I am curious why unlimited car wash passes are offered at car washes? What other industry offers unlimited anything? Many people drink coffee, Dunkin Donuts does not offer unlimited coffee. Everyone will need brake work performed on their car, Monro Muffler does not offer unlimited brakes for one monthly fee. Stanley Steamer does not offer unlimited carpet cleanings. So I ask, why do car washes offer an unlimited pass while many successful companies do not?
Unlimited Pass - Why are they offered?
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PaulLovesJamie
rural 5 bay SS
Not trying to be rude, but the answer is because it is a basic pricing and marketing strategy that works in certain circumstances. DD uses a different pricing strategy... but many places that sell coffee use the unlimited strategy. There is a major c-store chain here that offers unlimited coffee for about $10/month iirc. One of the local coffee shops does too. Diners offer free refills on coffee and soft drinks, not for the same duration of a month, but its a variation of the same thing.
I understand that, however I am comparing the car wash industry to leading corporations. The small diner, the few gas stations may offer the unlimited coffee. Why don’t these leading industry businesses offer something of an too good to be true deals such as unlimited washing in the car wash world? They don’t. So why do car washes?
slash007
Well-known member
Actually Panera started offering unlimited coffee about 2 months ago. Movie theaters have tried it, large chains like Regal.
Okay coffee was a bad example, regal offers seats to customer for unlimited. Those seats don’t wear out. The seats don’t have soap and water consumption there’s no wear and tear like there is in washing dirty cars.
AnalyticWash
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Memberships are offered because the math works out well. This is a high margin business. Margins give you great flexibility to execute a membership model successfully.
That being said, I don't personally have memberships available. But I have talked to dozens of operators that have gone down that path and gained many insights on how to do it.
That being said, I don't personally have memberships available. But I have talked to dozens of operators that have gone down that path and gained many insights on how to do it.
Waxman
Super Moderator
Also, monthly unlimited memberships provide a guaranteed monthly revenue stream, which can protect owners from peaks and valleys in the revenue stream. I visited a successful tunnel operation in FLA a few years back and the membership revenue the owner received monthly was what I would call a 'very good number'. It's money up front, which can also be seen as a free loan. Are banks loaning you $ for free? No.
Monthly revenue is the main point of the unlimited pass. Why would keeping margin high not be priority? Wash more cars to get more predictable revenue doesn’t seem like it’s an efficient method for a business model.
washnshine
Well-known member
True, but we are not in exactly the same situation as some of these other types of businesses. Most unlimited programs I know of are limited to one per day, per car, so it is not truly “unlimited”. Also, restaurants many not have unlimited by the month, but some do have unlimited by the meal in the case of buffets. We also do see more and more “subscription” types of pricing going on. We see it in software, access to digital content and gyms (when they can open again).
We also have a luxury in the car wash business with being able to tie vehicle recognition to rfid, license plates etc. to keep the users honest - for the most part. Not every business could do that. Maybe someday some fast food place will give you one cheeseburger a day for $19 per month - but you will need a chip surgically implanted in your wrist to make sure it is not abused.
As stated above, guaranteeing $35 or $40 per month from say, 700 club memberships will generally create more revenue than if those 700 people were not members. It is a law of averages scenario that has been worked out to the operator’s favor in cases where there is the proper mix to make it work. Not unlike the work an actuary would do for an insurance company. Maybe that’s what we should call it. Clean car insurance!
I see what you are saying about unlimited brake service - I know you don’t see that, but there actually are plans you can purchase to extend warranties on vehicles and cover significant repairs, which can be paid monthly to maintain.
I guess in short, it is done because it makes more money!
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Exactly. I call our Unlimited Membership program Rain Insurance.
My confusion is the goal of making more money. I don’t know how that could be proven based on 100 to 1000 subscribers. If the average customer is coming 5x per month and pays $30/month. Annually you would be collecting $36,000 and washing 6000 cars.
