When shop owners talk about performance metrics, most focus on sales or car count. But there’s a number that tells a far more powerful story: Gross Profit per Hour (GPH).
At Repair Shop of Tomorrow, we coach shops across the country to track and improve GPH because it’s one of the clearest indicators of true shop efficiency and profitability.
What Is Gross Profit Per Hour?
GPH = Gross Profit Dollars ÷ Billed Hours
Example: $40,000 GP ÷ 250 Billed Hours = $160 GPH
This metric shows how much profit your shop earns for every labor hour billed. It combines labor, parts, pricing, and productivity into one powerful number.
Why GPH Matters
Here’s what makes GPH one of the most important KPIs for your shop:
- 📈 Measures Operational Efficiency
GPH reveals how effectively you’re turning billed hours into profit. If it’s low, something in your process is leaking money—whether it’s pricing, productivity, or staffing. - 💰 Enhances Financial Control
By knowing exactly how much profit is generated per hour, you can confidently set labor rates, adjust pricing strategies, and make smarter staffing decisions. - 🧠 Drives Profit Growth
GPH highlights how productive and profitable each job is, helping you refine workflow, improve technician performance, and optimize service offerings for maximum impact.
How GPH Drives Better Business Decisions
When tracked consistently, GPH gives you actionable insights into:
- Technician productivity and efficiency
- Labor rate effectiveness
- Parts and labor margins
- Workflow bottlenecks
- Pricing strategy gaps
Combined with KPIs like Effective Labor Rate and Hours Per Ticket, GPH gives you a complete financial picture of your shop’s performance.
Key Takeaways
- Use it alongside other KPIs to improve margins, efficiency, and accountability.
- GPH shows how efficiently your shop turns time into profit.
- It helps you control financial outcomes by exposing operational leaks.
- Track it regularly and benchmark against your goals.