Please note: This blog post does not constitute legal or financial advice. This blog post is merely a guide on how shop management software works with accounting software. Additionally, there is a difference between bookkeeping services and accounting services. If you’re seeking professional accounting services, contact Paar, Melis, & Associates.
For many shop owners, the accounting side of business can be overwhelming. After all, there’s probably a good reason why you decided to start an auto repair business and not an accounting firm—you enjoy fixing cars and helping people, not staring at numbers all day. That's where reporting features from Tekmetric come in, making it easier to see all your finances in one place.
But when you’re in the shop owner’s seat, it’s vital for you to have a firm grasp on your books. If you want your business to succeed over the long haul, your financial statements need to be complete, consistent, and comparable.
Complete Statements
You should account for all transactions, not only your sales and expenses on parts and labor but also your taxes, warranties, refunds, cores, and any other major or minor transactions that may fall by the wayside. “Complete” also means that all relevant information such as dates, purchase order numbers, and vendor names are included on each statement. Complete statements will give you the clearest idea of how much money you actually have to invest back into your business at the end of each sales cycle.
Consistent Statements
You should have a regular schedule and method for tracking what your business makes and what your business spends. It’s good practice to check your numbers at least once a month, and conduct a thorough reconciliation and analysis of your books at least once every business quarter. By regularly checking your statements, you can quickly catch any errors or instances of loss, whether it’s from theft, slip-ups, or forgetfulness. After all, we all forget things, and when we do, it’s best to realize it as soon as possible.
Comparable Statements
Comparable financial statements help you spot trends, which will make it easier to work with an accountant or a consultant and make better business decisions. You should be able to cross-reference your financial statements with purchase orders, receipts, and other financial reports. If your financial statements are complete and consistent with one another, then they should already be easy to compare. But it’s also worth considering how the financial data in your shop management system “talks to” the financial data in your accounting software.
“What Are My Margins?”
Shop owners looking to grow their business should always be asking themselves, “What are my margins?” If you want to invest in new tools, new talent, and new locations, you need to know how much money you actually have after your income and expenses have been accounted for. There are two places that your shop can and should be tracking your margins: your shop management system and your accounting software.
If you read the above sentence thinking, “Why do I need both? Isn’t it redundant to use both a shop management system and an auto repair shop accounting software?” you’re not alone. In fact, a lot of shop owners swear by the reports in their shop management system—and hey, if you’re using a shop management system like Tekmetric, then those reports are going to give you a good baseline to go by.
But if we’re going to make sure our financial statements are indeed complete, consistent, and comparable, we need to have something to verify the financial reports we see in our shop management system. There are aspects of your business such as paid time off, benefits, and payroll taxes that your shop management system isn't going to factor into your gross profit margin.
We can't ignore our accounting software because, at the end of the day, Tekmetric or any other shop management software out there is what we think we're making—it's what we think our margins are; it's what we think we pay for parts; it's what we think we pay our employees.
At the end of a sales period, an auto repair shop accounting software like QuickBooks is going to tell you how much money your shop made in sales, how much you paid in expenses, and what your actual margins are. Right, wrong, or indifferent, there is useful information in both solutions, and we need to make sure that we understand why those do match or why they don't match.
How to Divide Sales & Expenses
While there are quite a few facets that make up your “books” or accounting log, you can simplify things by dividing your sales and expenses into categories. Probably the best categories to start with are as follows:
Parts
Labor
Shop supplies
Sublet work
Parts, labor, shop supplies, and sublet work will form the basis of your profit and loss statements. If you do not divide your sales and expenses, you’re going to have to manually go in and calculate everything, which can take up a lot of your time.
The good thing is that a shop management system and accounting software will make it easy to divide your sales and expenses into reports.
Tekmetric’s Financial Reports
Before we get into how to synchronize your shop management system and your auto repair shop accounting software, let’s look at the tools that Tekmetric provides shop owners to get a sense of their numbers.
Tekmetric includes an assortment of financial reports that can be customized and broken down in various ways. But the three financial reports that give shop owners the highest-level look at the financial health of their business are the End-of-Day Report, the Parts Usage Report, and the Parts Purchased Report.
