Price increase

[Ric]

I currently charge one token ($1) for 2 minutes. I am considering a start up increase to two tokens for 4 min. So...no increase in cycle time just in start up price.

Has anyone done such a change? What can I expect in revenue increases and complaints based on your experience.

If you have not done such a change, what is your opinion on what I might expect?

Increased utility expenses warrant a price increase. However, the economy in my area is very fragile. I am looking at options that would not alienate my customers.

 

[kentadel]

I did that exact thing 2 months ago. Raised start up to 2$ but also lowered time per coin slightly. Zero complaints. Revenue is up also, but a little early to give an accurate figure. I did upgrade the bays with credit card and bill acceptance and blasto-dry, so the price increase was to be expected.

 

[washme1]

I am getting close to raising my IBA prices $1 and dropping the time on my $2 startup in SS from 4 minutes to 3 min 36 seconds. I'm a little bit hesitant right now due to the skyrocketing gasoline prices but leaning towards moving forward with it.

 

[Whale of a Wash]

I can see your point on going to $2. A $1 in todays world doesn't pay many bills. Try this-- go to $2 for 3min. like i did for a week. If you only get a couple complaints, you'll leave it, like i did. They can't do the math , you could go $2 for 10 min, and someone would ask why you increased the price. I do give a $1 bonus on a $10 bill in the changer. The customer will see the price doubling, so you might as well cut the time. We need more SS operators to stay in business , and with super low prices, making money is nearly impossible. The economy isn't the greatest here either, and just got the weather channels worst weather city.

 

[Fatboy769]

Every single time over the years that I've worried about raising prices to offset my cost increases, turns out to be sleepless nights over nothing. Run a first class operation, give a good quality wash and charge accordingly. I'll always remember what an old timer once told me, "Son, don't be afraid to make money"!

 

[Waxman]

Every single time over the years that I've worried about raising prices to offset my cost increases, turns out to be sleepless nights over nothing. Run a first class operation, give a good quality wash and charge accordingly. I'll always remember what an old timer once told me, "Son, don't be afraid to make money"!

Great philosophy.

 

[madscientist]

I am getting close to raising my IBA prices $1 and dropping the time on my $2 startup in SS from 4 minutes to 3 min 36 seconds. I'm a little bit hesitant right now due to the skyrocketing gasoline prices but leaning towards moving forward with it.

The rising price of gasoline SUPPORTS your idea of a price increase, not the other way around.

 

[Bubbles Galore]

I am going to go $2 for 4 minutes here shortly as well. With only dispensing dollar coins out of my changers, only my quarter customers will notice it...I'm not worried about it, I just haven't gotten around to it yet...*lazy*

 

[Randy]

We recently raised the price of the car washes in town to $5 for 10 minutes, up from $3 for 5 minutes. We left one bay at each car wash at $3 for 5 minutes. The bays that get used the most are the $5 bays. We have one car wash that out in a rural area that’s still at $2 for 4 minutes, it’ll be changed over soon. The only comments we’ve received have been positive. The customers like the idea of not having to keep putting money into the coin box to keep it running. Put $5 in and your done or swipe your card for 10 minutes of time for $5.

 

[Earl Weiss]

The rising price of gasoline SUPPORTS your idea of a price increase, not the other way around.

Ask any Gasoline retailer what has happened to their sales volume in the last 2 months.

 

[madscientist]

If their sales are down it is because customers don't have the money to spend on any non-necessary gasoline purchases. Notice how this has not stopped the increase in the price of gasoline, nor the increase in the price of everything else inside the store at these local gas retailers. My point (which I respectfully submit in a non argumentative tone) is that we can't control whether or not people have money to spend on our services. We can, however, control our profit margin to a certain extent by adjusting our pricing. We can't continue to make less and less just because our costs are going up but we are worried about our customers' family budgets. My grocery store didn't drop the $5 gallon of milk back to $2.50 because it was concerned about my kids' calcium intake. The milk costs them more to put on the shelf so it costs me more to take it off the shelf. If they don't do that, they will not be open very long and I will have to go to another store that wasn't afraid to adjust their prices based on their operating expenses.

Even the CEO of WalMart has made a statement about the serious inflation that we are facing that is going to get much worse. Google "Bill Simon" and "inflation" if you want to read his full statement. The crazy commodity inflation has even affected Hershey's (the price of cocoa) as they have announced a 10% price increase on their entire product line.

Rising prices are occurring across the board. Every business around us is raising its prices. 7-11 shrunk the size of its Slurpee recently, which is like us lowering the time in our SS bays. Even if you can find a couple of items at Taco Bell under a dollar, the small drink now costs $1.29! WTF? You can't eat 2 Bell items accompanied by a shot glass of tap water. You have to buy the soft drink. Taco Bell's target market isn't awash in extra cash.

