Auto Parts MarkUp: Why It’s Not a Ripoff

Auto Parts Markup and What It Covers

Let me lay it out for you. If you just picked up your car from the shop, saw the auto parts cost on your invoice, then Googled the part and found it online for way less, I already know what you’re thinking: “I got ripped off.” Trust me—you didn’t. I’ve been in this industry for decades, and I’m going to explain why the auto parts markup exists, what it covers, and how much auto repair shops mark up parts—fairly, and for good reason.

Online and Local Auto Parts Prices Are Irrelevant

You can buy just about anything online cheaper than from a brick-and-mortar store. So, right off the bat, it’s an unreasonable comparison. The first thing I tell customers who bring up cheaper online parts is this: Those prices mean nothing to me. I can’t wait three to five days for a part to ship from RockAuto or Amazon. Your car is already on the lift, half taken apart. I need that part right now, not next week. That’s why I order from local parts stores or dealerships that deliver within 30 minutes. That speed, reliability, and convenience come at a premium—and that’s part of the auto repair shop parts markup.

Yes, you can buy this alternator at the auto parts store for $325. But I have to add an auto parts markup to cover all my costs and still make a profit.

Okay, but you argue that you can pick up an alternator at the same auto parts store for $325 and deliver it to the shop in 30 minutes. Yet, I quoted you $575 for the same alternator. In other words, I applied a 77% parts markup, which is slightly less than the average of 100%.

What you’re missing is that the $325 price isn’t the full cost. You’re not accounting for your time and risk. To calculate the real cost, count in your time and mileage to go to the auto parts store, buy the part and deliver it to me. Then, add in the costs associated with getting a defective part out of the box or have to pay me to replace it 6 months if it fails while under warranty. I have to include all those costs in my quote because that time and risk come out of my pocket.

To summarize: Once I diagnose the problem with your car, I have to locate the part and wait for it to arrive. If my go-to supplier doesn’t have it in stock, I have to keep calling around until I find a place that has it in stock and can deliver it quickly. This brings up the next point; from the moment I finish the diagnosis until the part arrives, my repair bay isn’t making any money. I’m not going to move your car out and start work on another if the part is going to arrive within the next 30-45 minutes. That dead time isn’t built into my hourly labor rate, and somebody has to pay for it. In addition, there are bookkeeping costs associated with getting the parts costs onto your invoice and bookkeeping costs assocaitate with paying the parts suppliers at the end of the mont.

Auto Parts Markup Percentage Is Standard in ALL Businesses

Let me be clear: The parts markup percentage in auto repair isn’t out of line compared to other retail businesses. Wondering how much auto repair shops mark up parts? It typically ranges between 66% and 100%, depending on the type of part and the supplier. That’s no different than what electricians, contractors, or appliance repair techs do.

You can buy a sump pump at a big-box store for $150, but if you hire a plumber, you’ll pay $300 for the same unit. That’s not a scam—it’s standard business practice. The auto repair shop parts markup works the same way.

Auto Parts Markup Covers More Than You Think

When I install a part, I take on the liability. If it fails within the warranty period, my supplier might hand me a replacement, but no one pays me to remove the defective part and install the new one. That labor comes straight out of my pocket. So, yes, the parts markup percentage includes a buffer to cover that future risk.

It also covers the time spent sourcing the part. I don’t just press a button and poof—it’s here. I’ve got to search local inventories, make phone calls, and manage delivery delays. That time costs money. And while you’ll never see a line item on your invoice for “admin time,” the auto repair shop parts markup covers that too.

Then there’s the downtime. While I’m waiting for a part to arrive, that repair bay is tied up and not making me any money. That’s lost productivity I have to account for—and I do that through the parts markup percentage.

Labor Rate And Parts Profit Is What Keep A Business Afloat

A common misconception is that my hourly labor rate includes profit from parts. It doesn’t. My labor rate covers technician wages, payroll taxes, insurance, overhead, building costs, licensing, software, and some profit. That’s it. The auto repair shop’s parts markup is its revenue stream—necessary to keep the lights on and the doors open. Why would I even bother providing parts if I didn’t make money on parts? I’d tell you to bring your parts and shift all the risk to you for ordering the wrong part, getting a defective part, or covering the labor cost if it fails during the warranty period.

When someone brings in their part and expects me to install it, they’re asking me to give up that revenue stream—and assume the risk if the part fails. That’s why many shops either flat-out refuse to install customer parts or charge a higher labor rate to compensate for the lost profit.

So How Much Do Auto Repair Shops Mark Up Parts?

Let’s talk numbers. Say I buy a part from a local supplier for $340. If I sell it to you for $580, I make $239. That’s a 41.2% gross profit—a reasonable margin. If I sell it for $681, that’s a 49.9% gross profit.

Or if I go through the dealer and pay $439 for the same part, then sell it to you for $700, I’m making a 37.1% gross profit. All of these are normal retail margins.

Still think you’re being gouged? Let’s compare auto repair shop profit margins to other industries:

Restaurants: 61%
Optical: 57%
Home furnishings: 47%
Women’s clothing: 46%
Auto parts stores: 37%
Tire stores: 36%
Auto Repair Shops: 30%

So again, when you ask how much do auto repair shops mark up parts, realize that it’s in line with—or even lower than—many other industries you buy from every day without blinking.

What the Parts Markup Pays For

Let me break it down one last time. The auto repair shop parts markup pays for:

• The risk of part failure under warranty
• The time spent sourcing and ordering parts
• The lost productivity while waiting for delivery
• The admin work of ordering the part, billing it to the job, and bookkeeping costs associated with paying the parts suppliers every month.
• The warranty I provide on the complete repair
• A fair profit to keep my business running

And no, it’s not greedy—it’s essential.

Rick’s Final Thoughts on Auto Repair Shop Parts Markup

You came here wondering how much auto repair shops mark up parts, and now you know: we mark them up enough to cover our costs, stay in business, and provide the professional service you depend on. The parts markup percentage isn’t a hidden scam—it’s a clear, fair, and necessary part of doing business in a real-world shop where speed, reliability, and expertise matter.

©, 2021 Rick Muscoplat