Auto parts markup
Most repair shops price parts with a markup matrix: cheap parts get a high percentage markup and expensive parts a lower one, so the shop earns a fair gross profit across the board. A common target is a parts gross profit margin of around 40 to 50%. Whatever you charge, the estimate must show the price the customer is agreeing to.
Markup vs margin
Markup is profit as a percentage of cost; margin is profit as a percentage of the selling price. A part that costs $60 and sells for $100 has a 67% markup and a 40% margin. Mixing them up is the most common pricing mistake.
| Markup on cost | Margin on price |
|---|---|
| 50% | 33% |
| 67% | 40% |
| 100% | 50% |
Sample markup matrix
| Your cost | Multiplier | Example |
|---|---|---|
| $0–$10 | 3.0× | $4 → $12 |
| $10–$50 | 2.25× | $30 → $67.50 |
| $50–$100 | 1.85× | $80 → $148 |
| $100–$250 | 1.65× | $180 → $297 |
| $250+ | 1.45× | $600 → $870 |
This is an illustration, not a standard. Check your prices against list prices and what local shops charge, so a customer who looks up a part online isn’t shocked.
What goes on the estimate
- Each part with its price; many states require parts and labor to be itemized.
- Whether parts are new, used, rebuilt or aftermarket, where your state requires it.
- Fluids and small items as parts. California, for example, doesn’t allow a generic “shop supplies” line.
Customer-supplied parts
If you install a part the customer brought, you can’t earn the markup and you can’t vouch for the part. Many shops charge a higher labor rate or a handling fee and give no warranty on the part. Write that on the estimate before you start.
Prices the customer approves. WrenchTicket estimates list each part and labor line with totals and tax, apply state rules such as California’s itemization, and turn into the invoice after approval. Pro adds approval links by text or email. $15 a month.
Write an estimateQuestions
Is it legal to mark up parts?
Yes. What matters is that the customer agrees to the price on the estimate before the work.
Should dealers and independents use the same matrix?
Not necessarily. Dealers often price closer to list; independents compete on total job price. Watch your overall gross profit, not just one part.
How often should I update the matrix?
When your parts costs change noticeably, or at least once a year.
General information, checked November 1, 2026. Multipliers are an example; set your own from your costs and market.
Free PDF
Auto repair paperwork cheat sheet
What every estimate, repair order and invoice must show, the rules of the 10 largest states and a printable added-work approval log. We email it to you.