What Would You Do?

[Bubbles Galore]

In 2012, my automatic did on average about 475 cars per month and averaged $6.53 per wash. We don't run huge numbers, but have a pretty loyal customer base that continues to come back.

As most of us, I am always looking for ways to get my customers to spend more money and time. I have installed a token dispenser on my automatic and plan on going "live" tomorrow (March 1st).

My wash packages are $4, $6, $8 and $9. With all the information I've laid out up to this point, would it make more sense to try to increase throughput by offering a token for EACH wash or should I focus on trying to increase my per car average by offering a free token on the $8 and $9 wash?

It's a very subjective question, but if you were in my spot, what would you do and why?

Any input is appreciated! Thanks!

 

[Waxman]

I would charge more per wash. $4 is too cheap.

Why $9? Raise all prices immediately. If you are producing good touchfree results, you are giving your wash away too cheap.

 

[Bubbles Galore]

I would charge more per wash. $4 is too cheap.

Why $9? Raise all prices immediately. If you are producing good touchfree results, you are giving your wash away too cheap.

I don't disagree, but as far as FMV goes in comparison to my competition, I am in the upper echelon. If I could justify it, I would have done it long ago. The C-stores I am competing with produce a decent car and are a buck less than I am with a gas purchase. Definitely an uphill battle, but one I'm trying to win by utilizing these ancillary features that they aren't focused on.

Let's just assume pricing has to remain static at this point...how would you approach the free vacuum token?

 

[MEP001]

I've been considering the same thing, and most likely I'll eliminate one wash and go from $4/5/7/8 to $5/7/9 and give two tokens for the premium wash, one for the others.

 

[Bubbles Galore]

I've been considering the same thing, and most likely I'll eliminate one wash and go from $4/5/7/8 to $5/7/9 and give two tokens for the premium wash, one for the others.

I hadn't thought about eliminating one wash...that's an idea...basically rewarding a premium purchase...

One thing that bothered me from a marketing perspective is that if I only offer it on a specific wash and not all of them...my advertising for "FREE VACS" goes right out the window...

 

[borumrm]

I hadn't thought about eliminating one wash...that's an idea...basically rewarding a premium purchase...

One thing that bothered me from a marketing perspective is that if I only offer it on a specific wash and not all of them...my advertising for "FREE VACS" goes right out the window...

Interesting .... I really can't give free vac because all of mine are combo vacs...they can either select fragrance or shampoo ... well I guess I could but I would rather not...what if you changed your marketing to something where they get a free wash after x purchased washes....so if they bought five $5 washes and got a free token with each one the next $5 wash would be free or it could be a dollar off the next wash if you accept tokens. The only problem with that part is at my wash you can mix tokens and cash but not tokens or cash and credit. I like the ideas that come across this board....keeps me thinkin....

 

[Bubbles Galore]

Interesting .... I really can't give free vac because all of mine are combo vacs...they can either select fragrance or shampoo ... well I guess I could but I would rather not...what if you changed your marketing to something where they get a free wash after x purchased washes....so if they bought five $5 washes and got a free token with each one the next $5 wash would be free or it could be a dollar off the next wash if you accept tokens. The only problem with that part is at my wash you can mix tokens and cash but not tokens or cash and credit. I like the ideas that come across this board....keeps me thinkin....

I don't really have a way to track that...nor do I want to. I'm sure it's possible, but I want to get this going asap.

 

[briteauto]

I always try to leverage my good/better/best packages to make it difficult for the customer to justify buying the middle package. Example:

1.Basic wash $6

2.Middle package $8- add one extra service - maybe a sealer or underspray

3.Top wash - $9 - adds two or three more extra services - tri foam, wheel blast/scrub and whatever you did not add above in the middle package.

You'll always have those who only want the basic - the only way to make that go away is to not offer it.

Now, anyone who wants to get more than a basic, is pretty hard pressed not to choose the $9. Add a token to that top wash, and you just gave them one more extra service to entice them to get the top package.

I'd offer the token on the top package only and try to pull all the $8's up to $9's.

You already have the $2 gap between your $6 and $8, so you are not going to change anyone's mind there, just give the more reason to throw a $10 in your machine and still get change and a token!

