This article was written by our expert who is surveying the industry and constantly updating the business plan for an auto repair shop.
Understanding the monthly expenses of an auto repair shop is crucial for anyone starting this type of business.
Auto repair shops face significant recurring costs that can range from $18,000 to $90,000 per month depending on size, location, and services offered. The largest expense categories typically include payroll costs, parts inventory, and facility rent or mortgage payments.
If you want to dig deeper and learn more, you can download our business plan for an auto repair shop. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our auto repair shop financial forecast.
Auto repair shops typically spend between $18,000 and $90,000 monthly across eleven major expense categories.
The three largest cost drivers are payroll expenses, parts inventory replenishment, and facility costs which together account for approximately 70-75% of total monthly expenses.
| Expense Category | Monthly Range (USD) | Notes |
|---|---|---|
| Payroll (wages, benefits, taxes) | $10,000 - $40,000+ | Largest expense for most shops |
| Parts & supplies inventory | $5,000 - $20,000 | Varies by shop specialization |
| Rent or mortgage payments | $1,500 - $15,000 | Location-dependent costs |
| Utilities (electric, water, gas, waste) | $500 - $3,000 | Higher for larger facilities |
| Insurance (liability, workers' comp) | $500 - $2,000 | Required business protection |
| Equipment maintenance & leasing | $500 - $1,000 | For lifts, tools, diagnostics |
| Marketing & advertising | $500 - $5,700+ | Digital and traditional channels |
What are the average monthly expenses for an auto repair shop, with a full breakdown by category and typical budget ranges in USD?
Auto repair shops typically face monthly expenses ranging from $18,000 to $90,000, depending on shop size, location, and services offered.
The expense breakdown includes eleven major categories with payroll being the largest at $10,000-$40,000 monthly, followed by parts inventory at $5,000-$20,000, and facility costs at $1,500-$15,000. Smaller expense categories include utilities ($500-$3,000), insurance ($500-$2,000), equipment maintenance ($500-$1,000), software subscriptions ($25-$400), marketing ($500-$5,700), towing services ($500-$2,000), licenses and permits ($50-$500), and miscellaneous expenses ($500-$2,000).
These ranges reflect data from established medium-sized independent auto repair shops across the United States. Urban locations and specialized shops typically fall toward the higher end of these ranges, while rural shops or those offering basic services tend toward the lower end.
You'll find detailed market insights in our auto repair shop business plan, updated every quarter.
How much is typically spent on rent or mortgage for the garage or shop location each month?
Auto repair shops typically spend between $1,500 and $15,000 monthly on rent or mortgage payments for their facility.
Location significantly impacts these costs, with urban shops in high-traffic areas paying $8,000-$15,000 monthly, while rural or suburban locations range from $1,500-$6,000. Shop size also affects pricing, as a basic 2-bay garage costs substantially less than a 6-bay facility with specialized equipment areas.
For mortgage payments, shops often pay similar amounts but must factor in additional costs like property taxes ($200-$1,000 monthly) and property insurance ($100-$500 monthly). Lease agreements typically include some utilities and maintenance, while owned properties require separate budgeting for these expenses.
Facility condition and amenities also influence costs, with newer buildings featuring modern electrical systems, proper ventilation, and customer waiting areas commanding premium prices.
What are the average monthly payroll costs, including salaries, benefits, and employer taxes for mechanics and administrative staff?
Payroll represents the largest monthly expense for most auto repair shops, typically ranging from $10,000 to $40,000 or more for shops with 3-8 employees.
| Position | Annual Salary Range | Monthly Base Cost | With Benefits/Taxes |
|---|---|---|---|
| Lead Mechanic/Technician | $50,000 - $65,000 | $4,200 - $5,400 | $5,900 - $7,600 |
| General Mechanic | $35,000 - $50,000 | $2,900 - $4,200 | $4,100 - $5,900 |
| Apprentice Mechanic | $25,000 - $35,000 | $2,100 - $2,900 | $2,900 - $4,100 |
| Service Writer/Admin | $30,000 - $40,000 | $2,500 - $3,300 | $3,500 - $4,600 |
| Shop Manager | $45,000 - $60,000 | $3,800 - $5,000 | $5,300 - $7,000 |
| Part-time Helper | $15,000 - $25,000 | $1,300 - $2,100 | $1,600 - $2,600 |
| Customer Service Rep | $28,000 - $35,000 | $2,300 - $2,900 | $3,200 - $4,100 |
Employer taxes and benefits typically add 20-40% to base wages, including Social Security, Medicare, unemployment insurance, workers' compensation, and health insurance contributions. Some shops also offer retirement plans, paid time off, and performance bonuses which further increase total payroll costs.
