Financial Analyst with 15+ years experience in small business finance and trade service profitability.
Find out how many repair jobs your auto shop needs to complete to cover all costs. Enter any three variables—Monthly Fixed Costs, Avg. Revenue per Repair, Avg. Cost per Repair, or Breakeven Repairs—to solve for the fourth.
Mechanic Breakeven Calculator
Auto Repair Breakeven Formula
The breakeven formula for an auto mechanic or garage finds the number of repair orders (Q) you must complete for your revenue to cover all monthly fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Revenue per Repair (P):
P = (F / Q) + V
Solve for Avg. Variable Cost per Repair (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead (e.g., garage rent, utilities, support staff salaries, insurance, diagnostic software subscriptions, tool/lift payments).
- Avg. Revenue per Repair (P): Your average *collected* revenue per repair order (R.O.).
- Avg. Variable Cost per Repair (V): The average cost directly tied to one repair (e.g., parts, fluids, shop supplies, mechanic’s commission if paid per-job).
- Breakeven Repairs (Q): The total number of repair orders you need to close each month to reach $0 in profit.
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What is a Mechanic Shop’s Breakeven Point?
A **Mechanic Shop’s Breakeven Point** is the exact number of repair orders (Q) you must complete each month to cover all of your costs. It is the minimum number of cars you need to service to stop losing money and start paying yourself profit. This number is the most important metric for managing a profitable garage.
**Fixed Costs (F)** are your consistent monthly overhead, whether you service 5 cars or 500. This includes your garage rent or mortgage, salaries for your service writers and office staff, liability insurance, lift payments, and diagnostic software fees.
**Variable Costs (V)** are costs that occur *only* when you perform a repair. The most obvious is **parts**. This also includes shop supplies (rags, chemicals, gloves), and any commissions you pay to mechanics based on the job they perform.
The **Contribution Margin** (P – V) is the profit from a single repair that goes toward paying your fixed costs. If your average repair order is $450 (P) and your average parts/supplies cost is $150 (V), your contribution margin is $300. This calculator finds how many $300 “profit chunks” you need to cover your total fixed costs.
How to Calculate Mechanic Breakeven (Example)
Let’s calculate the breakeven point for a 2-bay auto shop.
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Identify Monthly Fixed Costs (F):
Your garage rent is $6,000, service writer salary is $4,000, insurance/utilities are $3,000, and tool/software costs are $2,000. Your (F) is $15,000.
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Identify Avg. Revenue per Repair (P):
You find that your average repair order, after all collections, is $450.
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Identify Avg. Variable Cost (V):
For an average $450 job, you use about $150 in parts and shop supplies.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per repair: $450 (P) – $150 (V) = $300.
Next, divide the fixed costs by this margin:
Q = $15,000 / $300 = 50 -
Conclusion:
You must complete 50 repair orders each month at this average rate to cover all your shop’s costs. The 51st repair order is your first one that generates profit.
Frequently Asked Questions (FAQ)
It depends. If you pay your mechanic a flat weekly salary or hourly wage (e.g., $30/hr), their pay is a **Fixed Cost (F)**. If you pay them a commission or “flat rate” *based on the jobs they complete*, their pay is a **Variable Cost (V)**.
You must find the *average*. At the end of the month, divide your total revenue from repair orders by the total number of repair orders you completed. For example: `$45,000 / 100 R.O.s = $450` Avg. Revenue (P).
Parts markup is *how* you generate your (P). (P) is the final price the customer pays (labor + parts markup). (V) is what *you* paid for those parts. The difference is your profit margin, which helps cover your (F).
Estimate the cost of the new bay and equipment (e.g., $3,000/month). Add this to your (F). If your (F) goes from $15,000 to $18,000, your new breakeven point becomes `$18,000 / $300 = 60` repairs. You must determine if you can find 10 more repairs per month to justify the expansion.