Air conditioning service: As the temperature rises, so can your monthly (and yearly) net profit
Offering air conditioning service takes commitment, both in time and money. Do it right, and you could add more than $20,000 a year to your bottom line.
In Florida, where the heat and humidity can be consistently stifling, almost every service outlet performs complete air conditioning service -- not just a cooling system flush. Nationwide, however, 59% of independent tire dealers offer it.
Exactly how beneficial can the service itself be to your business once the equipment is in place and your technicians have been properly trained? Modern Tire Dealer's 2007 Automotive Service Survey has the answers.
The average air conditioning service ticket price is $341, the highest of all the services commonly offered by a majority of tire dealers (transmission service and major engine work are not included). Look at how that compares to the average ticket prices for the following services:
* Alignment: $79
* Battery/electrical: $91
* Cooling system: $121
* Bearing/seal: $165
* Brake: $212
* Engine diagnostics: $222
* Exhaust system: $227
* Chassis/suspension: $301
* Shocks/struts: $305
The average number of jobs per month is nine (even in Florida, no one performs more than 25 a month).
That's an average of $3,069 a month in gross revenue offering air conditioning service.
The average profit margin per job for dealers who service air conditioning systems is 55%. Multiply that by gross revenue, and the average monthly profit potential is $1,688, or $20,256 a year.
Cooling system service isn't as equipment-intensive, so the return on investment is more immediate. However, potential profit is much less, according to survey respondents.
Nearly 70% of the dealerships offer the service. They average 13 jobs a month; at $121 a ticket, that accounts for $1,573 a month in gross revenue.
Based on an average profit margin of 47%, cooling system service brings in $739 a month in profit, or $8,868 a year.
If you add both air conditioning and cooling system services to your offerings, you can improve your bottom line by $29,124 annually.
Best Practice: Tips -- By the numbers
If you don't offer air conditioning service, here's an idea of what you can earn annually by performing it. If you do, use the following averages as a benchmark to decide if you are maxing out your profitability.
Number of jobs: 9
Ticket price: $341
Monthly gross revenue: $3,069
Average profit margin: 55%
Monthly net profit: $1,688
Yearly profit: $20,256
Source: 2007 MTD Automotive Service Survey