Ask ten garage owners what they make on parts and most will say "about 30%". Ask whether that's markup or margin and the room goes quiet. The two sound the same but they aren't, and mixing them up quietly costs a garage thousands of pounds a year. Here's the difference, what to mark parts up by, and a calculator that does the sum for you.
Markup vs margin: the difference in one example
Markup is the profit as a share of what the part cost you. Margin is the profit as a share of what you sold it for. Same pound of profit, two different percentages.
Markup and margin calculator
Pick whether you know your markup, or know the margin you want to keep. The calculator gives you the selling price and shows both percentages side by side.
Use what the part cost you. If you're not VAT registered, use the price including the VAT you paid.
Sell it for£60.00
A 50.0% markup only keeps 33.3% of the sale price. That gap is where most garages lose money.
The conversion table
Pin this up in the office. It's the one most garages need.
| Markup on cost | Margin you keep | £40 part sells for |
|---|---|---|
| 25% | 20.0% | £50.00 |
| 33% | 24.8% | £53.20 |
| 43% | 30.1% | £57.20 |
| 50% | 33.3% | £60.00 |
| 67% | 40.1% | £66.80 |
| 100% | 50.0% | £80.00 |
The rule of thumb: to keep a margin, divide the cost by (1 minus the margin). For 40% margin on a £40 part: £40 ÷ 0.6 = £66.67.
How much should a garage mark up parts?
There's no legal or industry standard. Most independent garages work somewhere between 25% and 60% markup on trade price, depending on the part. Experienced garage owners often aim for an overall margin of 35% to 50% on parts across the year. Most garages use a sliding scale, not one figure for everything.
| Type of part | Typical markup | Why |
|---|---|---|
| Small parts under £20 (bulbs, wipers, clips) | 60% – 100%+ | The time to order, fit and invoice is the same however cheap the part |
| Service parts (filters, plugs, pads) | 40% – 60% | High volume, and customers rarely price-check them |
| Mid-price parts (£50 – £250) | 30% – 45% | The bulk of repair work |
| Expensive parts over £250 (clutches, turbos) | 20% – 30% | Customers do check prices online on big items |
| Tyres | £10 – £25 per tyre, or 15% – 25% | Customers compare tyre prices online more than anything else |
| Oil | Price per litre, 100%+ on bulk | Bought in bulk, sold by the litre |
VAT and parts pricing
If you're VAT registered, do all your parts maths before VAT. You claim back the VAT you paid on the part, so your cost is the price before VAT. Add your markup to that, then add VAT to the selling price at the end.
If you're not VAT registered, your real cost is the price including the VAT you paid, because you can't claim it back. A filter that costs £8.50 plus £1.70 VAT costs you £10.20. Put your markup on £10.20, not £8.50, or you lose the VAT from every part you sell. This is one of the most common ways small garages give money away without noticing. More on this in should a small garage register for VAT?
Five ways garages lose money on parts
- Pricing from an old cost. Trade prices rise several times a year. A price you typed in 18 months ago may now be under cost. Price each job from today's supplier price.
- Forgetting the small stuff. Cable ties, brake cleaner, copper grease, a clip that broke on removal. Either charge for them on the job or add a small fixed sundries charge, and say so on the estimate.
- Returns nobody sends back. A wrong part sitting on the shelf for three months is money gone. Send returns back the same week and check the credit comes through.
- Customers bringing their own parts. You lose the parts profit and you carry the risk if the part fails. If you allow it, charge a higher labour rate and give no warranty on the part. Make it clear in writing.
- Not checking supplier invoices. Check your supplier's statement against what you ordered each month. Mistakes happen, and they don't always go in your favour.
Should I show the parts price separately?
Yes. Itemised estimates build trust and cut arguments over the bill. Customers don't need to see your cost or your markup, only the price of each part and the labour. If a customer finds the same part cheaper online, explain what you add: the right part first time, a fitting warranty and no wait. Most customers understand that, and the ones who don't are rarely worth chasing.
Your labour rate matters just as much as parts. If you haven't checked yours lately, try the calculator in garage labour rates UK.
Autex prices parts from your supplier's live trade price with your markup rules, and shows the profit on every job before you invoice it. See how parts work in Autex or book a demo.