How is it possible for a garage to charge only $11.27 for 5 quarts of oil + filter?

[lupindub]

So my mom just got her oil changed at the usual place and they only charged her $11.27 for FIVE quarts of oil + filter. How in the world is this is even possible? The cheapest oil I could find out there for 5w-20 oil is $3.98/quart which would mean it would cost about $20 for 5 quarts. Add a cheap knock off brand filter and it would still be around $25 bucks or so for just the oil + filter. I don't understand how the garage is making and money charging so little. Obviously they charged her $20 for the service but that is simply paying the mechanic for his time + labour, not the parts. So what gives?

p.s - We (our whole family) have been getting the oil changed at this place for 10+ years and have had no problems with them.

[Justin.b]

They charge their new customers $50 for an oil change, and use their old oil for the the $11 oil changes.

Seriously, I don't know. I guess it's not crazy to think that 5w30 is cheaper when you buy it by the 55gallon drum but that's still a very low price. Maybe they just worked it out so the total with tax or whatever comes to $35 or so - and this way when people look at the invoice they think they're getting a great deal on the oil / filter.

-Justin

[DarkSunrise]

I would guess they're undercharging on the oil changes and making it back on bigger services/repairs. Cheap oil changes are just to get people in the door and earn repeat customers.

[Haeb]

Its called a loss leader....they intentionally lose money on that oil change. Why, you may ask??? The car was in their shop being worked on giving them opportunity to say hey...you need an air filter for $30 or brakes or...whatever they can up sell. If she just had the oil changed and that was it...they lost out. Its the gamble they take to get bodies in the door.

[Mr.ac]

Another thing you have to take in mind, they buy their oil and filters in mass quantities. As such they get it cheaper. They don't buy little quart bottles like you do like they sell in the store.

"Wholesale" prices are not really public. You could get the same deal if you buy 55 gal drums of oil and a cases of filters.

And like others say, they make their money on the extra services.

[LSxJunkie]

Bulk prices.

[mav1178]

Originally Posted by Haeb

Its called a loss leader....

Same thing you see for Black Friday.
Same thing you see for online sales.

You take a loss somewhere to get foot traffic. All about sales conversion rates and opportunity to generate incremental, additional revenue.

-alex

[synchromesh]

It certainly stirs a pot when a store or shop loses money just to let new or existing customers know the company appears to be a good honest decent provider.


Could be completely off on this but would not be shocked to find that there is an over supply of independent auto mechanics. Evidence? 15-20 years ago it was normal to have major repairs or maintenance on a vehicle at 100 clicks. Today, I'd be surprised to see most vehicles to have to be at bay at the mechanic for major repairs at that mileage.


I was in for a major surprise last year when I was a day too late making an offer on a 2006 BMW M5. Additional powertrain warranty was pretty much less than the cost of depreciation on a brand new car off the lot.

[serialk11r]

That sounds like at cost without labor. At Walmart you can get cheap oil for under $3 a quart, in 1 quart bottles. It's not hard to imagine a huge drum below $2/quart.

[EAGLE5]

They sell methamphetamine.

[MonoRaven]

Originally Posted by Haeb

Its called a loss leader....they intentionally lose money on that oil change. Why, you may ask??? The car was in their shop being worked on giving them opportunity to say hey...you need an air filter for $30 or brakes or...whatever they can up sell. If she just had the oil changed and that was it...they lost out. Its the gamble they take to get bodies in the door.

Haeb hit it on the head.
Upsell, it's all about the upsell!

[BlackJesus]

Originally Posted by lupindub

So my mom just got her oil changed at the usual place and they only charged her $11.27 for FIVE quarts of oil + filter. How in the world is this is even possible? The cheapest oil I could find out there for 5w-20 oil is $3.98/quart which would mean it would cost about $20 for 5 quarts. Add a cheap knock off brand filter and it would still be around $25 bucks or so for just the oil + filter. I don't understand how the garage is making and money charging so little. Obviously they charged her $20 for the service but that is simply paying the mechanic for his time + labour, not the parts. So what gives?

p.s - We (our whole family) have been getting the oil changed at this place for 10+ years and have had no problems with them.

55 gallon of 5w30 can cost as long as $300. 55 gallon = 220 quart. An average car uses about 5 quarts so divide 220 by 5 which gets it 44 cars.
$300/ 44 = $6.8

so it cost them about $6.8 dollars per oil change

Now most dealer will have club access to cheaper shop items such as oil filter which they can get about an average of 30% percent off. so a cheap oil filter can cost them anywhere between 1-4 dollars.

In theory an average oil change can cost shop owners between $8-14 depending on their memberships etc. The oil change business makes very little out of changing oil. Like most of the members said before theyll have to upsell on other things such as a/c recharge, air filter, etc where they can make a huge ass profit from.

To make a long story short. Attract customers with low oil changes then tell customer that they need to replace other unnecessary items for a profit.

[NyC Zn6]

dude did they even change her oil lol...

[Justin.b]

Originally Posted by BlackJesus

To make a long story short. Attract customers with low oil changes then tell customer that they need to replace other unnecessary items for a profit.

That's the Jiffylube / Firestone model. This local shop is probably just trying to develop a relationship so people feel comfortable going there for larger repairs they actually need.

I once had a Firestone guy insist I needed a replacement cabin air filter for an 89 Ford Escort. The car was not equipped with a cabin air filter. They were also insisting I needed a front main seal (there was some oil residue in that area of the engine, but no oil dripping on the ground and no measurable difference in oil level between oil changes.) I think there was some other bs service they were also pushing, but I forget what that was.

We had stopped in there to get a tire plugged. I left after a heated exchange with the entire staff and just went home to plug the tire. I had gone there to save time. I misunderestimeted them.

-Justin