How Much Do Tire Shops Make Per Year?

‍How Much Do Tire Shops Make Per Year?

The competition in this industry is fierce, with many new start-ups opening each year and existing stores struggling to stay afloat. Tire shops make money by selling tires but also offer other services such as oil changes, alignments, and repairs.

This is the big question. While we can’t predict exactly how much money tire shops will make per year, we can look at the data and see general trends.

According to tire industry experts, the average tire profit margin is around 20%. This means that if you buy a tire for $100, you’ll sell it for $120. So, how much money do tire shops make per year?

Assuming you can sell as many times as possible, you can expect to make anywhere from $100,000 to a few million per year in revenue, and the profit margins vary based on tire margin and other services.

For example, many tire shops also offer services like installation and retreading to help increase income. The tire shop brand also impacts how much they make because many franchise opportunities are a big upfront investment, but they make more per year.

What Are the Costs of Opening a Tire Shop?

We’ve talked about profit margins and average tire prices, but we haven’t discussed the expenses of opening a tire shop.

There’s more to running a tire shop than just buying some tires and hanging an “Open” sign in the window.

You must account for costs like employee salaries, insurance, and utilities. If you want to open your own tire shop, it’s important to expect these costs.

Sure, it would be great if you could open your own business without worrying about costs, but that’s just not realistic. So, what are the costs of opening a tire shop?

When opening a tire shop, plan to spend at least $50,000-$100,000 on equipment, tools, and real estate. If the shop is a franchise, costs are even higher because the franchise fees start at $10,00 and range up to $50,000.

Other costs include things like permits and licenses, which vary depending on where the shop is located.

What Is The Average Profit Margin On Tires?

As we’ve seen, the average tire profit margin is around 20-30%. This means that if you buy a tire for $100, you’ll sell it for around $125.

That profit margin varies slightly depending on the type of tire. For example, tires for light trucks and SUVs generally have lower profit margins than passenger car tires.

Light truck tires have an average profit margin of around 20%, while SUV tires have an average profit margin of around 22%. The other aspect of profitability for a tire shop is the warranties and services offered.

Selling tires is the most stable and predictable source of income because the prices are set, and the margin is already calculated. Tire shops can improve profitability and net income by increasing sales or introducing new revenue streams.

Are Tire Shops Profitable?

We’ve seen tire shops generate as low as $25,000 in profit annually, and we’ve seen shops do unbelievable numbers. We’ve seen what goes into the cost of opening a tire shop and how much money each part of the process makes.

Now, we have to ask ourselves: Are tire shops profitable? In most cases, yes. It all comes down to whether the shop owner is managing their expenses properly.

The shop owner has to be frugal to keep the lights on and the doors open. This means that you have to spend your money wisely. Don’t blow it all on fancy cars and big, expensive offices.

Keep the expenses low, and it’s possible to have all the money needed to succeed.

What Is Most Profitable For Tire Shops?

Tires are the obvious answer when thinking about tire shop revenue. But it’s not always the most profitable solution, and other services exist.

For example, retreading is repairing a tire by removing the tread from it and putting a new tread on it. This is a lucrative service to offer, and it involves quickly retreading the tire for a cost of 30-50% of the original tire price.

Retreading a tire is cheaper than a new tire for customers too. This is why it’s a common practice to offer, but the initial equipment scares some new tire shops away.

Other profitable services include changing tires and patching tires for customers. These are additional add-on services offered by most shops to increase revenue.

Factors That Impact How Much Tire Shops Make Per Year

There are a few things to know before you start a tire shop. This includes the cost of starting a tire shop and how much money it can make.

A tire shop's revenue will depend on how many tires they sell and how much they charge for labor. But because there are many moving pieces in a business like this, other factors also impact revenue.

Tire Shop Band

The tire shop brand is an important factor to consider. For example, many franchise tire shops will make more money because they possess a sense of customer trust due to their branding.

But this also comes with increased costs like higher upfront investments and regular franchise fees. Increased costs can lead to lower profit for a tire shop.

Tire Margins

Tires are one of the most expensive components to purchase for a car, which is why they have a high-profit margin. The higher the profit margin on tires, the more money will be made by selling them.

This is because there is less risk involved in producing and selling tires with a high-profit margin than there would be with low-margin tires.

Service Offered

Next, tire shop owners should be looking for other ways to draw in customers rather than just selling tires. Diversifying the income of the shop can ensure long-term profitability.

However, this also means hiring new people in many cases. Consider some of the possible services that can be offered and how they impact how much a tire shop can make per year.

Store Location

Lastly, the store location will impact how much a business makes; the same is true for tire shops. This includes knowing competitors in the area and how well the tire shop can stand out compared to others.