it does when the service relies on the human element to get completed.
You pay up front for websites/apps, because you get access/product right away.
But any interaction where the human is involved(plumbers, tree service, mechanics, body shops etc)...you pay only after the job is finished.
The reason is that when you pay someone they have no real incentive to give you their best service...since they already got paid. And yes word of mouth might work, but I'm not seeing awesome deals on there. The venture beat article shows they got someone an Accord for $32K. Carsdirect has that same top of the line trim for $28K.
And carsdirect has the same incentive, give good service to get word of mouth so they can get more leads....the only difference is that you get to save a bunch of money too.
Since we are focusing on incentives, if they charge the dealer - they are working for the dealer. Who do you think they will be motivated to help better? If the dealer pays them, they have to help the dealer maximize his profit and the customer loses.
Carsdirect is a broker of used cars. They solve the problem of letting sellers find buyers and vice versa, not the same as making the process of buying a new car painless and shorter.
Most importantly though, their offer to refund your money for any reason makes this entire argument pointless. If they didn't think they could make you happier by saving you at least more than their fee, do you think they would make that promise?
they charge the dealer by providing sales, so yes they are working for the dealer...but the only way they can provide sales is by getting the customer a good price. So they are working for the customer.
and carsidrect is for new cars, I think you are confusing them with cars.com
actually your point that they have a refund policy led me to go look at that page...and my opinion is now even worse. Apparently that money only gets you one car. So you can't cross shop the best deal on a Civic and a Corolla to see which is the best option, without paying even more money.
I think you are misunderstanding their target customer. They are not targeting people who want to buy a car, but are not sure when or which one. They seem to be intentionally targeting people who are ready to go to the dealer and buy a specific car, but hate bargaining with car salesmen.
I happen to be at that specific point right now and if their service works as described on the many testimonials on the site and one on HN, I think paying $39 for it would be a great deal.
I do think you have a point in that, folks often come down to more than one choice on a model and make their final decision based on price. I think it would make sense for them to have a plan that supports this use case.
My guess is that happy customers will tell their friends and use the service again when they buy another car. Those are both powerful incentives.
What incentive do they have to do a good job for you when they're just turning your contact information over for lead generation money?