Average Repair Order (ARO) is one of the most important indicators of a healthy and profitable automotive repair shop. Increasing and maintaining higher ARO allows your staff to work efficiently while making the shop more money in the process.
When it comes to running a profitable auto repair shop, successful owners recognize the balancing act between maintaining a proper car count and maximizing the average repair order (ARO) dollars.
The best-run shops know their break-even point: the number of cars needed on a weekly basis multiplied by the average dollar per job that will earn enough gross profit to cover operating costs and expenses.
There’s a common misconception among automotive repair shop owners regarding labor rates. Some owners feel they need to offer labor rates under the local market average to attract and retain customers, and they’ve been targeting low rates for years based on the competition. This mentality can drastically affect your profits.
Is your shop only open during normal business hours, say from 8am to 5pm? If so, you may be leaving money on the table.
Profitable repair shops capitalize on the demand for early morning and evening hours on both ends of the traditional workday because customers don’t want to (or can’t) take time out of their regular working hours to drop off or pick up their vehicle.