An auto repair shop’s profit and loss statement has five blocks: sales, cost of sales, gross profit, operating expenses and net profit. What separates a shop P&L from a generic one is where technician wages go, and getting that placement wrong makes your gross profit look fine while the business quietly loses money.
Your accountant hands you a P&L once a month, or once a quarter, or once a year if you’re being honest. Most owners glance at the bottom number, decide it’s higher or lower than they hoped, and file it. That’s a shame: everything worth knowing about the shop is on that page, in order, and it takes about fifteen minutes a month to read once you know what each line is doing.
Here’s the walkthrough, and a template that isn’t behind a form.
📥 auto-repair-shop-pl-template.xlsx · every line below, with subtotals calculated, a 12-month comparison tab showing each line as a percentage of revenue, and an owner’s compensation adjustment. No form, no email.
Download the shop P&L template »
The short version
- Five blocks: sales → cost of sales → gross profit → operating expenses → net profit.
- Split sales into labor, parts, sublet and tires. One “revenue” line hides everything worth knowing.
- Productive technician wages belong in cost of sales. This is the placement most shop P&Ls get wrong.
- Calculate gross profit separately for labor and parts. Two different businesses sharing a building.
- Read every line as a percentage of revenue and compare to your own prior months.
- If you pay yourself irregularly, normalize your own wage before drawing any conclusion.
What goes on an auto repair shop profit and loss statement: Block 1, sales
Split it. A single revenue line is where most shop P&Ls go wrong: labor and parts have completely different economics, and averaging them tells you nothing.
| Line | What goes in it |
|---|---|
| Labor sales | Billed labor only. No parts, no fees, no tax. |
| Parts sales | What you charged the customer for parts. |
| Tire sales | Separate if tires are meaningful for you. Tire margins are thin and unlike everything else. |
| Sublet sales | What you billed for work sent out: machine shop, alignment, glass, upholstery. |
| Shop supplies and fees | Shop supply charges, disposal fees, diagnostic fees if you bill them separately. |
| Other income | Storage, towing, anything else. Keep it small and separate. |
| = Total sales |
Why the split matters. A shop at $60,000 a month with a 65/35 labor-to-parts mix is a different business from one at $60,000 with a 35/65 mix. The first sells skill, the second sells components, and you can’t see that from a total.
Watch shop supplies and fees: small, easy to leave misconfigured for two years, and the line customers ask about more than any other. Policy side in shop supply fees explained.
Block 2: Cost of sales
Direct costs of producing the work. Everything here scales with volume.
| Line | What goes in it |
|---|---|
| Parts cost | What you paid for the parts you sold. Not what you bought this month, what you sold this month. |
| Tire cost | Same logic. |
| Sublet cost | What the machine shop or alignment shop charged you. |
| Productive technician wages | Wages and payroll tax for the people turning wrenches. This belongs here. |
| Freight and delivery in | Small, real, usually forgotten. |
| = Total cost of sales |
The technician wage placement, and why it matters
This is the most consequential line on a shop P&L, and plenty of accountants who don’t do shops for a living put it in the wrong place.
Productive technician wages are a cost of sales. They vary directly with work performed. Park them in operating expenses instead and your gross profit will look excellent, because you’ve stripped the largest variable cost out of it. You’ll conclude your pricing is healthy when it isn’t, and you’ll find out at the net line, by which point the month is over.
Where the edges are:
- Service advisors and writers: usually operating expense, since they’re not producing billable hours. Some shops put them in cost of sales when pay is commission-based. Pick one and stay consistent.
- Shop foreman: split him if he’s half producing and half supervising, or put him wholly in cost of sales if he’s mostly on the tools.
- The owner who turns wrenches: see the compensation section below. This causes more confusion than anything else on the page.
- Technician non-productive time: training, cleanup, meetings. Technically operating expense. Most shops leave it in cost of sales and accept the small distortion, which is fine as long as it’s the same every month.
Block 3: Gross profit
Gross profit = total sales − total cost of sales
Then, the part worth the effort, calculate it separately for labor and parts:
Labor gross profit % = (labor sales − productive tech wages) ÷ labor sales
Parts gross profit % = (parts sales − parts cost) ÷ parts sales
These are the health check on your pricing, and they fail for different reasons.
Labor gross profit falls when your effective labor rate slips, when tech pay rises without a rate change, or when unbilled diagnostic time grows. Start with effective labor rate.
Parts gross profit falls when supplier costs move and your prices don’t, when discounting creeps in, or when your tiers no longer match what you’re selling. PartsTech surveyed 752 shops in 2025 and found 51–60% is the most common parts gross margin band, 58% is the benchmark commonly taught, and 63% of shops land below it. The fix is a grid: parts pricing matrix for auto repair.
Track both monthly, as percentages, across twelve months. The direction is the information.
Block 4: Operating expenses
Costs that exist whether or not a single car comes in. This is the block that quietly grows.
