03 September 2018
Many investors have asked us about our new pricing structure and whether it was a profit warning. Below I wish to address the reason behind the pricing change.
In our previous business model, Omnicar’s revenue was not determined by the number of dealers and workshops on our solution but by the number of contracts generated by Omnicar’s customers. Our previous business model was based on a 5% fee to Omnicar out of the contracts our dealers were generating on our platform plus a small monthly fee. Now, we operate with a fixed fee (the average fee is SEK 1,429 monthly). Even if we have 1,000 dealers and they generate 90 contracts on average after 12 months of a value of SEK 200, that is still much less in the first two years compared to our new model based on a fixed fee and 700 dealers. Consequently, our revenue outlook is now much more precise and our target is actually higher compared to our old model.
What we can see is that the workshops (not car dealers) do not perform as fast as we want them to. In principle, we are selling too cheap compared to the value we are generating and, consequently, we are in a position where we can increase our pricing. OmniCar has found that car dealers see the SAM solution as a must-have and they show a willingness to pay a higher license fee compared to the current 5% commission.
We have been addressing this market in less than one year and now we have the insights to optimise our revenue numbers and now that we do not depend on the dealers’ performance, we are solely dependent on our ability to sell our solution to the market.
Some investors have asked why we did not disclose our KPI numbers.
The KPI transparency was based on our “old” business model, which was hard to understand for many investors, mainly because so many factors would influence our revenue (number of contracts, value, number of dealers, length of contracts). With the new model, the only KPI is the number of dealers and workshops that subscribe to our solution. We currently have 471 dealers and workshops on our platform and our target for 2018 is 700 with our new business model.
For more information about OmniCar Holding AB, please contact
Claus T. Hansen, CEO
Telephone: + 41 79 854 47 69
The IT company OmniCar has developed a unique software solution called SAM (Service Agreement Manager) for vehicle repair shops and car dealers. SAM is a digital tool that is designed to automatically manage future sales and service agreements. SAM helps vehicle repair shops and car dealers to manage and sell far more service contracts than before, using customized additional services and subscription-based services that follow each car throughout its lifecycle.