How much does the shop spend each month on parts and supplies inventory replenishment?
Auto repair shops typically allocate $5,000 to $20,000 monthly for parts and supplies inventory replenishment.
This expense varies significantly based on shop specialization, with general repair shops spending toward the lower end while specialized shops (transmission, engine rebuilding, or luxury vehicle service) often exceeding $20,000 monthly. The inventory mix includes filters ($500-$1,500), fluids and lubricants ($800-$2,000), belts and hoses ($600-$1,800), electrical components ($1,000-$3,000), and brake parts ($1,200-$2,500).
Shops typically maintain 30-60 days of inventory for fast-moving items like oil filters and spark plugs, while keeping minimal stock of expensive or specialized parts that can be ordered as needed. Seasonal fluctuations also affect spending, with higher inventory costs during peak service periods like spring and fall.
This is one of the strategies explained in our auto repair shop business plan.
What are the usual monthly utility expenses, including electricity, water, heating, and waste disposal?
Auto repair shops typically spend between $500 and $3,000 monthly on utilities, with costs varying by shop size, location, and equipment usage.
Electricity represents the largest utility expense at $300-$2,000 monthly, primarily driven by air compressors, hydraulic lifts, diagnostic equipment, and lighting requirements. Water costs range from $100-$500 monthly for parts washing, floor cleaning, and restroom facilities. Heating and cooling expenses vary seasonally from $200-$800 monthly, with shops requiring adequate ventilation systems for fume extraction.
Waste disposal costs $50-$300 monthly and include regular trash pickup, hazardous waste disposal for used oil and chemicals, and recycling services for metal parts and batteries. Some utilities offer commercial rates that can reduce costs, while energy-efficient equipment and LED lighting can significantly lower electricity expenses.
Larger shops with multiple bays and extended operating hours typically fall toward the higher end of these ranges.
What are the typical costs for liability insurance, workers' compensation, and other business-related insurances on a monthly or annualized basis?
Auto repair shops typically spend $500 to $2,000 monthly on comprehensive business insurance coverage.
| Insurance Type | Monthly Cost Range | Coverage Details |
|---|---|---|
| General Liability | $50 - $150 | Customer injury, property damage, advertising claims |
| Professional Liability | $100 - $300 | Errors in repairs, faulty workmanship claims |
| Workers' Compensation | $200 - $800 | Employee injury coverage, varies by payroll size |
| Property Insurance | $100 - $400 | Building, equipment, inventory protection |
| Commercial Auto | $150 - $400 | Shop vehicles, customer car coverage while in care |
| Cyber Liability | $25 - $75 | Data breach, customer information protection |
| Business Interruption | $50 - $150 | Lost income during forced closure |
Workers' compensation rates vary significantly by state and claims history, with shops maintaining good safety records paying lower premiums. Bundling multiple policies with one insurer often provides discounts of 10-20% compared to purchasing separate coverage.
How much is spent on equipment maintenance, repair, or leasing fees on a monthly average?
Auto repair shops typically allocate $500 to $1,000 monthly for equipment maintenance, repairs, and leasing fees.
This category includes preventive maintenance contracts for hydraulic lifts ($100-$200 monthly), air compressor servicing ($50-$150 monthly), and diagnostic equipment updates ($100-$300 monthly). Equipment leasing costs vary widely, with basic lift leases starting at $200-$400 monthly while comprehensive diagnostic systems can cost $500-$1,000 monthly.
Unexpected repair costs typically average $200-$400 monthly when spread across the year, though actual expenses vary significantly by month. Shops often establish maintenance contracts with equipment vendors to ensure predictable costs and priority service response.
We cover this exact topic in the auto repair shop business plan.
What are the monthly costs associated with software subscriptions for POS systems, invoicing, or diagnostic tools?
Auto repair shops typically spend between $25 and $400 monthly on software subscriptions for business management and diagnostic tools.
Basic point-of-sale systems start at $25-$50 monthly for simple invoicing and payment processing, while comprehensive shop management software ranges from $70-$200 monthly and includes inventory tracking, customer management, and scheduling features. Diagnostic software subscriptions cost $50-$150 monthly per workstation, with premium systems offering real-time updates and expanded vehicle coverage.
Additional software costs include accounting programs ($15-$50 monthly), customer communication platforms ($20-$75 monthly), and parts ordering systems ($25-$100 monthly). Many shops bundle multiple software needs with single providers to reduce overall costs and improve system integration.