End-Of-Day Report
Tekmetric’s End-of-Day Report automatically pulls all the sales data inputted into Tekmetric and generates some of the most important business metrics for shop owners to follow. It includes your shop’s Average RO in Sales and Profits, your Profit Margin, your Gross Sales, and your Gross Profit.
While the End-of-Day Report defaults to showing your shop's earnings for the day, it can be set to show your shop’s earnings for any date range that you want. This is where shop owners can get a good forecast of how much money their shop is making. You can even compare how your shop is doing over different periods of time.
It’s important to remember that the End-of-Day Report pulls from everything put into Tekmetric, but there may be other sources of revenue and expenses that don’t make it into Tekmetric, so this report may not be 100% accurate. To have complete accuracy, you should use Tekmetric in conjunction with an auto repair shop accounting software.
Tekmetric Parts Reports
The End-of-Day Report will show you critical stats about your shop, such as your Average RO in Sales and Profits, your Profit Margin, and your Gross Profit.
However, you also need to keep track of every part your shop purchases and sells. When you’re buying and selling parts, it can be tough to keep track of everything—especially manually! A lot can happen. For example, parts can get lost in some corner of the shop, get stolen, or just not be accounted for in a repair estimate.
Minimizing loss is what Tekmetric’s two parts reports—the Parts Purchased Report and Parts Usage Report—do best. When you use these reports alongside each other, you can compare the parts your shop has purchased with the parts your shop has actually used.
Tekmetric’s Parts Purchased Report
The Parts Purchased Report will give you the key details about parts your shop has purchased, including the:
Name of the part
Vendor
PO#
RO Source
Date Purchased
Quantity
Unit Cost
Total Cost
Ordering Employee
Tekmetric’s Parts Usage Report
The Parts Usage Report will show you exactly when each part was used. You’ll get details including:
The job title
The job category
The RO number it was used in
The customer and vehicle associated with the part
The technician associated with the job that involved the part
Using Tekmetric’s Parts Reports Alongside Your Auto Repair Shop Accounting Software
The combination of Tekmetric’s Parts Purchased Report, Parts Usage Report, and your accounting software add up to a powerful reconciliation tool. (Since QuickBooks is one of the most commonly used in the industry, that’s the example we’ll be using).
When you compare information between Tekmetric’s reports and QuickBooks, you can pinpoint the specific date range when things started to go astray with a particular type of part or vendor, determine how much you’re actually profiting from a given part, and identify any disconnects like “magically” disappearing parts, ex-employees using your shop’s charge accounts, and so forth.
For instance, let’s say you pull up the Parts Purchased Report and see that your shop purchased 100 oil filters two months ago, and QuickBooks corroborates this information. However, when you pull up the Parts Usage Report, it indicates that none of those oil filters have been used in those two months! From there, you can start to narrow down different possibilities for the 75 remaining oil filters:
Maybe the service advisors forgot to log those parts
Maybe the parts were stolen
Maybe a former employee somehow ordered those parts
Maybe your shop really had no use for those parts in the last two months
Here’s another example: let’s say that a particular part shows up on two repair orders in Tekmetric’s Parts Usage Report. When you check Tekmetric’s Parts Purchased Report, you see two orders of that part. So far, so good. But when you turn to QuickBooks, you see ten orders for that part. So, what happened?
Perhaps a service advisor ordered those parts outside of Tekmetric and didn’t properly log them in the system. Or, perhaps an ex-employee is using your shop’s charge account on accident—or on purpose.
Once you find the root cause, you can take the necessary steps to ensure such a thing doesn’t happen again. You can reiterate to all of your service advisors that logging parts ordered outside of Tekmetric is a must-do, every time. If the problem is with an ex-employee, you can cut off their access to your charge account and create stricter offboarding procedures moving forward.
Best Practices for Getting Your Parts In Order
The best way to make sure you don’t run into any headaches when comparing the information in Tekmetric’s Parts Purchased Report, Tekmetric’s Parts Usage Report, and your auto repair shop accounting software is to get your parts process in order from the get-go. Training your team and implementing repeatable processes for logging and tracking every part will save you time down the line.
Train Service Writers On Parts Ordering Guidelines and Documentation
A streamlined parts ordering and documentation process starts with your service writers. If they input the wrong information in Tekmetric or forget to do so at all, it’ll have a trickle-down effect. You’ll end up scratching your head when things don’t line up in QuickBooks and the Parts Purchased Report and Parts Usage Report in Tekmetric.
