How Much Money Do You Make on an Oil Change?

Dealers are constantly asking me how to increase traffic in their service drive, but when I tell them my answer – which by the way is very simple– they often get very defensive. You see, my philosophy on increasing service traffic is that if you want or need more customers, you have to get aggressive on your oil & filter change price. In fact, the exact price I suggest is $17.95. After they have a coronary and look at me like I'm an idiot, they begin their half-hearted attempt to prove me wrong.

We'll lose money at $17.95 they say. We don’t make any money on oil changes now at $24.95 - and we will only get the bargain hunters in our store that never buy anything (by the way, the technical term for those customers is “turds”). They continue with an explanation of how their oil change is worth more –  certified techs, use genuine manufacturers parts, do a multi point inspection, top off all the fluids, blah, blah, blah. All things that customers blow off because they believe that “it’s just an oil change…anyone can do an oil change.”

They throw me a few more zingers and when they finally run out of breath, I ask them this earth-shattering, mind-numbing question that brings them to their knees: “How much money do you make when someone goes somewhere else for service?” That’s it. They shut up. They don’t answer. They just look away, shake their headsand realize, reluctantly, and without any prodding from me - that I am right. They make nothing.

I continue - A $17.95 oil & filter change, when advertised aggressively will bring more customers in to your store and at least give you the opportunity to sell them something. Maybe it's a brake job or tires or another vehicle. Maybe this trip is nothing, but you kept them out of the competition and you had the chance to build a relationship with the customer – so what is that worth?

Next, I point out that the statement they made about not making any money on an oil change is false. I tell them they are liars. It's always good to keep the conversation on track, right? Don’t believe me? How many repair orders has your store written up for “just an oil change” that turn into huge tickets totaling over $1,000? How many? A lot, if you do some checking (and I suggest you do), but somehow we forgot about those. We get hung up on the one “turd” that only wanted to buy an oil change and nothing else.

Think about this –  don’t worry about the price increase on oil. It doesn’t matter and it's insignificant when you consider the big picture. And don’t get hung up on what the independents charge. They can charge more because the perception is that they're cheaper. Customers think you're more expensive. You need to dispel that myth and make up the difference with a heavier mark-up on repair work. And last, and this is a biggy - advertise aggressively. Otherwise you're just discounting your services for customers who would have already come to your store and paid more. Remember, the goal is to get more customers in the door so you can sell them something.