Is owning a gas station profitable? 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.
Profit Factors and Averages
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.
Additional Revenue and Costs
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 offer additional services, such as a convenience store or car wash, tend to make more money. Owning a gas station can be a rewarding enterprise as the demand for fuel in America is constant.
Profit Margins and Geographic Variations
- 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.
- Privately held gas stations have average profit margins of less than 2 percent.
- In Canada, most gas stations manage an average profit of 3c a litre after expenses, within a $30 billion annual industry.