How much does it cost to open a gas station? The initial costs of opening a gas station range on average from $250k to $2 million even for a small gas station. Also, unless you have access to large stockpiles of motor-grade gasoline, you must enter into an agreement with a gasoline supplier.
Startup Costs Breakdown
What are the startup costs for a gas station? You should expect to secure at least $300,000 to cover costs like:
- purchasing the location
- installing fuel dispensers and underground storage tanks
- buying an initial fuel supply
Loans and government small business funding can help cover these expenses.
Profitability and Earnings
What impacts potential earnings? A station’s location significantly affects its bottom line. Gasoline carries low profit margins, while convenience store sales generate higher profits. Additional profit sources are car wash services and food sales.
What is the average gas station profit margin? Gas stations average a 1% net profit margin. At $3.50 per gallon, they net 3.5 cents profit per gallon sold. Owners across the country average $60,000 to $66,000 in annual profit.
How much does it cost to open a new or existing gas station? Building a new four-pump gas station costs around $500K. Upgrading an existing station costs $200-300K. SBA loans best finance stations.
Is a gas station a good investment? Starting a profitable gas station takes significant effort and capital. But convenience store sales can make up for low fuel profit margins over time.
Assessing Gas Station Profits
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.
After expenses like rent and labor, about 2 cents per gallon profit remains. Fixtures and equipment range from $10,000 to $100,000. Construction builds out a station and equipment meet safety regulations.
The gas station industry brings in $89 billion annually. Visit our guide on how to start your own gas station and whether it is the right fit. Choosing the right business name is important and challenging. If you operate a sole proprietorship, you might want to operate under a business name.