To obtain a healthy parts margin, it’s essential to spend time making sure service writers understand your shop’s guidelines on parts ordering and documentation. You could make it a policy that service writers can only order parts from certain vendors within Tekmetric, and if they want to bypass that, they have to get permission from you first. Then, you could tell them that they must log each part that’s ordered and used as soon as possible. That way, the chance that they forget to input a part order or add a part to a repair order will be minimized, and you won’t have to scroll through pages of statements down the line.
Adjust Your Shop’s Parts Matrix as Needed
The day you snag a deal on a part is always a good one. However, be sure to follow that win by tweaking your shop’s parts markup matrix. Your shop’s parts matrix is what helps you markup parts in a fair way, and in turn, earn the appropriate profit on each part you sell.
If you don’t adjust the markup for the particular part you got for less, you’ll be losing money. For example, say your markup on a $100 part is usually 15%. But, if you get that part for $80 the next time, you might consider bumping up the markup to 20%.
Review All Things That Have to Do With Parts Ordering on a Regular Basis
Earlier, we discussed how it’s good practice to check all your numbers at least once a month, and also thoroughly reconcile and analyze your books at least once a business quarter. You should apply a similar mindset to all things having to do with parts ordering at your shop; about once a month, review the parts information you have in QuickBooks, and see how it corresponds to what’s in your Parts Purchased Report and Parts Usage Report.
Common Questions About Getting Parts In Order
Question: What’s the best way to get an accurate understanding of what my shop spends on parts?
Answer: If your shop doesn’t have a large amount of inventory sitting around, or if you do have a large amount of inventory but it doesn’t tend to fluctuable much, we recommend that you look at the cost of goods sold in QuickBooks and compare it to the data in Tekmetric’s Parts Purchased Report.
However, if your shop does have a large amount of fluctuating inventory, then you might have to go to QuickBooks and add up the costs of goods sold with your inventory that’s been added to assets (perhaps in the same time period). With a large amount of fluctuating inventory, you’ll see some slight discrepancies with the information on Tekmetric’s Parts Purchased Report. That’s because that report could include parts you brought in for specific repair orders, as well as parts you have in your inventory. (In that case, looking at Tekmetric’s Parts Usage Report will give you a clearer picture).
Question: Should I enter each part I purchase into QuickBooks?
Answer: Not if you’re keeping good track of your statements!
Entering each part into both QuickBooks and your shop management system can be a mountain of work that may not be worth the hassle. Ultimately, your goal is to get the most accurate numbers possible, and then make smart decisions for your shop based on that information. And you can quickly achieve that by entering your invoice totals.
By logging each and every part transaction into QuickBooks, you’ll reach 100% accuracy, but will be unnecessarily getting lost in the weeds. The reality is that most shops will be a-ok simply putting their monthly statements into QuickBooks and being in the “ballpark,” such as 95% accuracy, rather than 100% accuracy.
The only time you may want to start entering every part purchase into QuickBooks is if your shop is dealing with a stressful parts inventory or parts management issue.
Question: If my shop does have a need to enter each purchased part into QuickBooks, how long should I do this for, and how often?
Answer: The level of work involved with putting every single purchase order into QuickBooks could almost amount to full-time hours.
Also, within the scope of that deadline, decide if you and your team will log each part order daily, weekly, or monthly. By setting aside a dedicated time to do so, you can avoid disrupting your workflow as a group.
Question: If I’m using a cash basis of accounting, when should I switch to the accrual basis?
Answer: The short answer is that you should switch to accrual basis when your business gets more complicated, or even when you decide that you’re ready to majorly grow your business. When you grow your shop, you’ll be dealing larger parts orders between multiple vendors and suppliers, more jobs coming in, and additional team members. Once a lot of money is going in and out, it’ll become essential to log your income and expenses in realtime, which is only possible with an accrual basis of accounting.
Minimizing Financial Discrepancies Between Platforms
A shop management system like Tekmetric helps your team track your shop’s purchases and sales. But of course, all of that financial data must also line up in your auto repair shop accounting software.
