree to which your company makes money.
  • Who can help? Kaizen CPAs & Advisors can help with all your accounting needs, including identifying your profit margin and what that means for your business operations.

Here are some helpful tips for improving your tire store profit margin in a few easy steps. 


Profit margin is the difference between what you sell your tires for and the amount of money it costs to make them. It's calculated by dividing sales by expenses or revenue minus the cost of goods sold (COGS).

In other words: Profit Margin = Sales - COGS

However, improving your profit margin is far more complex than just increasing prices. Sure, higher prices could lead to more revenue, but that’s assuming:

  • The high prices don’t push away lifelong customers
  • The high prices don’t increase your COGS
  • The high prices don’t turn away potential customers in your market

Rather than simply raising prices without a true strategy, there are a number of ways to improve your tire store profit margin.


Improving your processes will help you substantially when it comes to being more efficient and profitable. As you review your processes, look for ways to improve efficiency and reduce costs.

Start by asking yourself:

  • Is it possible to increase revenue by increasing the number of tires sold per store? If so, how many more tires do you need to sell?
  • Can you increase profitability by lowering the cost of each tire sold? If so, what can be done from a supply chain perspective or through product design to reduce expenses and make your store more profitable?


Creating an excellent customer experience should never be undervalued or overlooked, especially since customers are willing to pay premium prices for your service. In fact, Forbes reports that more than half (a shocking 58%, to be exact)  of customers would pay more for better customer service. Another study added that 1 in 4 customers would pay nearly 10% more in just about any industry for excellent customer service. 

So, what can you do to create an excellent customer experience? You need to have a strong understanding of what your customers really want.

The goal is to get them in the door and keep them coming back as often as possible. You can do this by providing a superior product or service at a fair price, supporting it with quality customer service, and ensuring that everything works smoothly together.

A good example of this would be having the right tires for your car on the shelf when someone comes into one of your stores looking for new tires for their vehicle. If you don't have these items ready in stock, it sends the message that you aren't prepared or organized enough to take care of them properly — and nobody wants to deal with an unprofessional business!


Upselling is the practice of selling a customer additional products or services after they have already made a purchase. For example, if a customer is ready to make a new tire purchase but you also notice repairs that will help their new tires last longer, you can strategically upsell the customer. This can include alignment service, TPMS sensors, and road hazard warranties.

If your tire shop doesn’t do general repair, consider establishing a referral relationship with a general repair shop. They may not want to replace tires because it is inefficient for their shop, and if you send repair work that your tire shop does not do, they may return the favor by sending you tire work.

The benefits of upselling are twofold. Firstly, it increases your profit margins by adding more products or services to the original sale. Secondly, upselling creates customer loyalty by offering value-added extras that are not mandatory but still add value to their experience.


One of the first steps in improving your tire store profit margin is to stop offering tires at low margins just because they're popular.

Regardless of how ‘popular’ they are, tires that are expensive and difficult to sell are bad for your business because they take up valuable space that could be used for something more profitable. This may even be a good time to upsell a customer on a different product that offers more long-term value for you and them.

When focusing on the products that make you the most money and also happen to be popular with your customers, that’s where you’ll see true profitability.


Another important step to take to improve your tire store profit margin is to reexamine the brands you offer and work on removing some of those expensive ones that aren't selling. 

If you've been in business for a while, there's a good chance that you have some brands of tires in your inventory that are not selling. If this is the case, it's time for some spring cleaning.

Before removing any brand from your lineup, it's important to ensure that they're actually not selling. Since most tire stores still use pen and paper, it can be challenging to track which tires are moving and which ones aren't—especially if you offer different sizes of the same model.

This is where technology and modern inventory tracking come into play and make a significant difference: modern POS systems can tell you exactly how many units were sold at what price tag, so there's no guesswork involved!


If you’re struggling to stay up to date with important accounting metrics including profit margin, we’ve got some good news — there’s a simpler way to stay on top of your accounting tasks while managing your tire store. 

Our automotive accounting experts can lay the foundation for business growth by simplifying and organizing your accounting practices. Contact Kaizen for more insight and resources into other ways you may be able to improve your profit margin and grow your business!

How to get better restaurant reviews: deliver an ‘amazing experience’

How to get better restaurant reviews: deliver an ‘amazing experience’

For the last few months we’ve been delivering you (pun intended) a series of articles on how to create an atmosphere conducive to meeting the goals...

Read More
Profit First is hard work. Here’s why your small business should implement it anyway.

Profit First is hard work. Here’s why your small business should implement it anyway.

Let’s get this out of the way first – Profit First IS NOT a “set it and forget it” solution. If you’re looking for a hands off solution to your...

Read More
Marketing for Restaurants: Where to Start

Marketing for Restaurants: Where to Start

As a restaurant owner, you know that the BEST marketing is great food and service. For the purposes of this article, we’ll assume that you have that...

Read More