I am just saying that we should not be afraid to adjust our prices accordingly. If you fail to do so you will get left behind (in a secular way, of course).

 

[Earl Weiss]

>>Originally Posted by madscientist
The rising price of gasoline SUPPORTS your idea of a price increase, not the other way around.

Ask any Gasoline retailer what has happened to their sales volume in the last 2 months.<<<

I guess I could have been more clear. For ease of reference I repeat your point and my comment above.

The rising price of gas has reduced sales volumes. Retailors needed to raise the price of gas due to wholesale cost increases. However, profit margins on a gallon of gas have not increased and the sales volume has decreased.

IMNSHO the rising price of gasoline neither supports nor detracts from the idea of a wash price increase. This will need to be determined by the costs associated with the wash process as well as competitive market factors which will determine sales volumes which in turn will affect the overall bottom line.


I know that in my particular situation and I believe that of many other operators our fixed costs (rent / debt service base electricty and fuel costs, scavenger, and insurance, real estate taxes. ) are a huge percentage of our expenses. This dynamic changes dramaticly if you own your place outright.

The cost per unit sale is far different than gasoline. On a $4.00 gallon of Gas you are lucky to have a gross margin of 20cents. If they come in with a credit card and buy 10 gallons that shrinks to 13 cents.

On a $4.00 wash cycle purchase for a SS the gross margin is significantly higher. I would like to hear opinions on this. My tunnel and SS are metered together, so I have not tried to fgure out a cost allocation. This would be tough to do. I would guestimate on a $4.00 cycle, water, solutions, natural gas, maintenance would run about $1.00. (I am not an IBA guy so I don't know what the costs / margin is.)

 

[Reds]

Gasoline margins may be lower, but if they sell 100,000 gallons a month, which is not unusual, the margin is a pretty big number in dollars. I think consumers look at $70 to fill up vs. $45 a short time ago. Our price increases amount to $1 which may be a lot as a percentage, but I don't think most people do the math as a percentage. A lot of people don't even know what a margin is. When I was in the fast food biz margins were right around 10% but we did over a million a year in volume. I think that return on investment needs to figure into the equation too. I raised my wash prices due to increased costs - electric went from $800 mo. to $1100. Propane from $1200 to $ 2500. Health costs up 15%. Fixed costs vary year to year. Variable costs are all over the map. They both affect your margin and your ROI. A 4SS/2IBA can cost almost as much as a Burger King to build and equip, but volumes are significantly different. So your margins need to be higher to support a decent ROI. I think that a $1 increase does not raise eyebrows as much as gas or food prices due to the fact that their is not an aggregate total in dollars - carwash is a standalone service where food and gasoline are bought in multiple quantities. And I believe that people look at the dollar amount that they spent, not the % it went up.

 

[Earl Weiss]

Reds, all your points are good. Further reinforces the idea of each business evaluating their price / volume / costs independantly.

With the gasoline Business i think that when i started working in the business our price was as low as 25 cents a gallon. If you were 2 cents higher than the guy down the street you heard about it from the customers and you could see your volume drop.

When gas was $3.25 a gallon, if you were 2 cents higher than the guy down the street you heard about it from the customers and you could see your volume drop.

Now, from $3.25 to $4.00+ things are climbing so fast all you hear about are increases from customers and still see your volume drop.

So, while the % of the total purchase difference with the competition has decreased markedly, customer behavior has not.

 

[madscientist]

Earl,

You are correct that the price of gasoline neither supports nor detracts from this argument. My thought was that since gasoline prices have increased along with prices of just about everything else, we shouldn't worry about our customers' impression when we raise our prices. Our customers realize for the most part that things just cost more now, and they are noticing that at the gas pumps as well as the grocery store and the restaurant and at Wal Mart, etc. It's fine that there are differences between operating a gas station and a car wash.

The main point, and the point of this thread, is whether or not to increase the price of our washes. I say that if your operating expenses have risen dramatically like mine have over the past few years, then you must adjust your prices to compensate. We are both on the same side of this argument. You must evaluate your business independently. Your ability to operate for a reasonable profit should be the main reason, and other things like customers' feelings and competitors prices are much less important. You can't offer a $5 wash if it costs you $5.01 to provide it.

When you first open a wash, there are always some people that pull in, look at the price, and then leave because they know of a cheaper option. We don't offer our services at a reduced price in that situation just to accommodate that customer, and we shouldn't do it now.

 

[readydave8]

Ask any Gasoline retailer what has happened to their sales volume in the last 2 months.

Around here probably stayed the same, got to drive the kids to school and run to the store for smokes.