Running a top-tier automotive repair business isn’t just about how many cars you can get through the door; it’s also about identifying services that bring in the best profits.
Instead of focusing only on volume, smart shop owners are zeroing in on high-margin jobs that offer big returns. In fact, knowing which auto repair services to prioritize not only boosts revenue, it can also help streamline operations and improve a shop’s overall productivity.
Here, we’ll walk through a number of services designed to set your car repair business apart, drive up profits, and create a unique list of automotive repair services for your customers. But first, the basics…
Breaking Down Repair Costs
To position your mechanic store for more riches, you’ll need to know how to calculate profit margins on repairs. Each job includes a mix of costs—labor, parts, and overhead—that affect the final margin. Breaking down these elements beforehand should give you a clearer picture of where the money goes; then, you can work on managing costs.
Labor expenses usually make up a big chunk of the repair bill, covering wages, benefits, and more. Keeping close tabs on labor hours is key, since even a slight miscalculation can mean lost profits. Then there’s the cost of parts procurement—getting quality parts at a good price, with the right markup. And don’t forget about overhead, like rent and utilities, which chip away at each repair’s proceeds. These areas need to be accounted for first before your shop can see its actual profit margin.
What Affects Profit Margins
Not all auto repair services deliver the same margins. Factors like the type of vehicle, complexity of the job, and even a customer’s willingness to pay all make a difference. Complex work that involves hard-to-find parts or elaborate processes, for example, generally commands higher prices. Luxury or high-end performance vehicles that require specialized parts and expertise can justify bigger markups as well. And, customers that recognize and value your expertise are usually more open to paying for premium services.
High-Margin Services
Diagnostic Services: Diagnostics are some of the most profitable auto repair services around, mainly because they rely on both specialized knowledge and equipment. The key is setting the right price for your technicians’ time and know-how, whether that’s an hourly rate or flat diagnostic fee. An added bonus: These services can also lead to more repair work down the road.
Electrical Repairs: Most modern cars are like mobile computing centers packed with cameras, sensors, and other sophisticated systems. Which means that for experienced techs, electrical repairs can be a goldmine. What customers see as a simple sensor replacement or wiring fix is often much more, requiring deep investigation to determine the source and a steady hand to avoid damaging sensitive equipment. Once they understand the skill and care involved in electrical work, most customers will sign off on it.
Suspension & Steering: Besides being profitable, these repairs include a critical safety element; oftentimes, they also come with upsell opportunities for things like tire balancing and wheel alignment, or repair/replacement of shocks, ball joints, or coil springs. Communication is important here: A customer may balk at a pricey alignment at first, but if you explain how it affects the car’s handling and their overall safety, they’re more likely to greenlight the work.
Engine Repair & Maintenance: Because major engine repairs often involve pricey parts and intensive labor, customers expect to pay more for them. Think timing belt replacements, head gasket repairs, or swapping out faulty ECMs. But the real secret to increasing your average repair order (ARO) in this area is bundling services. Combining them with complementary work like oil changes or coolant flushes can really boost the ARO and profit margin (since there isn’t much additional labor required).
Specialized Services
Performance Upgrades: Whether we’re talking supercharger installations or custom exhaust mods, performance upgrades bring in repeat customers, word-of-mouth referrals, and big revenue. Appealing to enthusiasts who are passionate about their vehicles can help cement your status as the go-to shop for performance work.
Custom Fabrication: If your shop has talented welders or fabricators on staff, you’re in luck. Whether it involves cutting, stamping, shaping, or welding, custom work can be incredibly profitable. Most owners appreciate what it takes to put a chassis together, or build a custom exhaust or one-off suspension system for their classic car or hot rod; and they're willing to pay for it.
Services by Shop Type
Quick Lube Shops: For quick lube shops, it’s all about the add-ons. There should be plenty of opportunities to raise the ticket price through air filter replacements, wiper blade changes, and other routine services.
Tire Shops: Tire sales may not carry the best margins, but wheel alignments, balancing, and TPMS repairs can help fill the gaps. Just make sure you market them as essential maintenance rather than optional add-ons.
Truck Repair Shops: The advantage here is that trucks can’t afford to stay down for long, so speed and reliability are key. This clientele will value emergency roadside service, fast-tracked repairs, and preventative fleet maintenance programs.
Detailing Shops: Detail shops can capitalize on services like ceramic coating, paint correction, and interior restoration. Customers who get their vehicles detailed see them as investments worth protecting, and effective marketing and pricing strategies based on seasonal promotions and custom packages, for example, can pave the way for steady business.
Get Mileage Out Of Your Services
Ramping up your shop’s profits sometimes involves working smarter, not harder. Whether you’re offering high-margin services like diagnostics and engine repairs, specializing in performance or fabrication work, or honing in on your most bankable areas, becoming one of the most profitable auto repair companies in your area often comes down to maximizing these opportunities.
And remember: While you’re identifying the perfect mix of services, don't forget about the tools that help you manage them. The right auto repair software can help you track your most profitable services regardless of your automotive vertical. Request a demo of Shopmonkey’s best-in-class repair shop management platform today!
