Understanding Labor Profitability at Your Auto Shop

See how you can use R.O. Writer reporting tools to keep track of your labor profits. 

As an auto shop owner, you know that the people who staff your shop—mechanics, technicians, and other employees—are vital to its success. Having a thorough understanding of how much of your shop’s profits come from parts and how much comes from labor is one of the many ways you can maximize efficiency and ensure long-term growth. Alternatively, not knowing what percentage of your business’ profits come from labor could leave you uncertain about how to staff your shop and even hinder your ability to make smart business decisions.

Why Tracking Labor Profits is Important 

To run a repair shop profitably, you must understand what the success benchmarks are and how you can consistently meet them. Many shops charge too low a labor rate which can lead to a loss of revenue. Other shops charge too high a labor rate which can drive customers away. Striking the right balance is key to maintaining a steady flow of business.

With the right reporting tools, you can increase profits and efficiency. R.O. Writer’s real-time reports can show you where you can make adjustments. Let’s take a look at how you can use our reports to better understand labor profits at your shop.

Using R.O. Writer’s Reporting Module to Track Labor Profits

Knowing what reports to use will help you find the information you need to maximize profits. You can track labor profits using the following R.O. Writer reporting tools.

The Summary Report can and should be pulled daily to show labor percentages at your shop, alongside other important details about your business. Your labor percentage represents the money you made in labor, divided by the cost of taxes. If this number seems unbalanced, you might consider whether your labor rate is due for an increase.

The Labor Detail Report shows labor operations billed on closed repair orders. This report will show your effective labor rate and whether you’re getting the correct labor time and charge. Remember that the dates within the date range you selected for this report are based on the close date of the repair orders. If you don’t currently use our Digital Vehicle Inspection (“DVI”) app but still want the ability to track efficiency, you can do so within this report.

The Sales by Technician Report looks different to other R.O. Writer reporting tools, but can be used to garner a lot of useful information. This report will show you totals for each technician or labor category and tell you if your technicians are booking enough hours. This report compares the amount that was billed to the customer to the time that was spent on the repair. It will give you a clear understanding of the effectiveness of your shop’s labor rate. You can use this report to look at an individual technician’s stats and ensure your employees using tools like DVI Suite and the job clock to maximize efficiency.

In the Sales by Labor Operation Report, you can view sale totals for each category of labor operation. Use this report to clearly see your shop’s missed opportunities, peripheral sales, trends, coupons and promotions, and how much revenue was brought in by the average job. You can also compare sales by labor for different date ranges to determine where you can offer more specific services. For example, running your Sales by Labor Operation report twice, then comparing the two date ranges can show you how frequently you completed air conditioner repairs this summer versus last summer.

The Shop Performance Report offers a great way to see your shop’s performance at a glance. It includes an overview of cash flow activity and sales at your shop, plus a view of your parts and labor sales, supplies, tax, and R.O. count. It also shows your shop’s sales and gross profits alongside other key metrics.

Lastly, you can use Central Service to supplement your other reporting, and see your shop’s overall sales, accounts payable and receivable, and your inventory. Central Service is now included in every R.O. Writer support subscription.

Using R.O. Writer to Better Understand Your Shop’s Profits

Take advantage of reporting software that will help you understand how much of your shop’s profits come from labor. With R.O. Writer’s array of reporting tools and customer portal, you can rest assured knowing every business decision you make is a smart one.