Guides for Canadian shops · Pricing
How to set your parts markup at an auto repair shop
Parts are a big share of most repair bills, and the markup you put on them decides how much of that you keep. Here is how to pick a markup that covers your costs, holds up when customers compare prices, and stays the same on every job.
- Markup is based on your cost; margin is based on the selling price. Don’t mix them up.
- A tiered markup (higher on cheap parts, lower on expensive ones) usually beats one flat number.
- Set it once and apply it the same way on every job, not by feel.
- Check what you actually made on parts every month.
On this page
1Know markup from margin
These two get mixed up all the time, and the difference is real money.
Markup = (price − cost) ÷ cost
Margin = (price − cost) ÷ price
A part that costs you $50 and sells for $100 is a 100 percent markup but a 50 percent margin. If you aim for a 40 percent margin but put a 40 percent markup on parts, you only earn about 29 percent.
| Markup | Margin you keep |
|---|---|
| 25% | 20% |
| 40% | 28.6% |
| 60% | 37.5% |
| 100% | 50% |
2Decide what your markup has to cover
Parts markup is not just profit. It pays for the work around every part:
- Time spent looking up, ordering and receiving parts
- Returns, wrong parts and cores you chase back to the supplier
- Parts that fail early and get replaced for free
- Shop supplies and the small stuff nobody bills for
If your labour rate already covers your costs (see how to set your labour rate), parts markup is where much of your profit comes from.
3Use a tiered markup, not one flat number
With one flat markup, a $4 bulb earns you almost nothing for the time it takes to order, and a $600 part looks overpriced next to online prices. A markup matrix fixes both: higher markup on cheap parts, lower on expensive ones.
Example matrix
| Part cost | Markup | Example |
|---|---|---|
| Up to $10 | 100% | $8 part sells for $16 |
| $10.01 to $50 | 60% | $40 part sells for $64 |
| $50.01 to $200 | 40% | $120 part sells for $168 |
| Over $200 | 25% | $400 part sells for $500 |
A starting point, not a rule. Adjust the tiers to your market and your suppliers.
4Check it against what customers see
Customers look things up. Pick a few parts you sell every week, like brake pads, filters and batteries, and compare your price to what a customer would find at a parts store.
- You are far above: lower the tier for that price range. That part is the one customers will question.
- You are close or below: you have room on that tier, or your supplier cost is good. Keep it.
When a customer does ask, explain the difference plainly: you sourced the right part for their car, you install it, and you stand behind the job.
5Apply it the same way on every job
The biggest leak is not the markup you pick. It is markup typed by hand, differently by each person, on busy days. Set it once so every part is priced by the same rule, and limit who can change it on a job.
In Moibay you set a flat markup or turn on a parts markup matrix in Settings, and each part is priced automatically when it goes on a work order. You can lock markup so only admins change it, and Reports shows your parts profit each month. Try it with sample data in the demo shop.
Questions shops ask
What is the difference between markup and margin?
Markup is profit as a share of what the part cost you. Margin is profit as a share of what the customer paid. A $50 part sold for $100 is a 100 percent markup but a 50 percent margin.
Should every part get the same markup?
Usually not. A flat markup makes cheap parts barely worth handling and expensive parts look overpriced. A tiered markup (a matrix) charges more on small parts and less on big ones.
What if a customer finds the part cheaper online?
They are comparing a bare part to a part your shop sourced, checked, installed and stands behind. Explain that, and keep your prices on common parts in a range you can defend.
Should I install parts customers bring in?
Many shops don’t, or charge a higher labour rate and give no warranty on the part. Whatever you choose, write it down and tell customers before the job, not after.
How often should I review my markup?
Look at it when a supplier changes prices and at least once a year. Check what you actually made on parts in your reports, not just what the matrix says.