Calculating Profit Margins
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. Do not count discounts or refunds. 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. Convenience store sales generate higher profits than gasoline. 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. Starting a profitable gas station takes significant effort and capital.
Revenue Streams and Earnings
Gas station owners can earn between $40,000 – $100,000 per year depending on location, size and type of gas station, and additional services offered. With slim profit margins of $0.03-$0.07 per gallon on gas sales, you can enhance the profitability of your gas station by adding a convenience store, car wash, mechanic services, or food options.
Gas stations that do more than serve gas tend to make more money. Gas stations are a great business to franchise because the demand for fuel in America is constant and not going anywhere.
After credit card fees and other operating costs, net profit for gasoline sales averages 3 cents a gallon.
For gas station owners in the Northeast, you could expect to earn an average of around $69,000 per year.
Profit Margins and Industry Overview
Privately held gas stations are barely growing revenues and seeing average profit margins of less than 2 percent. A good average profit margin is considered to be 10%.
Gas Station Industry in Canada
In Canada, gas stations manage an average of 3c a litre profit after expenses. The gas station industry in Canada is worth $30 billion annually, and there are 6,613 gas stations serving the market.