If your shop isn't using at least one mark up matrix to get the most out of your parts sales, then you might be leaving a lot of money on the table.
In fact, auto repair shops have an amazing opportunity to maximize their profit margin on parts sales in particular. Especially when you consider the tools available to support and simplify the entire process. Gone are the days of using pen and paper or busting out the calculators.
Cloud-based shop management systems have made it easier than ever to not only manage your shop, but really get the most value out of the work you're already doing.
Using a parts matrix in particular is one of the most important aspects in making sure your shop is profitable. By building streamlined process for marking up parts, shops can ensure grow your shop’s profit margin while staying fair to customers.
What is an Auto Parts Markup Matrix?
An auto parts markup matrix is a powerful tool for optimizing your parts pricing and increasing your gross profit.
When it comes to providing parts for a repair, auto repair shops can build multiple markup matrixes to determine the best markup percentage to apply based on different factors, like how much it costs your shop to purchase the part from your selected vendor.
In our latest Auto Repair Industry Index shops were achieving an average 35% with just 3 markup matrixes. There's a lot of room to grow their profits!
Why should shops use a parts markup matrix?
It might be easy for a shop to leave parts markups up to individual service advisors. However, this can result in widely varied processes based on each employee’s unique experience.
You want to build a consistent, reliable mark-up process to save your team time, while maximizing profit yet remaining fair to your customers.
With a detailed parts markup matrix in place there’s no more second-guessing.
Instead of spending precious time figuring out the right markup for every single repair order, the perfect markup percentage can be applied every single time -- both saving time while maximizing profit margins on every repair order.
The Price is Right: Efficient Parts Shopping
Before you decide how much to mark up a part, you obviously have to buy that part (or find it in the inventory). When shopping for parts, getting good deals is important, but so is having an efficient process for finding those deals. Efficient shops strike a balance between quickly finding parts and snagging good deals.
There are various ways to quickly shop around and find the best deal on parts. Some shops still send their part’s person to the local auto parts shop or scrapyard to find those hard-to-find parts.
These days, many auto repair shops save themselves a lot of hassle by turning to shop management systems that enable them to swiftly compare prices from multiple vendors at once. With online parts houses, repair shops can earn back the time they would have spent sending someone to hunt down these parts and making these comparisons in person.
Mark Up Parts By Just the Right Amount
After comparing prices and deciding which parts to purchase, it’s time to find the markup “sweet spot,” where it’s a good deal for your customers and your business.
As a general rule of thumb, the more expensive a part is, the less you can mark it up.
Consider this: fast food companies make some of their highest profit margins off of their least expensive menu item—soda. If a cup of soda costs the fast-food company $0.25, charging a dollar for it gives them a 75% profit margin. But a 75% profit margin on a hamburger that costs the fast-food company $7 to make would hike up the price to $12.25, which is probably more than most customers are willing to spend.
If you double the price of a $10 wiper blade, the customer won’t bat an eye. But if you try to mark up the price of a $400 alternator by 100%, it’s a different story! The customer will balk at the $800 price tag and probably go ask another shop for a second opinion.
Reach the Right Pricing With a Parts Matrix
Marking up Parts with a Simple Calculation
A simple calculation is used when you markup parts in a certain price range by a specific amount.
But you can also use a compound calculation for parts markups. With a compound calculation, parts are marked up by different percentages within specific cost ranges. For example, if you sell a job for $20, you could mark up the first $10 by 10%, and the last half by 20%.
Marking up Parts with a Complex Calculation
While compound calculations are more complicated, using them for your markup matrix can give you an edge when it comes to increasing your gross profit margins. Some shop owners that use complex calculations in their parts markups have been able to increase their profit margin by about 8% to 10% when compared to using a simple calculation.
Find the Right Markup Matrix For Your Shop
Ultimately, each shop has unique needs and preferences, and it’s up to you and your team to determine which type of calculation to use when building your parts matrix. But no matter which calculation method you choose, an automotive markup matrix can be a game-changer.
