Workshop profitability is what remains after you subtract parts cost, labour and a share of fixed overhead from the revenue on a job. Revenue is not profit: a workshop turning over ₺300,000 a month can be losing money if nobody is keeping the count.
This post works through the hourly labour rate, parts margin, mechanic commission and break-even point with example figures. The numbers are illustrative — fill in the same tables with your own costs.
Start with fixed costs
You cannot price anything without knowing your monthly fixed cost. An example workshop:
| Item | Monthly |
|---|---|
| Rent | ₺25,000 |
| Mechanics (2, gross) | ₺90,000 |
| Electricity, water, gas | ₺8,000 |
| Accounting, software, phone | ₺5,000 |
| Consumables (cleaning, cloths, sprays) | ₺4,000 |
| Other (tax, insurance, upkeep) | ₺8,000 |
| Total | ₺140,000 |
That ₺140,000 is what you pay even if you take no work at all.
The hourly labour rate
Setting the hourly rate at "whatever the market charges" is the most common mistake. The calculation:
Two mechanics, 22 days a month, 8 hours a day = 352 theoretical hours. But no workshop sells all its capacity: waiting, hunting for parts, talking to customers, cleaning. A realistic utilisation is 65%.
Sellable hours: 352 × 0.65 = 229 hours
To cover fixed costs from labour alone:
₺140,000 ÷ 229 = ₺611 per hour
That is the break-even figure, not profit. For a 25% margin the rate needs to be ₺764. Every hour sold below that has to be made up from parts margin.
Parts margin
Parts have two prices: purchase and sale. Margin is typically 20–40%.
But the number to watch is not the percentage, it is turnover × margin:
- Brake pads moving 40 units a month at ₺50 each: ₺2,000
- An exhaust moving 2 units a month at ₺400 each: ₺800
The high-margin slow mover earns less than the low-margin fast mover — and ties up cash on the shelf for longer. We went further into this in the inventory post.
The profit on one work order
Example: a 20,000 km service.
| Item | Amount |
|---|---|
| Invoiced to customer | ₺4,200 |
| Parts purchase cost | −₺1,500 |
| Labour (2.5 hours × ₺611 cost) | −₺1,528 |
| Gross profit | ₺1,172 |
| Mechanic commission (10% of labour) | −₺153 |
| Net profit | ₺1,019 |
₺1,019 net per job. How many of those a month cover fixed costs?
₺140,000 ÷ ₺1,019 ≈ 137 jobs
That is break-even. Every month below 137 is a loss; every job above it is net profit.
Setting mechanic commission
Three common models:
Percentage of labour. The most common and the fairest. The mechanic earns by working faster, and has no incentive to push parts.
Percentage of revenue. Risky: it pushes mechanics towards expensive parts, because commission comes off parts too.
Flat fee per job. Encourages short jobs and discourages long, difficult ones.
In practice 8–15% of labour works. To calculate commission at all, every work order needs duration and mechanic filled in — which is why we treat both as mandatory in the work order post.
What moves profit most
Three levers, with very different effects:
Utilisation. Going from 65% to 75% takes sellable hours from 229 to 264. That is 35 extra hours sold against the same fixed cost: roughly ₺21,000 of additional revenue a month. It requires no investment, only fewer jobs sitting idle.
Returning customers. If service reminders bring 10 extra jobs a month, that is ₺10,190 in net profit, against a few hundred lira of messaging cost.
Raising prices. Lifting the hourly rate 10% has the fastest effect but risks losing customers. Try the other two first.
You cannot manage what you do not measure
Every calculation here depends on one condition: parts purchase price, duration and mechanic recorded on every work order. In a notebook that data is either missing or impossible to aggregate — we covered why in the migration post.
Ridebase Garage keeps per-work-order cost, parts margin and mechanic commission in the same panel, so the month-end report is not calculated by hand. Details on the motorcycle service software page.