How do I work out the profit on a repair job?

Add the labor you billed to the parts you charged for. Subtract what the parts cost you, everything else the job consumed, and the card processing fee on the whole invoice. What remains is the profit on the job before income tax.

Why divide profit by unbilled hours as well as billed hours?

Because the unbilled hours are hours you could not sell to anybody else. Driving, collecting parts, quoting and chasing approval all come out of the same working day. Dividing by billed hours alone produces a figure that flatters every job with a long drive attached to it.

What is a good profit margin on a mechanic job?

This page does not name one, because there is no sourced figure behind it and a made up benchmark is worse than none. What it does give you is a way to compare your own jobs to each other, which is the comparison that actually changes what work you take next month.

Should parts profit be counted as job profit?

Yes, as long as the parts cost going in is the delivered cost including freight and any core charge you do not get back. Counting the sticker price of the part as your cost quietly moves the freight into the profit column, where it does not belong.

Calculator

Job profit calculator for a mechanic

Put in one job and see what it really made: after the parts cost, after the driving, after the card fee, and per hour once the hours nobody paid for are counted in. The result is on the page, not behind an email form.

Labor hours you billed

What went on the invoice, not what the job really took.

Your hourly rate

The rate on the invoice for this job.

Parts charged to the customer

The parts line on the invoice, after your markup.

What those parts cost you

Delivered cost, including freight and any core charge you do not get back.

Other costs this job carried

Driving, parking, shop supplies used up, a tool bought for this job alone.

Unbilled hours the job ate

Driving, parts collection, quoting, chasing the customer. Nobody paid for these.

Card processing rate

Read the exact rate off your own processor statement rather than trusting a default.

Card processing, flat part

The per transaction piece. Set it to zero if the customer paid cash.

Profit on this job

$216.66

What is left after parts, costs and the card fee, before income tax.

Labor billed: $200.00
Total invoiced: $368.00
Parts and other costs: $140.00
Card processing: $11.34
Profit margin on the job: 58.9%

Profit per hour the job took

$66.66 per hour

Billed hours plus the unbilled ones. This is the number worth comparing between jobs.

Hours the job really took: 3.25
Profit divided by those hours: $66.66

The formula, written out

Revenue first: labor hours billed multiplied by your hourly rate, plus what you charged for parts. That is the invoice total, and it is the number most people stop at.

Then take three things off it. What the parts actually cost you, delivered. What the job cost you in anything else, which is mostly driving, parking and the shop supplies it consumed. And the card processing fee, which is a percentage of the whole invoice plus a flat piece per transaction. What is left is the profit, before income tax.

The last step is the one that changes decisions. Divide that profit by every hour the job took, billed and unbilled together, and you have profit per hour. That is the only number that compares one job honestly against another.

Profit per hour, not profit

A job that made a good sum over a whole day and a job that made half as much in ninety minutes are not comparable on profit, and a mobile mechanic who ranks work by profit alone will keep taking the wrong jobs. Profit per hour ranks them properly.

The hours to divide by are all of them, including the ones nobody paid for. In the example this page opens with, the job billed 2.5 hours but really took 3.25 once the driving and the parts collection are counted. Divide by the billed hours alone and the job looks like $86.66 an hour. Divide by the hours it really took and it is $66.66. Same job, same invoice, and the second number is the one your week is actually made of.

This is why two mechanics with identical rates can end a month in completely different places. The one whose jobs are clustered, whose parts arrive before the visit and whose estimates get approved without three phone calls is selling far more of the day than the one whose are not.

The costs that get left out

Four costs disappear from most mental arithmetic, and all four are inputs here on purpose.

The card fee, because it comes off after the money has already felt like yours. Freight and core charges on parts, because the invoice from the supplier arrives separately from the part. Shop supplies actually consumed on the job, the cleaner, the gloves, the fixings, the fluid topped up and never charged for. And the return trip when a part is wrong, which is not a cost of that trip but a cost of the original job that caused it.

None of them is large on its own. Added together across a month they are usually the difference between the profit somebody thinks they made and the balance actually sitting in the account.

About the defaults on this page

The job the calculator opens with is an illustration, not a typical job, and there is no such thing as a typical job anyway. It is priced so the arithmetic is visible: an invoice of $368.00 that leaves $216.66, a margin of 58.9%.

The card processing fields deserve a specific warning. Rates differ by processor, by card type, by whether the card was present, and by what plan you are on, so the defaults here are placeholders. Read your own processor statement, find the total fees for a month and divide by the total processed, and you will have a truer blended rate than any figure printed on a page like this one.

The example the calculator opens with, done by hand

Labor hours billed multiplied by the rate: $200.00
Parts charged to the customer: $168.00
Invoice total: $368.00
Parts cost and other job costs: $140.00
Card processing on the invoice: $11.34
Profit left on the job: $216.66
Hours the job really took: 3.25
Profit per hour the job took: $66.66 an hour

Questions people ask about job profit

How do I work out the profit on a repair job?: Add the labor you billed to the parts you charged for. Subtract what the parts cost you, everything else the job consumed, and the card processing fee on the whole invoice. What remains is the profit on the job before income tax.
Why divide profit by unbilled hours as well as billed hours?: Because the unbilled hours are hours you could not sell to anybody else. Driving, collecting parts, quoting and chasing approval all come out of the same working day. Dividing by billed hours alone produces a figure that flatters every job with a long drive attached to it.
What is a good profit margin on a mechanic job?: This page does not name one, because there is no sourced figure behind it and a made up benchmark is worse than none. What it does give you is a way to compare your own jobs to each other, which is the comparison that actually changes what work you take next month.
Should parts profit be counted as job profit?: Yes, as long as the parts cost going in is the delivered cost including freight and any core charge you do not get back. Counting the sticker price of the part as your cost quietly moves the freight into the profit column, where it does not belong.