Cloud-based solutions typically offer better value and automatic updates compared to traditional installed software requiring separate maintenance contracts.
How much is budgeted each month for marketing, advertising, and customer outreach?
Auto repair shops typically allocate $500 to $5,700 or more monthly for marketing, advertising, and customer outreach activities.
Digital marketing represents the largest portion, with Google Ads campaigns costing $1,000-$3,000 monthly in medium-sized markets for competitive keywords like "auto repair near me" and "brake service." Social media advertising adds $200-$500 monthly, while website maintenance and SEO services cost $300-$800 monthly.
Traditional marketing expenses include local newspaper ads ($200-$500 monthly), radio sponsorships ($500-$1,500 monthly), and direct mail campaigns ($300-$800 monthly). Customer retention programs like loyalty rewards, referral bonuses, and seasonal promotions typically cost $200-$600 monthly.
Shops in competitive markets or those seeking rapid growth often spend 5-8% of gross revenue on marketing, while established shops with strong word-of-mouth referrals may spend only 2-3% of revenue.
What are the average monthly expenses for vehicle towing partnerships or in-house towing operations?
Auto repair shops offering towing services typically spend $500 to $2,000 monthly on towing operations.
Partnership arrangements with local towing companies usually involve revenue sharing where the shop pays 20-30% of towing fees collected, resulting in costs of $500-$1,200 monthly for moderate volume. In-house towing operations require higher monthly expenses including truck payments or leases ($800-$1,500), commercial vehicle insurance ($200-$500), fuel costs ($300-$600), and operator wages ($2,000-$4,000).
Equipment maintenance for tow trucks adds $150-$400 monthly, while licensing and permits cost $50-$150 monthly. Some shops operate towing as a break-even service to attract repair customers, while others treat it as a profit center requiring careful cost management.
It's a key part of what we outline in the auto repair shop business plan.
How much does the business typically spend each month on licenses, permits, and inspection fees?
Auto repair shops typically spend $50 to $500 monthly on licenses, permits, and inspection fees, though many of these costs are paid annually.
Business licenses cost $100-$500 annually ($8-$42 monthly), while automotive repair licenses range from $200-$1,000 annually ($17-$83 monthly) depending on state requirements. Environmental permits for hazardous waste handling cost $300-$800 annually ($25-$67 monthly), and fire department permits for flammable materials storage add $150-$400 annually ($13-$33 monthly).
Professional certifications for technicians cost $200-$600 per person annually, while equipment certifications and calibrations add $500-$1,500 annually. Some jurisdictions require monthly or quarterly inspections with fees of $50-$200 per visit.
Shops should budget for annual renewal costs and potential fee increases, as regulatory compliance represents a necessary but non-negotiable expense category.
What amount is generally set aside monthly for miscellaneous or unforeseen operational expenses?
Auto repair shops typically reserve $500 to $2,000 monthly for miscellaneous and unforeseen operational expenses.
This emergency fund covers unexpected equipment breakdowns, such as lift hydraulic failures ($500-$2,000), air compressor repairs ($300-$1,500), or diagnostic equipment malfunctions ($200-$1,000). Facility issues like plumbing problems, electrical repairs, or roof leaks can cost $300-$2,500 depending on severity.
Additional unforeseen costs include regulatory compliance updates, emergency parts purchases for unusual repairs, temporary labor during employee absences, and customer accommodation expenses for service delays. Shops also use this buffer for opportunities like bulk parts purchases at significant discounts or urgent equipment upgrades.
Financial experts recommend maintaining 3-6 months of operating expenses in reserve, with this monthly allocation contributing to overall business stability and cash flow management.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
Understanding auto repair shop expenses is essential for business success, but it's just one piece of the financial puzzle.
Proper expense management, combined with strategic pricing and efficient operations, determines the difference between profitable and struggling auto repair businesses.
Sources
- BayIQ - Auto Repair Shop Monthly Expenses Budget
- Pro Built Steel - Profit and Cost of Auto Repair Shops
- Business Plan Templates - Auto Repair Shop Running Costs
- FinModelsLab - Auto Repair Shop Operating Costs
- Dojo Business - Auto Repair Shop Budget Requirements
- Vantage Point Risk - Auto Repair Shop Insurance Cost
- Insureon - Auto Repair Mechanics Insurance Cost
- Auto Repair Bill - Software Pricing
- ARI - Auto Repair Software Price
- Shop Marketing Pros - Google Ads Budget