Monday, October 15, 2007

Trust your Mechanic

Here is the plan for a new kind of car repair shop.

The main problem with car shops is there is no way you can trust them. Ever time I take my car in, I can picture the person at the front desk getting his training. "Don't you dare let that customer out the door without getting them to fix something. Even if everything is fine, find something that you can repair, for example, the drive belt always looks warn, customers are a sucker for changing the drive belt!" (I won't mention how many times I've changed mine)

The problem here is this: The mechanic is not on your side. His incentive is to find as many things wrong with your car as possible.

So here is what I suggest: A subscription-based car care. The way this works is you pay a monthly fee to your mechanic and in return he will charge you only for the parts he needs to fix your car. That way, his incentive is to make your car go as long as possible without needing repairs. He has no motivation for changing your drive belt if it's perfectly fine, he doesn't make any extra money as a result.

Now the trick is, how much would the monthly fee need to make it worth it for consumers. Certainly customers would be willing to pay a premium for having a trust worthly Mechanic, but not that much of a premium.

I think you have to base this calculation on how much an oil change costs. If you could make the price not that much more than an oil change, consumers would buy it up.

Let's say it costs on average $35 for an oil change at place like Jiffy lube and any car needs to change it's oil about every 3 months or 4 times a year. It also takes a person about 15 minutes to change some oil. The question is: How many cars do you need to have enrolled and how much money do you have to charge in order for it to be worth it?

A scenario: You have 3 employees. A mechanic (4000 per month), an oil change kid (costs 2000 per month), and you. You get 800 cars and charge them 15 per month, equivalent to a $45 + $15 for parts oil change. Not that bad for the consumer. You make a total of 12,000. Paying your self a pretty good salary of 6000 minus garage expenses.

You get the oil change kid to do all the oil changes, you have the mechanic do any complicated work, and you sit at the front desk and say hello to people. Your oil change kid can change the oil for 160 cars per week, giving him plenty of slacking off time since only about 100 cars will need to change their oil each month.

Would people actually pay $15 per month for that? I certainly would.

Oh well so much for living in a fair world. If one of you out there is reading this and knows when you really need to change a drive belt, quit your job and start a business! Or maybe I'll quit my job and start a computer maintenance business.

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