Tracking shop metrics can leave even the most business-minded shop owner confused.
Recently, the team at The Busy Bays Podcast was able to speak with Tekmetric CEO Sunil Patel on the most effective KPI’s and shop metrics to track as a shop owner to increase profitability.
So, do you really have to track shop metrics or KPI’s? Isn’t there some other way? According to Patel, knowing shop metrics and understanding what they mean is a key way to increase profit. A few of his favorites include average repair order, car count, close ratio, gross profit and gross profit per hour.
Patel left us with three pieces of advice for shop owners just starting out in shop metrics.
- Know the cost of labor – You could be undercharging for labor, a way to avoid this is by knowing how your shop’s cost of labor relates to other shops in your area.
- Know your parts margin – On average, you should be making a 55 to 60 percent profit margin on parts. A parts matrix is a good way to see your average profit margin on parts.
- Know how many hours of labor you are selling per week – This is an important metric for the health of your shop.
2020 was a tough year, Patel predicts that 2021 will be an exciting year with many opportunities for repair shops.
To hear the full interview on KPI’s and shop metrics with Tekmetric CEO Sunil Patel, listen to the podcast here- https://www.repairshopwebsites.com/resource-center/repair-shop-podcast/#25 or on your favorite podcast platform.