Retailers Make Very Little Selling Gas. Generally, the markup on a gallon of gas is about 15 cents per gallon. Factoring in expenses, a retailer is left with about 2 cents per gallon in profit.
In-Store Sales: The Real Moneymaker
The real money is made inside the store. Today, 80% of gas stations have a convenience store on site. According to a study, 44% of gas station customers go inside. Convenience store sales often have much higher profit margins than gasoline sales. In fact, convenience store sales account for the majority of profits for many gas stations.
Potential Earnings and Investments
Like any business, a gasoline station can be a good investment when well-located and well-run. They can generate healthy profits. Successful station owners can make $40,000 to as much as $100,000 annually with hard work and ancillary business.
Gas stations know that most consumers choose where to go solely based on price. After credit card fees and operating costs, net profit for gasoline sales averages 3 cents a gallon. Speedway is one of the most profitable gas station chains on the market.
Profit Calculation
Calculating the monthly profit margin of a gas station is essential to determine potential earnings. First, total all revenue, including sales inside and outside the store. Next, add up all expenses like payroll, utilities, taxes, and fuel costs. Subtract expenses from revenue to get monthly net profit.
A station’s location significantly impacts its bottom line. The average gross margin on gasoline is 15 cents per gallon. After expenses like rent and labor, about 2 cents per gallon profit remains. Additional contributors are car wash services and food sales.
Gas stations average a 1% net profit margin. With gas at $3.50 per gallon, they net 3.5 cents profit per gallon sold. West Coast owners average $60,000 in annual profit. Midwest owners average $61,000. South owners average $66,000. Building a new four-pump gas station costs $500K. Upgrading an existing station costs $200-300K. SBA loans best finance stations.