How do you calculate service kit margin?

Divide the kit's gross profit by its revenue and multiply by 100. With $18,500 gross profit on $42,000 of kit revenue, margin is 18,500 / 42,000 x 100 = 44.05%.

What is a good margin on aftermarket service kits?

Ag equipment service and parts kits typically run 35-50% gross margin, well above whole-goods. The 44.05% in the example clears a 38% target by about 6 points, which is healthy for a stocked kit.

Why is my kit margin gap negative?

A negative gap means you are ABOVE target, the example shows -6.05 percentage points because 44.05% actual exceeds the 38% target. A positive gap would mean you're falling short of plan.

Service kit margin vs whole-goods margin, why so different?

Tractors and combines often sell at single-digit margins because buyers shop competitively, while service kits are needed during a breakdown in-season and command 35-50%. That's why aftermarket drives dealership profit.

Should I price a kit to hit exactly my target margin?

Target is a floor, not a ceiling. In-season, time-critical kits (e.g., harvest-season header rebuilds) can carry margin above target; commoditized maintenance kits may need to sit closer to it to stay competitive.

Does this margin include freight and core charges?

No. Bake inbound freight, core handling, and any kitting labor into your gross profit figure first, otherwise the 44% reads high versus the true landed margin.

Agricultural Equipment & Farm Machinery Manufacturing calculator

Service Kit Margin Calculator

Service kit margin measures how much gross profit your aftermarket parts kits, filter kits, hydraulic seal kits, planter row-unit rebuild kits, keep on every dollar of kit revenue. For farm machinery OEMs and dealer parts departments, the aftermarket is where the real money lives, often running at margins the whole-goods business can only dream of. This calculator divides kit gross profit by kit revenue, then tells you whether you're above or below the margin target your parts P&L is built around. Aftermarket managers use it to price new kits, audit existing SKUs, and decide which kits are worth keeping in the program.

What this calculator does

Calculate service kit gross margin from kit gross profit, service kit revenue, and a margin target.
a parts manager or aftermarket estimator needs to verify margin on agricultural equipment service kits
It computes the gross margin percentage of a service kit and the gap, in percentage points, between that margin and your target.

Formula used

Service kit margin = service kit gross profit ÷ service kit revenue × 100
Kit margin gap = service kit margin - target service kit margin

Inputs explained

Service kit gross profit:
Service kit revenue:
Target service kit margin:

How to use the result

Use it when pricing a new service kit, reviewing aftermarket SKU profitability, or building the parts department's annual margin plan.
Gross margin only, it ignores warranty returns, obsolescence write-downs, freight, and the carrying cost of stocking slow-moving kits, so a high gross margin can still hide a money-losing SKU.

Current U.S. benchmarks

Industrial natural gas averages $4.27 per Mcf (EIA, May 2026), down 9% from a year earlier, with industrial electricity at 8.71 cents per kWh. Process heating and refrigeration budgets track both.
Steel mill PPI stands at 374.203 (BLS, Jul 2026), up 22.5% from a year earlier. New factory orders are up 7.4% year over year (Census).
The U.S. has 21,668 machinery manufacturing establishments employing about 1,086,146 workers (Census County Business Patterns, 2023).

Common questions

How do you calculate service kit margin? Divide the kit's gross profit by its revenue and multiply by 100. With $18,500 gross profit on $42,000 of kit revenue, margin is 18,500 / 42,000 x 100 = 44.05%.
What is a good margin on aftermarket service kits? Ag equipment service and parts kits typically run 35-50% gross margin, well above whole-goods. The 44.05% in the example clears a 38% target by about 6 points, which is healthy for a stocked kit.
Why is my kit margin gap negative? A negative gap means you are ABOVE target, the example shows -6.05 percentage points because 44.05% actual exceeds the 38% target. A positive gap would mean you're falling short of plan.
Service kit margin vs whole-goods margin, why so different? Tractors and combines often sell at single-digit margins because buyers shop competitively, while service kits are needed during a breakdown in-season and command 35-50%. That's why aftermarket drives dealership profit.
Should I price a kit to hit exactly my target margin? Target is a floor, not a ceiling. In-season, time-critical kits (e.g., harvest-season header rebuilds) can carry margin above target; commoditized maintenance kits may need to sit closer to it to stay competitive.

Last reviewed 2026-07-13.