Discrepancy: Labor Gross Profit Margin is Higher in Tekmetric than in QuickBooks
Your shop’s labor gross profit margin is a particular piece of data that’s tricky to align between both your shop management system and your accounting software.
Why? It comes down to how you pay your technicians, which in part likely depends on the labor times your shop is using.
With a shop management system like Tekmetric, you can input an hourly rate for your technicians. Tekmetric tracks additional key data points, such as how many hours each technician works a day and how much your shop sells each day. But, some things aren’t always factored in, like vacation and benefits. As for payroll taxes, the system doesn’t account for those either.
What can end up happening as a result is the labor profit margin in Tekmetric will almost always be higher than the real-life number in QuickBooks. And depending on what your shop’s compensation structure is, it might be impossible to get the numbers to match 100% in both systems.
However, you can get the numbers extremely close (for example, the number in Tekmetric might be $15,300, and the number in QuickBooks might be $15,500). Here are ways you can get your labor gross profit margin numbers in Tekmetric and QuickBooks closer together:
The Back Office Integration
Tekmetric integrates with Back Office. Back Office uses a tool called Accounting Link to transfer your shop’s sales, payments, and purchases into QuickBooks. Using Accounting Link via the Back Office will ensure that the information sent to QuickBooks is accurate—you won’t have to worry about manually typing in an incorrect number. You can review and verify the information before it gets sent to QuickBooks. With Accounting Link, you’ll also save time because you won’t have to input the numbers twice.
Tekmetric’s Shop Settings
Additionally, you can use Tekmetric’s Shop Settings to minimize financial discrepancies. If you see 100% gross profit on a line of a job, chances are you either: 1) didn’t have a cost assigned to the technician or 2) didn’t have a technician assigned to the job.
In either case, it means that there’s a $0 cost for the labor your shop is selling.
So, as a starting point, make sure your service advisors assign a cost to each technician within Tekmetric and assign each job to a technician.
If you want your payroll to be as accurate as possible in Tekmetric, you can also bump up your technician’s hourly rate within Tekmetric to account for additional overhead costs, such as benefits, healthcare, and 401k expenses. So, if your technicians’ hourly rate is $40, then you can bump it up to $45 in Tekmetric to account for that extra overhead.
Discrepancy: Parts Profit Margin is Higher in Tekmetric than in QuickBooks
Many shops might find themselves in a situation where their parts profit margin reported in Tekmetric might not line up with what’s in QuickBooks. For example, the End-of-Day Report in Tekmetric indicates that they are hitting that target; they sold $50,000 worth of parts with $25,000 in costs.
But QuickBooks tells a different story—a 30% parts margin, with $50,000 in spend and $35,000 in costs. That $10,000 difference in costs is concerning; something is majorly off.
Of course, by using the Back Office integration, you can stop these types of problems in their tracks. But here’s what else you can do.
Pull Up the Cost-of-Goods Report in QuickBooks
You can go into QuickBooks and pull up a report for the Costs-of-Goods sold for parts, which will show every transaction you made from the first day of that month to the last day of that month.
From there, you can do several things to sort through the data and make sense of it, including putting it into Excel or analyzing it by vendor. You can then compare that data with what’s in Tekmetric’s Parts Purchased Report to see where that $10,000 came from.
Perhaps you see that in QuickBooks, it shows that you spent $10,000 with a particular vendor, but in Tekmetric, it shows you’ve spent $0 with that vendor that month. Clearly, that’s a problem; somewhere, somehow, something slipped under the radar.
As you continue investigating, you’ll likely find the answer. Perhaps an ex-employee had used your name and account to purchase parts. Or, there could be a smaller reason for that disconnect, namely, things like cores and warranties. If you’re not getting that money on the back-end from your vendors, that can cut into your parts profit margin.
Once you figure out the cause, you can take the necessary steps to ensure it never happens again. So, in the case of the ex-employee using your name and account to purchase parts, you can place stronger safeguards for all departing employees to ensure they’ll never have access to your account again once your shop no longer employs them.
Match Every Part to a Paid Ticket in Tekmetric
Ultimately, if you paid for a part, make sure you can match it to a paid ticket in Tekmetric. It’s best practice to conduct regular spot checks to catch anything that’s not lining up along the way versus having to face an unpleasant surprise at the end of the month.
