06-21-08 - 5

Funny little thing. AAA is a member-owned co-op or something like that. Anyway, because of it, they publish all their financial details in the membership magazine. You can see a breakdown of money in & where it goes. I was amused to notice that AAA loses money on their basic service. Roadside service & free maps and all that cost quite a bit more than they get in membership dues, something like cost $5M, receipt $4M. They make up the difference through the profits on their travel agency and insurance business. So the basic membership is a loss leader. I was kind of surprised, I always figured that AAA worked with the "gym" business model - that is, the people who actually use the service much are very unprofitable, but you make it up with the vast number of people who sign up but never really use it.

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old rants