Oil Change Profit Margins

The oil change business whether fixed or mobile is hard to succeed in. Its not impossible but there are many problems associated with the business model that I find disturbing at best. One of the main problems I see is the lack of profit in the service that most quick lubes are selling. I was down in Atlanta for two weeks and was surprised by the number of establishments offering $16.00 oil changes. One place, I think it was a Toyota dealership went as far as offering a $20 synthetic blend oil change. All I could think to myself is "this is crazy". Those places are actually loosing money off oil changes. Why would any business be in business to loose???

The answer is simple. And this is the flawed business model that I mentioned. The oil change is bait. Like a fisherman baits his hook with a worm or fish eggs so do most quick lubes. They are in the business of pushing extra things you do not need. Many of the extra items that they push you do need but I question the extent. And if the place actually does more than basic maintenance, watch out! Your basic oil change will quickly turn into a several hundred dollar break job, CV joint repair, timing belt replacement, belt replacement, etc. Sometimes you really do need those items. But many times you do not. But those places are obligated to sell you unnecessary items because they are not making money off the main item you came there for.

If places would sell oil changes at a reasonable price then I think the consumers would benifit immensely. If most quick lubes set their prices at a rate that they were making at least 15-20 per oil change than they could make money off 40-60 oil changes per day and then they would not have to resort to less than ethical practices. But you see all it takes is one guy trying to low ball everyone else asking $10 for an oil change and then people flock to him and he rips them all off. Great you got a $10.00 but that was followed by a $350 repair bill and your car is less than two years old. HA HA suckers.....

I say this because its sad but in reality there are only a few states where the market allows quick lube operators to actually make money off oil changes. What I just said is golden. There are 5-7 states that you can make a decent profit from oil changes and nowhere in the south do they lie. Too much competition and cheap labor. I know a person who started an oil change business in Missorri only to find out that the market he was in only beared $15.00 oil changes. The oil and filter were $12.00 Its hard to make money when you make $3.00 profit.

If you listen to this advise it will save you much time and money. For those potential mobile operators who think they can charge a lot more than the going price I say if you can sell...yes but generally no. If you can really sell your service and are a big talker and can instill value to fleet managers I say yes you can charge $10 more than the market. But if you are not than forget it. Most mobile operators I know try to do it for less.

Know your market. Know what it bears. The oil change business do not have high profit margins. They relie heavily on vollume and selling lots and lots of additional services to people even if they do not need them or are unnessary. Remember this. You will be no exception if you live in most parts of the United States. I run my business as honest as one can. Guess what...I can afford to. I happen to live in one of those states I mentioned. There are no $15 oil changes where I live. I pay for it with 6 months of dreadful freezing negative twenty conditions though so do not think its a cake walk. Ever try changing oil in 5 degrees and feel your hand going numb trying to get an impossible oil filter off. I do. But for that trouble I have way higher margins than most people. What does your state, city, area, income level, total market bear for an oil change. Find out and think about picking another business for be in if its under $30-35.