Become an Accounting Pro One Step at a Time
It’s totally natural to be intimidated by accounting, especially if it’s the first time that you’ve waded into the financial side of your business. But with experience and time, you’ll get the hang of things. Little by little, you’ll be able to look at a discrepancy and say “Oh! I understand what’s going on here.”
Focus on those small wins, and always continue learning. Dig behind the numbers, learn how to analyze them, and ask your accountant and team members questions along the way. Train your service advisors to get the basics right, too, so you have back up right there at the shop. Even if your shop doesn't face a particular accounting challenge today, it doesn’t mean it won’t in the future.
By learning even just the basics of accounting, you’re putting your shop in the best financial position by securing the best profit margins possible.
Find out what shops in your state are charging, and how to set a labor rate that keeps your shop profitable
In the automotive repair industry, your labor rate is more than just a number on an invoice — it is one of the key metrics that drives your business's profitability and overall growth. For shop owners, staying competitive while maintaining healthy margins requires a clear understanding of how labor costs fluctuate across the country. But knowing the national average is only half the picture. The more important question is: how does your shop compare?
Whether you are running a small independent shop or a high-volume operation, knowing where you stand relative to the average labor rate in your state — and against top-performing shops in your market — is essential.
This guide covers the current landscape of automotive repair labor rates across all 50 states, the factors that drive those numbers, and a step-by-step roadmap for setting a rate that supports your shop's long-term success.
Methodology and Key Terms
Tekmetric built this auto repair shop index as a community resource, backed by data from more than 10,000 shops across North America. Shops can use this tool to benchmark themselves and see how they compare state by state.
Key Terms to Know
Labor rate: The retail price per hour charged to the customer for repair services.
Flat-rate: A pricing model where a job is billed based on a predetermined number of hours from a labor guide, regardless of how long the actual repair takes.
Effective labor rate (ELR): The actual amount of labor revenue earned per billed hour after accounting for discounts, menu pricing, and unbilled time.
Understanding these terms will help you interpret the data below and apply it to your specific situation.
Mechanic Labor Rates by State
The average labor rate across the United States is $132 per hour, with the lowest state at $85 per hour and the highest at $197 per hour. Labor rates vary significantly by state, primarily driven by local cost of living and competition.
📊 See How Your Shop Compares — Free
The data below tells you what shops in your state are charging. But the labor rate is only one piece of the picture. The Tekmetric Shop Index lets you benchmark your shop across the four metrics that actually drive profitability — ARO, car count, parts margin, and effective labor rate — against thousands of real shops nationwide.
It's free, takes less than two minutes, and requires no Tekmetric account.
West Virginia: $85 per hour — lowest in the nation
Wisconsin: $121 per hour
Wyoming: $134 per hour
Factors That Impact Automotive Labor Rates
Why do auto repair labor rates vary so widely from state to state? A few key factors drive the differences.
Cost of Living
In states with a higher cost of living, shop owners face higher wages to attract technicians, more expensive rent, and elevated utility and supply costs. Those overhead realities push labor rates up — not because shops are padding their margins, but because the math demands it.
Shop Type and Specialization
Dealerships typically carry the highest labor rates because of their overhead, factory-trained technicians, and reliance on OEM parts. Independent shops often have more pricing flexibility, particularly for routine services like oil changes. Specialty shops — focused on European vehicles, diesel, or performance — tend to command higher rates as well.
A diagnostic job requires a different skill set than a brake job. Shops that employ ASE-certified technicians or master technicians can and should charge accordingly. The rate reflects the expertise required to do the work correctly.
Start with what it actually costs you to have a technician on the floor. This includes:
Wages and overtime
Payroll taxes
Benefits (health insurance, 401k)
Workers' comp and liability insurance
Training and certifications
Divide that total annual cost by the number of billable hours that technician produces in a year. That's your loaded cost — and it doesn't include any profit margin yet.
Step 2: Account for Overhead
Your labor revenue also needs to cover the cost of running the business:
Rent
Utilities and shop supplies
Marketing and software
Taxes
Step 3: Determine Your Target Profit Margin
Tekmetric shops average 65% labor profit margins. If your loaded cost for a technician is $45 per hour and you want a 65% margin, your base labor rate should be at least $128 per hour.
