How to calculate gross profit per new unit at a motorcycle dealership

In the competitive world of motorcycle sales, understanding and optimizing your dealership’s financial metrics is crucial for sustained success. One key indicator of financial health is the gross profit per new unit (GPNU), a metric that provides valuable insights into the profitability of each sale. In this blog post, we’ll delve into the detailed calculation process for determining the gross profit per new unit at your dealership.

Calculation Method

The formula for calculating gross profit per new unit is straightforward yet comprehensive. It involves subtracting the cost of goods sold (COGS) and any discounts provided from the total sales, and then dividing this result by the number of new bike sales made per month. However, it’s essential to note that certain elements must be included or excluded to ensure accuracy.

Included in Sales

  1. Pre-delivery costs: These internal charges, reflecting the full retail cost of both labor and parts associated with pre-delivery, should be included in the sales figure. This accounts for the necessary work to prepare a new bike for the customer.

 

Excluded from Sales

  1. Accessories sold with the new bike: To accurately calculate gross profit per new unit, exclude the cost of accessories bundled with the motorcycle. This cost will be factored in separately.

  2. Labor to fit accessories: Similar to accessories, the labor costs associated with fitting accessories should not be included in the sales figures. This ensures a clear separation of costs.

  3. Registration and on-road costs: These costs, including registration fees and on-road expenses, should be accounted for separately. They do not contribute to the sales figures.

  4. Taxes: Taxes should be excluded from the sales figures to maintain accuracy in the calculation of gross profit.

Cost of Sales

Included in Cost of Sales

  1. Pre-delivery costs (including fuel): Just like in the sales figure, pre-delivery costs, including fuel, should be included in the cost of sales. This reflects the true expenses associated with preparing a new bike for the customer.

  2. The cost of giveaways. Any costs associated with promotional giveaways should be factored into the cost of sales.

Excluded from Cost of Sales

  1. Accessories sold with the new bike. The cost of accessories bundled with the motorcycle should not be included in the cost of sales.

  2. Labor to fit accessories: Similarly, labor costs associated with fitting accessories should be excluded from the cost of sales.

  3. Registration and on-road costs: These costs should be treated separately and not included in the cost of sales figures.

  4. Taxes: To ensure accuracy, exclude sales taxes from the cost of sales figures.

Conclusion

Calculating gross profit per new unit at your dealership involves meticulous attention to detail and a clear understanding of what should be included or excluded. By adhering to the outlined formula and considering the specific elements mentioned, you can gain valuable insights into the profitability of each sale. This data empowers you to make informed decisions, optimize your sales strategy, and ultimately drive the financial success of your dealership in the highly competitive motorcycle market.

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