Calculating Monthly Profit
To calculate the monthly profit margin of a gas station, total all revenue without counting discounts or refunds. This includes sales inside and outside the store. Then sum up all expenses such as payroll, utilities, taxes, and fuel costs. Finally, subtract expenses from revenue to find the monthly net profit.
Impact of Location and Additional Services
The location of a station greatly influences its financial success. On average, the gross margin on gasoline is 15 cents per gallon, which leaves about 2 cents per gallon after accounting for expenses like rent and labor. However, convenience store sales along with other services like car washes and food sales typically bring in higher profits.
Costs and Averages
Building a new four-pump gas station can cost around $500K, while upgrading an existing station may require $200-300K. SBA loans are often used to finance these investments. Gas station earnings can vary by region, with annual profit averages around $60,000 to $66,000 on the West Coast, Midwest, and South. Overall, gas stations average a 1% net profit margin.
Opening Costs
Average Costs
The cost of opening a gas station in the US ranges from $250K to $2 million, even for a small one. The major expenses include purchasing property, obtaining permits and licenses, buying equipment, and stocking inventory. Financing is often sought through banks or Small Business Administration (SBA) loans. Starting a profitable gas station demands substantial capital and dedication.