If you gained 100 subscribers/regular customers that came because the service was top notch and the average wash price is $10 per wash and they come 2x a month. That’s $24,000 a year and washing 2,400 cars. $10 per wash. Assuming it costs $2 to wash a car. You spend $4800 to clean 2,400 cars and profit $19,200/$8 profit per wash
If you washed 6000 cars x $2 that’s $12,000 to make $36,000 leaving you with a $24,000 profit/$4 profit per wash. You make $4800 more however you wash 3,600 more cars. The last 3,600 cars cleaned for free clog up your tunnel slowing the service down and costing you money in the long run. You make make more revenue... margin, not so much.
AnalyticWash
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You are making a lot of assumptions...
MEP001
Well-known member
You may or may not make more money, that part will depend more on pricing. Evidently the goal is to make consistent money as mentioned. An example would by gyms. If they thought they could make more money by charging a per-hour or per-visit fee, why do almost all of them do a monthly subscription?
BenBranam
Member
You're making up numbers. One of the numbers one of the big pay station operators that do tens of thousands of memberships said the average membership person uses their membership 3.2 times per month.
If that number is true and you charge 3.5 times every month for your monthly membership you will be making money. The money will be predictable and will come in even if it rains for a week or another Pandemic hits.
You'll also tie people to your wash. They won't be getting a wash at another location when they are paying you for one.
My wife kept her membership for six months after I stopped needing the car to be clean for work. She only used it once a month. Her reason for keeping it was that she didn't want to mess with the pay station or employees when she went to get the car wash. She just wanted to go.
There are a lot of upsides of the unlimited programs and it is the way our world is going. We pay monthly for almost everything in our lives. So why not a car wash program?
If you have the equipment or can get it for cheap, try it! What do you have to lose? If it doesn't work, just kill it off and try something else. The world is changing and we in the car wash business are moving painfully slow.
If that number is true and you charge 3.5 times every month for your monthly membership you will be making money. The money will be predictable and will come in even if it rains for a week or another Pandemic hits.
You'll also tie people to your wash. They won't be getting a wash at another location when they are paying you for one.
My wife kept her membership for six months after I stopped needing the car to be clean for work. She only used it once a month. Her reason for keeping it was that she didn't want to mess with the pay station or employees when she went to get the car wash. She just wanted to go.
There are a lot of upsides of the unlimited programs and it is the way our world is going. We pay monthly for almost everything in our lives. So why not a car wash program?
If you have the equipment or can get it for cheap, try it! What do you have to lose? If it doesn't work, just kill it off and try something else. The world is changing and we in the car wash business are moving painfully slow.
If you do the math and change it to 3.5x washes a month.
You collect $30/month from 100 customers. That 4200 washes, if it costs $2 to wash a car you spend $8400 to make $36000, $27,600 profit. You make $8400 more but you clean 1800 cars at $4.50/wash. Rather than the person keeping their margin high and line free. The only one benefitting from unlimited pass memberships benefit is companies that offer car wash equipment and soaps. The more they wash the more they make, the margins are great in the wash business, until promotion of overwashing by companies that encourage these plans landing them more profits from soaps, equipment, the more you wash the more wear occurs, the more they make, the more they control the whole process. Seems counter productive.
Why is there such focus on the money being consistent, rather than caring about the margin. When its guaranteed the car was margin is high, why risk a program with something "You may or may not make more money, that part will depend more on pricing" which is guess work. We know margins are high, and the unlimited pass makes it a guessing game. Makes no sense to sacrifice margin for consistent. A gym and a car wash are too different to compare. Car washes have very costly equipment, gyms dont use millions of gallons and large amounts of power to operate. The more you wash the more utilities are used, the more equipment suppliers win as you wash cars for ever increasingly smaller margins.
It's more of a math equation than an assumption. No matter if the unlimited user cleans 3.5x or 5x per month as an average wash amount, the washes margins are slowly stripped as people transfer over to subscriptions until the whole business is locked into a "consistent" system that shows margins far less than operating at full price. Trade the business model from a consistent one and work on a better customer experience that the customer will come back on their own. As many other business in other industries operate like this. The more you wash the more soap and equipment wears out, the same wash suppliers supporting the unlimited pass is the same ones selling you the higher volume of equipment and soap.
JGinther
Zip-tie engineer
I think your missing the competitive advantage of providing 'perceived value'. Not a parallel, but Netflix provides memberships while blockbuster (remember them?) provided daily rentals.