Scaling your auto repair business requires moving beyond simple spreadsheets and paper repair orders. You need a robust shop management software that has enterprise-level features, centralized real-time reporting, and helps you provide a consistent customer experience across locations.
This guide breaks down the top enterprise software solutions for auto repair shops with 2+ locations.
Top 5 Enterprise Solutions for Shops With Multiple Locations
Finding the right software partner for your expanding shop is critical to your success. Below you will find our top overall picks for multi-shop operators (MSOs).
Multi-shop owners love Tekmetric because they can run their entire business, across all locations, from one platform. Featuring an all-in-one shop management solution with centralized real-time reporting, marketing, payments, and 70+ integrations, Tekmetric makes it easier for you to manage multiple locations. Why we picked Tekmetric:
Centralized reporting: Real-time dashboards enable you to see how each location is performing. You can track financials, employee performance, shop metrics, ARO, car count, and more.
All-in-one solution: Instead of switching between platforms, Tekmetric offers shop management, POS, and CRM in one place.
Company history: Built by a former shop owner, Tekmetric is often praised for ease of use, simple onboarding, reliable support, and listening to customer feedback.
Shop-Ware is designed to help you maintain consistency across multiple locations with unified customer history, reporting, and employee management features.
Why we picked Shop-Ware:
Reporting: Find the metrics that matter the most to your business.
Customer experience: Standardize your customer experience across locations.
Employee management: Easily compare employee productivity and manage permission levels.
Protractor is a popular shop management system for shops with multiple locations or franchises. Protractor offers advanced reporting features and shop management features so you can run your shop confidently.
Why we picked Protractor:
Reporting: Performance tracking, insights, and employee productivity monitoring.
Fullbay specializes in heavy-duty truck and trailer repair shops. Most standard shop software struggles with the complexity of fleet maintenance, but Fullbay was built for it.
Why we picked Fullbay:
Centralized inventory: Track parts and inventory across all locations.
Integrations: Fullbay has plenty of industry interrogations to keep your shop running.
If you are looking for a lighter software solution, Garage360 might be a good option for your shop. Supporting quick-lube, body/collision, and fleet, Garage360 can be used in a variety of shops.
Why we picked Garage360:
Versatile: Can be used in multiple shop types.
Permission control: Manage your employee permissions across locations.
Reporting: Pull the data you need to make informed decisions.
Pricing: Starting at $79/mo (billed annually).
Which software features should I look for when I manage multiple shops?
If you are comparing software options for your chain operations, these are the modern features to look for:
Centralized real-time reporting: Tired of trying to guess how each shop location is performing? Pick a software that can pull the data you need from any location or aggregate it across shop locations within a user-friendly dashboard.
Inventory/parts management: Tracking parts can be difficult as you expand. Find a solution that can track inventory levels and transfer parts as needed across locations.
Standardized workflows: Having standard workflows streamlines your shop operations. Select a software that can standardize your operations, prices, and procedures.
Employee permissions:Managing employee permissions is critical to ensuring the safety of your company data and holding employees accountable. Pick a software that keeps your business secure.
Single vs. Multi-Location Management: What are the differences?
Why can’t you just use a single-shop system? The difference lies in automation and control.
Standardization: In a multi-location setup, you need to ensure that technicians at every shop are following the same workflow and procedures so your customer experience is consistent.
Visibility: Single shop software may have reporting, but you need to be able to compare metrics between shops to make informed business decisions.
Security: Multi-shop software provides employee permission settings and typically comes with advanced data protection.
Pricing: Most single-shop software options will charge you per user or limit repair orders. Enterprise software will grow with you and charge based on the number of locations.
Final Thoughts
Choosing an enterprise-level auto repair shop software isn't just about features; it's about finding a partner that helps you maintain a consistent customer experience as you grow. Whether you prioritize inventory management, deep metrics, or standard procedures, ensure you find a solution that can grow with you.
Thought Leadership
Shop Management
Best Auto Repair Software for Multiple Locations (Full Guide)
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