Step 4: Benchmark Against Your Market
Your internal numbers come first, but you can't ignore the local market. If your rate is $128 and every comparable independent in your area is at $100, you need to either clearly justify your value — through better inspections, faster turnaround, stronger communication — or find ways to reduce overhead. Benchmark against shops of similar size, service mix, and geography.
Step 5: Implement a Labor Matrix
Not every repair order is equal. Shops that implement a labor matrix can automatically adjust rates based on job complexity — billing more appropriately for diagnostic work or specialty repairs without manually recalculating every estimate.
Managing labor rates manually is a recipe for inconsistency and missed revenue. Here's how Tekmetric gives you the tools and data to stay ahead.
Know Where You Stand with the Tekmetric Shop Index
Before you can optimize your labor rate, you need to know how your performance compares to other shops. The Tekmetric Shop Index gives you free, instant benchmarking across four metrics: ARO, car count, parts margin, and effective labor rate. Enter your shop's numbers and see exactly where you rank against thousands of shops nationwide — no account required, no sales call, no commitment.
You can't improve what you don't measure. This is where that work starts.
Tekmetric's reporting features give you live visibility into ARO, car count, revenue, and technician productivity — so you always know how your shop is performing, not just at the end of the month.
Custom Labor and Parts Matrices
Tekmetric lets you build a labor matrix that automatically adjusts rates by job type. A custom parts matrix works the same way on the parts side, protecting your margins consistently across every repair order.
Digital Inspections That Justify Your Rate
Tekmetric's digital vehicle inspections let your team send photos and videos of needed repairs directly to a customer's phone. When a customer can see the worn brake pad or the leaking gasket for themselves, they're far more likely to approve the work — and far more comfortable with the rate attached to it.
Accurate Labor Guide Integration
Tekmetric integrates with industry-standard labor guides so your estimates are based on real, accurate times — not guesswork or memory. That means technicians get credited fairly under a flat-rate system, and your service advisers spend less time on paperwork and more time with customers.
Benchmark Your Insights Now
Knowing the average labor rate in your state gives you a useful reference point. But the shops that stay profitable long-term don't stop at state averages — they benchmark continuously, track the right metrics, and make adjustments based on data instead of instinct.
Your labor rate should reflect your actual overhead, your team's capabilities, and the quality of service your customers experience. Use the state data above as a starting point, then go deeper with the Tekmetric Shop Index to see how your shop compares across every metric that drives profitability.
Compare your shop's performance against real data from thousands of auto repair shops by state.
Benchmarking data is only useful when it changes what you do next.
If you've run your shop's numbers through the Tekmetric Shop Index and seen where you rank on ARO, car count, parts margin, and effective labor rate — good. You have a diagnosis. Now you need a plan.
This post walks through what each gap in your TSI results is actually signaling, which operational levers move the needle on each one, and how to build a focused 90-day improvement target that gives your team something concrete to work toward.
Start With the Biggest Gap
Your TSI results will show you four rankings. Resist the temptation to try to improve all four at once. The shops that make the most progress pick the metric with the largest gap and stay focused on it for a full quarter before adding another priority.
Trying to improve ARO, car count, parts margin, and effective labor rate simultaneously often means improving none of them because the operational changes required for each are different and can compete for your team's attention.
So step one is simple: look at your four rankings, find the biggest gap from the industry benchmark, and start there.
Gap: ARO Below Benchmark
If your average repair order is lagging, the most common root cause is inspection performance. Either digital vehicle inspections (DVIs) aren't being completed consistently, or they're being completed but not converted into approved work.
A few questions to answer before you act:
What percentage of repair orders have a completed DVI attached?
Of the DVIs sent to customers, what percentage include photos or video?
What's your close ratio on recommended work?
If DVI completion is below 90%, that's almost always the first lever. Tekmetric's Inspection Report shows completion rates by technician, making it straightforward to identify who needs coaching and who's already performing well.
"Now I can look at everybody at a glance. I can be in a different state, different city and know exactly what's going on in each location all the time." — Leroy Ingram, Ooroo Auto Care, Tekmetric Customer
If DVI completion is strong but close ratio is low, the issue is likely in how inspections are being communicated to customers — photo and video quality, the language in findings, how quickly the estimate follows the inspection.
