Fascinating maths. How much does a car repair shop earn

If you want to make a profit from your business, you can't do without quality marketing and miscalculations. Let's take a look at how to calculate your earnings from car maintenance services.

Methods for making money in a car service

In a multi-disciplinary service station, the list of services provided can be as follows:

• diagnostics, repair, maintenance – standard routine works from oil change to overhaul of running gear;
• tuning – «upgrade» car from airbrushing to rechipovka engine;
• additional services – from seasonal tyre storage to pre-sale preparation;
• automotive shop – sale of accessories, components, special tools for cars;
• financial and consulting activities – car insurance, car loans, etc.

How to calculate profit

The amount of net income depends on many indicators, each of which should be worked hard on. Below is the formula that is used to calculate the net income:

Profit = Margin*Revenue.

1.        Margin – is the value expressing the difference between the price of the service provided and its cost. It is measured in per cent.

For example, replacement of hydraulic oil costs 800 rubles, while a service station specialist earns 200 rubles for this service.

Net profit = (Price – Cost price)/Price, i.e. (800–200)/800 = 0,75 or 75 %.

This figure will be even more accurate if you subtract the costs of utilities, taxes, salaries, rent, etc. The result is 60-65%.

Conclusion: the more you price your service and the lower its cost, the higher will be the margin and, consequently, the profit of the car repair shop.

The more you price your service and the lower will be its cost, the higher will be the margin and, accordingly, the profit of the car repair shop.

2.        Revenue – is the total amount of money received from customers over a certain period of time.

There are three factors that affect the monthly revenue of a car repair shop: the average cost of a work order (cheque), the notional number of orders per customer, and the total number of customers served.

Revenue – is the total amount of money received from customers over a certain period of time.

Let's assume that 200 customers were served at the car service centre during the month. Of these, 80 people paid for 2000 rubles, the remaining 120 – for 3500 rubles.

Of these, 80 people paid for 2000 rubles, the remaining 120 – for 3500 rubles.

Calculate the average cheque: (80*2000 + 120*3500)/200 = 2900 roubles.

Of these 200 customers, 120 came twice, and 80 – once, so the average number of orders per customer will be: (80*1 +120*2)/200= 1,6.

Revenue = Number of customers *Average cheque *Average number of orders per customer=200*2900*1.6=928000.

Conclusion: there is a direct relationship between each indicator and revenue, i.e. the increase/decrease will move in one direction.

Conclusion: There is a direct relationship between each indicator and revenue, i.e. the increase/decrease will move in one direction.

Now let's understand what can affect the number of customers served. You shouldn't assume that all potential clients who call on the phone for a consultation will come to you. It should not be forgotten that the more cultured and professional a telephone service operator speaks to a potential client, the more effective the incoming call will be. The scientific method is to determine the probability of hitting the mark by the conversion rate.

Total number of useful customers = Number of calls*Conversion percentage.

For example, in a day, you received 10 phone calls, 5 live enquiries, and 3 website submissions. In total, 18 people contacted the car service, among which you received a portion of real customers: from the callers – two, from the live enquiries – three, and from the online conversation – one. In total, – 6 people.

A total of 18 people.

Hence, the conversion rate is 6/18 = 33.3 per cent.

Finally, we derive the full formula for calculating net income.

Profit = LG (number of hits) *LC (conversion rate) *TR (average number of orders per order) *TV (average amount per order) *M (margin).

If you are interested in how much the car maintenance business brings in, they promise 30 million rubles of net earnings annually, but if you look at things realistically, 10-15 million rubles a year you are assured.

Remember that 90% of the income of your car service – the result of competent management and miscalculations. Since you, most likely, – a newcomer among business sharks, do not skimp on the services of a professional marketer, who will help to bring the car service to a decent level and maintain it in the future, increasing your own profits.

In order to provide quality services, we advise you to buy only quality equipment for diagnosing starters and other equipment.