As a six-location shop owner and someone who spends a lot of time helping others scale their businesses, I’m always studying on how to best scale, how to avoid pitfalls, and as my friend Jack Crowley says “I will gladly pay the idiot tax”–Meaning he will pay to learn from others who have done what he wants to do, and learn from their mistakes.
A recent article I came across talked about a KPI rarely talked about in our industry and it got me thinking. So I ran my very first Facebook survey, it was a lot of fun, and some great conversations came out of it. We’ve all heard plenty about car count, gross profit margins, and average repair order (ARO). I believe there is one that deserves more attention: Revenue Per Employee (RPE).
I asked fellow shop owners to share two key numbers: their annual revenue and the total number of employees on their payroll. Over 100 shop owners responded, representing shops of all sizes and from all over the country. The responses ranged from one-man operations to multi-location businesses generating millions. The variety of the data made one thing clear, RPE offers a fresh lens through which to view the efficiency and health of a shop.
This is what my findings are, based on the survey results:
- The Average RPE: Most shops reported RPE in the range of $200,000 to $300,000. This seems to be the sweet spot for the industry, but as always, there were exceptions.
- Top Performers: Some shops pushed well past the $300,000 mark, with a few hitting $400,000+. These high performers tended to be smaller shops with lean teams and tight systems. However, scalability and owner burnout were often concerns in these cases.
- Lower RPEs: On the other hand, some shops fell below $200,000 per employee. This was usually attributed to a mix of factors: Opening new locations, underpriced services, inefficiencies, or teams that included a higher percentage of non-revenue-generating roles, like shuttle drivers or admin staff.
- 40% of respondents reported RPE between $200,000 and $300,000.
- 25% of shops exceeded $300,000, with a handful hitting remarkable numbers like $450,000.
- 35% fell below $200,000, with many citing challenges like new hires or growth pains.
Small shops with just a few employees dominated the top RPE brackets. One single-owner shop reported pulling in $240,000 annually. Another shop, with a team of three, hit $460,000 per employee by focusing on high-margin work and efficient processes. But there’s a flip side to this: scalability. Lean teams leave little room for error, and if the owner is heavily involved in day-to-day operations, it can limit growth and lead to burnout.
Shops with 6 to 12 employees seemed to find a balance between efficiency and scalability. These shops averaged around $250,000 RPE, with the strongest performers achieving over $300,000. The key? Clear role definitions and a focus on productivity. These shops often invested in tools like digital vehicle inspections (DVIs) and had strong technician-to-advisor ratios (usually 3:1 or 4:1).
Larger operations (12+ employees) tended to hover around $200,000 to $250,000 RPE, though there were exceptions. One multi-location business with 35 employees reported an impressive $408,000 RPE, citing strong systems and disciplined leadership. However, larger shops often include more non-revenue-generating roles, which can pull the average down.
Revenue Per Employee is more than just a number. It’s a reflection of how well your team is working together, how efficient your processes are, and how confident you are in your pricing. It can also be an early warning system for issues like too much payroll, inefficient workflows, or underperforming team members.
For example, several respondents noted that raising their labor rates had an immediate and positive impact on RPE. One owner said, “We’ve been underpricing ourselves for years, and it wasn’t until we bumped our rates that we realized how much revenue we were leaving on the table.”
Another key driver of high RPE was leveraging technology. Shops that used tools like DVIs or real-time KPI dashboards consistently outperformed those relying on manual processes. As one owner put it, “You can’t improve what you don’t measure.” If you’re in growth mode, it’s important to know that your RPE might take a temporary dip. Shops that had recently opened additional locations or added staff often reported lower RPE during the adjustment period. One shop owner shared how their RPE dropped from $300,000 to $250,000 after opening a third location but noted, “It’s a short-term pain for long-term gain. Once our new hires get up to speed, we expect to be back on track.”
How to Improve Your RPE
Improving RPE isn’t about squeezing every last drop of productivity out of your team, it’s about working smarter. Here are a few steps to consider:
- Roles: Make sure every employee has a clear role and is contributing to the bottom line. Invest in training to improve your team and boost productivity.
- Pricing: If your pricing doesn’t reflect your expertise, it’s time for an adjustment. Confident pricing goes a long way toward improving margins and RPE.
- Growth Strategy: If you’re expanding, have a strategy to maintain RPE as you onboard new staff or open additional locations.
What I loved most about the responses to this survey was the honesty. Shop owners shared not just their numbers but the stories behind them, the challenges, the wins, and the lessons learned. It reinforced something I’ve believed for a long time: we’re better when we share ideas and learn from each other.
Revenue Per Employee might not be the first KPI you think of, but it’s one that can offer insights into your business. It forces you to ask tough questions: Are your employees working efficiently? Are your processes optimized? Are you pricing confidently? These are the questions that drive success.
So, what’s your RPE? And more importantly, what could it be if you made just a few changes?