Shops on Tekmetric also have access to the Parts and Labor Matrix, which protects against underpricing. It can be a quiet ARO killer that doesn't show up until you look at margin data.
A car count gap can mean two different things depending on how it breaks down: you're not bringing in enough new customers, or your existing customers aren't returning at the rate they should. Both problems need attention, but they need different solutions.
For new customers, the questions are acquisition-focused. Tekmetric's online booking gives customers a way to find you and schedule an appointment 24/7 — filling bays without your team picking up the phone. The more friction you remove from the booking process, the more new customers follow through.
For returning customers, the questions shift to communication. Are declined jobs being followed up? Are customers receiving service reminders? Tekmetric Marketing automates follow-ups on declined work and scheduled maintenance intervals — so your team stays in contact with your car count without adding manual effort.
"Seven hundred and two dollars in ad spend has generated 11 net-new customers and $12,802 in new customer revenue — an 18.3x return on ad spend before factoring in the lifetime value of those customers returning for future visits." — Tanner Markham, Phase 2 Automotive, Tekmetric Customer
A parts margin gap is almost always a pricing problem — either your markup isn't keeping up with cost increases, you're applying flat markup where a tiered matrix would protect margin better, or your team is manually overriding prices inconsistently.
The fix starts with reviewing your Parts Matrix in Tekmetric. A well-structured matrix automatically applies the right markup based on part cost ranges, removing the inconsistency that comes from individual pricing decisions at the job level.
After updating the matrix, run your Parts Purchased Report to verify that retail pricing is reflecting the changes accurately. This is also a good time to cross-reference against recent vendor invoices — if costs have moved significantly in the last 6 months, your matrix thresholds may need updating.
If your effective labor rate is trailing your posted rate, the most common culprits are inconsistent discounting, flat-rate job structures that cap labor recovery, or package pricing that doesn't account for actual labor time.
Start by pulling your Discount Detail Report to see where and how often discounts are being applied. If they're being applied inconsistently across your team, that's a coaching conversation — and Tekmetric's real-time reporting makes it easy to see which service writers are discounting most frequently.
The Labor Matrix is the structural fix. Similar to the parts matrix, a tiered labor matrix adjusts the billed hours or dollar amount based on configured ranges, protecting margin without changing what customers see on the invoice.
Once you've identified your primary gap and the lever that addresses it, the last step is turning it into a measurable target for the next 90 days.
A good 90-day target is specific, tied to a leading indicator, and gives your team something to track week over week. For example:
ARO gap: "Increase DVI completion rate from 72% to 90% over 90 days, tracked weekly via Inspection Report"
Car count gap: "Launch declined-job follow-up automation within 30 days; track returning car count monthly for 90 days"
Parts margin gap: "Update Parts Matrix for all parts under $150 within two weeks; track parts margin weekly via Parts Purchased Report"
Labor rate gap: "Reduce average discount percentage by 15% over 90 days, tracked via Discount Detail Report"
These aren't arbitrary numbers — they're examples of the leading-indicator approach that lets you see progress before the outcome metric moves. Set yours based on where you're actually starting, not where you want to end.
Check Your Rankings Quarterly
Your TSI results are a snapshot. Set a reminder to re-run the benchmarking every quarter so you can see whether your numbers are moving relative to the industry — not just relative to your own history.
The shops that use benchmarking most effectively are the ones that treat it as a recurring discipline, not a one-time exercise.
"Thanks to Tekmetric, we've really enhanced our business and are looking to expand. We're the #1 shop, 6 years in a row in Upstate New York." — Chris Chevalier, AAA Auto Repair, Tekmetric Customer
See how your shop stacks up against thousands of auto repair shops nationwide
You track your ARO. Maybe you watch your car count week over week. You know when a month is good and when it's below par.
But here's a question most shop owners can't answer quickly: Compared to shops like yours, are your numbers strong, average, or quietly underperforming?
There's a real difference between a number that's improving and a number that's competitive. A shop can grow ARO year over year and still be well below what high-performing shops are seeing in their market. Without an external reference point, you don't know which situation you're in.
That's the problem benchmarking solves, and it's the reason the data matters more than the direction.
