Profits in the Parts Department


Is it the function of the Parts Department, basically, to provide parts for the Service Department? 

If the answer to this question is yes, then it isnít necessary to track, in great detail, the profitability of your parts area.  However, if you are selling a significant amount of parts over the counter, and have a at least one part or full-time parts department person, you should be tracking just how much this department is contributing to the overall profit picture of the business. 

After all floor space, light, heat, telephones, etc. are being used. 
In addition, the parts inventory is costing you at least 8% per year, and this results in a lot of money spent
($
20,000 in inventory costs you $1600 per year just taking up space).

The percentage mark-up on parts is probably the best of all the products you have in your store. In some cases, you can make 100%, but remember,  you donít pay the light bill with percentages. I explained, in the Showroom section, that percentages could be very misleading, when it comes to how much youíre making. Take 
a seventy-five cent gasket, that has a fifty-percent mark up. You made thirty-eight cents, and that is before you subtract shipping and overhead.

Profits from the Parts Department should be an important contribution to the business. I can demonstrate how to measure and increase the profits. 

Donít ignore the potential that exists and could be maximized with just a little effort.


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