Parts Used vs. Parts Billed: Fix the Leak, Save Your Margin

If your parts margin looks solid but something still feels off in your numbers... it might be time to take a closer look at the parts you're not billing. 

This isn’t about pricing or markups. It’s about the parts you’re already using that aren’t showing up on the repair order. And if those parts aren’t making it onto the ticket, they’re not making it to your bottom line either. 

Let’s talk about where this profit leak is really happening—and how to stop it. 

What is parts margin? 

Before we dig into where things go wrong, let’s talk about what you’re aiming for.

Your parts margin is the difference between what a part costs you and what you sell it for. 

🤔Example: You sell a part for $100 that cost you $40 – your gross profit is $60. That’s a 60% parts margin.

Margins like that are what keep your shop profitable. But here’s the catch: if the part doesn’t make it onto the repair order, your margin drops to zero—and you’re also out the cost.

That’s the core issue we’re tackling in this post: parts that get used, but never billed.

🔎Related: Markup and Profit Margin: How Auto Repair Shops Can Price Smarter

Where the leak starts 

You order the parts. Your team installs them. But somewhere between delivery and billing, parts go missing from the repair order. Not physically missing—they just don’t get entered into the system. 

Sometimes it’s a $0.50 drain plug gasket. Sometimes it’s a $50 hose. Either way, if it’s not on the RO, you’re eating the cost and losing the markup. 

🤔Example: You install a $20 hose but forget to bill it. With a 5x markup, that’s $100 in revenue lost—and you’re $20 in the red. 

And this isn’t just a one-off mistake. We’ve seen shops with as much as $5,000 to $50,000 a year in parts that were purchased, installed, and never billed. 

Signs you might have a parts billing problem: 

• Your gross profit on parts seems lower than expected 
• Inventory numbers feel off month to month 
• You buy the same small parts often, but they rarely appear on ROs 
• You’re seeing good car count but margins aren’t keeping up 

Shop Check: Are your techs and service writers clear on who’s responsible for making sure every installed part gets billed? 

How it happens 

In most cases, it’s not theft or bad intentions—it’s just a process gap. Parts might be added during a job but never updated on the RO. Techs might skip over small items, like a bulb or fluid top-off. Bulk materials like oil or brake fluid may not get properly tracked. If there’s no system in place to reconcile what’s used with what’s billed, that gap becomes a profit leak. 

How to catch it 

You don’t need to overhaul your whole system. But you do need a process that compares what you buy to what you bill. 

Here are three ways shops are doing it:

1. Use your shop management system better

Most shop management systems, like Tekmetric, let you track inventory and connect parts to ROs. But the system is only as good as the data you feed it. Make sure: 

• All parts received are entered 
• All billed parts are tagged to the RO 
• Your inventory count is clean and updated 
• You’re reviewing trends regularly to catch what’s falling through the cracks 

📝Back-of-napkin math: If you miss just $10/day in parts, that’s over $3,600/year lost—before you factor in markup.

2. Cross-check purchases vs. usage

Have your office manager or bookkeeper run a report:

• What parts were purchased this month? 
• What parts were tagged to ROs? 
• What’s left in inventory? 

The difference is your leak.
 

3. Automate the reconciliation

If you're already using a shop management system like Tekmetric but want an extra layer of oversight, tools like Wicked File can help. They don’t replace your system—they enhance it by identifying gaps between parts purchased and parts actually billed. Wicked File also tracks core returns and credits to ensure you’re not leaving money on the table. 

Start by tightening your process 

My advice: "Start simple. Is your inventory count clean?" 

Before you bring in new tools or audits, take a close look at how your team is currently handling parts: 

• Are parts being received and entered right away? 
• Are technicians and service writers consistent about adding parts to ROs? 
• Are team members aware of how even small misses affect profitability? 

This is about dialing in your process—not adding complexity, but reducing waste. 

💡Pro tip: Schedule a 10-minute team huddle each week where service writers and techs walk through one or two real repair orders. Look for any missed parts, then discuss how to catch those before the RO is closed.