Internal Tracking Tells You the Trend. Benchmarking Tells You the Truth.
Internal performance tracking is essential. If you don't know your ARO, car count, parts margin, and effective labor rate, you're managing without the most basic tools. But internal tracking has a structural limitation: it can only tell you how you're doing relative to your own history.
That's useful for spotting momentum — a rising ARO, a growing car count, tighter parts margin. What it can't tell you is whether your baseline is strong or weak relative to the market.
A shop with a $580 ARO that has grown from $520 over two years has made real progress. But if top-performing shops in their region are averaging significantly higher, that progress hasn't closed the competitive gap. It's just moved in the right direction.
The fix isn't to stop internal tracking. It's to add an external benchmark so you know what the target actually looks like.
Many shop owners get their benchmarks the informal way: conversations with peers at trade shows, numbers shared in coaching groups, or revenue figures posted in forums. These have real value, but they're also limited.
Self-reported numbers skew high (people share their wins). Peer groups are small samples. Industry averages from trade associations are often lagged and lack the granularity you need to compare fairly — a six-bay shop in a suburban market shouldn't be benchmarking against national averages that include dealership-adjacent shops in metro areas.
The more useful comparison is data drawn from shops operating in similar conditions, at similar scale, tracked in a consistent and anonymized way.
What Good Benchmarking Actually Looks Like
Effective benchmarking for an auto repair shop compares you on the four metrics that most directly drive profitability:
ARO: Are you getting full value from each car that comes through your door?
Car count: Is your volume where it needs to be to support your revenue goals?
Parts margin: Are you protecting margin as supplier costs fluctuate?
Effective labor rate: Is your real revenue per labor hour aligned with your posted rate?
Each of these metrics has a different lever. If your ARO is lagging, the fix usually involves inspection completion rates or customer communication. If your car count is stagnant, the issue is typically acquisition or retention. If your parts margin is eroding, your pricing matrix needs a look. If your effective labor rate is low, it's often a discounting or packaging problem.
Benchmarking tells you which problem to solve first. That's valuable when you have limited time and you're trying to prioritize.
How the Tekmetric Shop Index Works
The Tekmetric Shop Index is a free benchmarking tool built from data collected across more than 12,000 auto repair shops. Enter your shop's metrics and get an instant comparison showing where you stand on each of the four key measures. No Tekmetric account is required. Anyone can use it.
The output isn't a vague grade — it shows you where each metric ranks and gives you a clear picture of where the gap is largest. That's the signal that tells you where to focus first.
The benchmarking data is the starting point, not the finish line. Once you know which metric is your biggest gap, you can start asking the right questions:
If ARO is lagging: How consistently are your technicians completing and sending digital vehicle inspections (DVIs)? Are customers seeing and approving the recommended work?
If car count is flat: Are you actively pursuing new customers? Are return visit intervals optimized? Are declined jobs being followed up?
If parts margin is soft: When did you last review your parts pricing matrix? Is it adjusting for recent cost increases from your vendors?
If the effective labor rate is low: Are service writers building jobs accurately? Are discounts being applied consistently or inconsistently?
Each of these questions points toward a workflow, and Tekmetric's reporting is built to surface the answers at the job, technician, and service writer level. But even before you get to that step, knowing which question to ask is most of the work.
High-performing shops don't treat benchmarking as a one-time exercise. They check their rankings periodically, track how their numbers shift against the industry baseline, and use the comparison to coach their teams with context.
"You're at 85% DVI completion" is a data point. "You're at 85% completion, and top shops are at 95%" is a coaching conversation with direction.
"Seeing them take the shift to Tekmetric and then grow profitability in the same four walls has been phenomenal. Some of them are just exponential." — Matt Schwab, Clutch Automotive, Tekmetric Customer
Takeaways
Internal tracking shows you direction; benchmarking shows you position.
The four metrics — ARO, car count, parts margin, effective labor rate — are the right comparison points.
Good benchmarking data is consistent, anonymized, and drawn from shops with similar operating profiles.
The TSI tool is free, built from more than 12,000 shops, and gives you an instant read on where your gaps are largest.
Your benchmark result tells you which lever to pull first — and that's where the work starts.
Once you know your gaps, the next step is building a system to close them.
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