Occupancy: rent or mortgage, property tax, building insurance, utilities, waste and hazmat disposal, facility maintenance.
Administrative payroll: service advisors, office staff, bookkeeper, and the non-productive portion of ownership, plus employer taxes, workers’ comp, health insurance and retirement on that payroll. Workers’ comp in this industry is not a rounding error.
Sales and marketing: advertising, website, signage, sponsorships, review platforms, printing. Break it out by channel if you can, because this is the one line owners defend with a gut feeling instead of a number.
Shop operating: small tools, consumables not billed to customers, uniforms and laundry, equipment leases, scan tool and information subscriptions, software.
Professional and financial: accounting, legal, bank charges, and credit card processing fees, which are real money at shop ticket sizes and belong on their own line.
Vehicle: shuttle, loaners, parts runner, fuel, insurance. Depreciation: non-cash, but it’s telling you your lifts are consuming themselves. Interest: equipment loans, building, line of credit.
Our auto repair shop expense spreadsheet uses this same category structure, so the two reconcile at month end.
Block 5: Net profit, and how to read it honestly
Operating profit = gross profit − operating expenses
Net profit = operating profit − interest − taxes (as applicable to your entity)
Now, the part that matters more than the number.
We are not going to give you a net margin benchmark. You’ll find articles stating that the average shop nets some specific percentage. We went looking for a primary source. Every figure traces to a content site with no stated methodology, no sample, and nobody who collected data. Serious benchmarking studies in this industry do exist, behind paid or gated access at accounting firms that specialize in the sector. If you want real comparative data, get it there, from a firm that will also look at your actual numbers.
What to do instead: read your own number correctly.
1. Normalize owner’s compensation. If you pay yourself sporadically, take draws instead of a wage, or work 50 hours a week in the bays for nothing, your net profit is fiction. Put a market-rate wage in for every role you personally fill, in the block where that role belongs, and recalculate. A shop that “nets 12%” while the owner works unpaid as tech and advisor is not netting 12%.
2. Read every line as a percentage of total sales. Dollars rise when the month is busy and tell you nothing. Percentages compare across months, and this is the highest-value change most owners can make to how they read a P&L.
3. Compare to yourself. Same month last year, plus a rolling twelve. Your own history controls for your market, rent, mix and labor cost in a way no published average can.
4. Find the two lines that moved most. Two or three lines explain nearly all of any month’s change. Find them, write down why in one sentence, done in fifteen minutes.
5. Watch the ratios that predict. Gross profit percentage on labor and parts moves before net profit does. If those slide, you know in month one instead of month six.
Where the numbers come from
A P&L is only as good as the records under it, and the two lines most often wrong in a shop are parts cost and labor hours. Both come off repair orders. If your tickets don’t consistently record what a part cost you and how many hours were billed, your gross profit lines are estimates and everything downstream sits on them.
Garage records cost and sell price on parts, labor lines and billed hours on every repair order, with history attached to the vehicle and the customer. On the Premium plan, cost-vs-profit and cash flow reporting is where you read the gross profit picture between accountant statements instead of waiting on the close. It isn’t accounting software and it doesn’t produce your tax P&L. It produces the operational data a P&L is assembled from, which is the part most shops are missing.
Frequently asked questions
What should be on an auto repair shop’s P&L?
Sales split into labor, parts, tires and sublet; cost of sales including parts cost and productive technician wages; gross profit calculated separately for labor and parts; operating expenses grouped into occupancy, admin payroll, marketing, shop operating, professional and financial; then operating profit and net profit.
Do technician wages go in cost of goods sold?
Productive technician wages, yes. They vary directly with work performed. Service advisors and office staff normally sit in operating expenses. Putting tech wages below the gross profit line makes your margins look healthy when they may not be.
How often should I review my shop’s P&L?
Monthly, with each line as a percentage of total sales, compared to your own prior months. Quarterly is too slow to catch a margin slide while it’s still cheap to fix.
What’s a good net profit margin for an auto repair shop?
There’s no published figure with credible methodology, which is why we don’t quote one. Normalize owner’s compensation to market rate, read every line as a percentage of revenue, and compare to your own trailing twelve months. For real benchmarks, a specialist automotive accounting firm is the source worth paying for.
Bottom line
A P&L read properly takes fifteen minutes a month and tells you more than any dashboard. Split the sales, put technician wages where they belong, calculate labor and parts gross profit separately, read everything as a percentage, and compare to yourself instead of to a benchmark somebody made up.
Download the template, fill it in for last month, and do it again in thirty days. The second one is where it starts being useful.
Garage keeps the operational records those lines are built from: repair orders, parts cost and sell price, labor hours, vehicle history, with cost-vs-profit reporting on the Premium plan.
Seven-day free trial, no credit card, no contract. $39/mo for one user, $69/mo for up to seven.
