Garages urged to get on top of gross profit understanding

Automotive consultancy, Fourmative is encouraging garages to make use of its free guide to help them better understand gross profit and how to make improvements.

Gary Hodgkiss, director at Fourmative said: “Over the past 30 years, I am amazed at how many times I have gone through gross profit calculations with sales staff, managers and even business directors.

“Many managers are still getting these calculations wrong every day.

“To be blatantly honest it has not got much better in recent years as managers and sales staff rely upon the computer to work out the profit for them, forgetting that the computer will only report upon the sales decisions made by the managers and their staff.

“I remember one Car Dealership Service department who had just agreed their budget for the coming year, part of that budget was to achieve a Gross Profit on all subcontract work of 20%.

“After one month of trading, the month end accounts showed a gross profit of 16.67% on subcontract work.

“We helped the Service Manager understand why this was happening and the steps to take to achieve the target profit and the very next month the 20% target was achieved.”

Fourmative have posed four gross profit questions and garage owners are advised to claim a a free guide to help them understand the calculations and improve profit.

  1. You buy a product at £3.42 and sell it at £4.99. How much gross profit % do you make?
  2. You buy some products at £48.00 per dozen. At what price do you sell them (each) if you want to retain a gross profit of 18%?
  3. You buy a product that retails at £38.52 and you receive a 34% discount off it. At what price do you sell it if you wish to retain a 24% gross profit?
  4. You buy a range of parts at retail less 60%. What discount can you give to potential customers if you wish to retain a 28% gross profit?

Gary added: “These calculations are key for any anyone who buys and sells and a must for all garage owners.”

To request your free guide, select ‘more details’ below.

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