BTW - I also agree with eliminating the $4 - that just devalues what you offer. Get your customers paying $6 or $9. A 50/50 split gives you an average ticket of $7.50


Good luck.

Mike

 

[Bubbles Galore]

I always try to leverage my good/better/best packages to make it difficult for the customer to justify buying the middle package. Example:

1.Basic wash $6

2.Middle package $8- add one extra service - maybe a sealer or underspray

3.Top wash - $9 - adds two or three more extra services - tri foam, wheel blast/scrub and whatever you did not add above in the middle package.

You'll always have those who only want the basic - the only way to make that go away is to not offer it.

Now, anyone who wants to get more than a basic, is pretty hard pressed not to choose the $9. Add a token to that top wash, and you just gave them one more extra service to entice them to get the top package.

I'd offer the token on the top package only and try to pull all the $8's up to $9's.

You already have the $2 gap between your $6 and $8, so you are not going to change anyone's mind there, just give the more reason to throw a $10 in your machine and still get change and a token!

BTW - I also agree with eliminating the $4 - that just devalues what you offer. Get your customers paying $6 or $9. A 50/50 split gives you an average ticket of $7.50


Good luck.

Mike

Thanks for the well thought out post, there definitely seems to be a conscensus to eliminating the basic wash.

 

[bighead]

Use the "free vacs" as a way to kill your $4 wash

Go free vacs with $6 $7 $8 $9... as soon as you can add a premium sealant to your washes and go higher on the top wash... like $6 $8 $9 $10.... if you have a premium wax, go there now as you add the free vacuums.

Just by eliminating the $4 wash your average is going to jump by over a dollar, maybe even close to $2....

I'm in business to make money... I've found that most of my problems are caused by the cheap washers.

 

[Bubbles Galore]

Use the "free vacs" as a way to kill your $4 wash

Go free vacs with $6 $7 $8 $9... as soon as you can add a premium sealant to your washes and go higher on the top wash... like $6 $8 $9 $10.... if you have a premium wax, go there now as you add the free vacuums.

Just by eliminating the $4 wash your average is going to jump by over a dollar, maybe even close to $2....

I'm in business to make money... I've found that most of my problems are caused by the cheap washers.

I can't raise prices at this point, but I am liking the idea of removing my $4 wash.

 

[ted mcmeekin]

We considered eliminating bottom wash but it is a very tiny percentage of sales so would make little difference to total sales.

Ted

 

[bigleo48]

Bubbles,

What are the sales % for each of the 4 washes?

Also, is there sales tax on the washes? What I'm getting at is the Gas bar down the road may charge his price plus tax. I know here in Ontario its 13%, so a significant difference as my prices include tax and the gas bars do not (add it over and above).

 

[Waxman]

"I can't raise prices" is a mistake.

I know because I've made the same mistake.

What %age use each wash? That'll tell you if your price can/should go up.

Do you take CC?

Are you putting out a good quality wash?

Are you attended?

Do you offer free towel dry station?

I don't see how you can pay for your new automatic at your current prices.

 

[robert roman]

In-bay monthly volume is 475, average is $6.53, wash prices are $4, $6, $8 and $9.

Does it make sense to increase throughput (token with purchase) or average revenue (token with top washes)? What would you do and why?

I would start by simplifying the problem. Let throughput (T) represent rate at which the system generates money. So, throughput equals sales minus cost of goods (assume 10 percent).

T = (475 * 12 * $6.53 * 0.9)
T = $33,500 (rounded)

Assume token/top wash strategy causes positive shift in sales mix (min 10 percent, max 25 percent).

Note – average revenue is function of prices and sales mix. However, you did not provide a specific mix, so we have to assume something (i.e. equal weighted average).

Average = ($4 * 0.25) + ($6 * 0.25) + ($8 * 0.25) + ($9 * 0.25) = $6.75

T (10%) = (475 * 12 * $7.10 * 0.9)
T (10%) = $40,500 (rounded)

T (25%) = (475 * 12 * $7.63 * 0.9)
T (25%) = $43,500 (rounded)

Throughput at 10 percent and 25 percent increase in volume, initial average

T = (475 * 1.10 * 12 * $6.53 * 0.9)
T = $36,900 (rounded)

T = (475 * 1.25 * 12 * $6.53 * 0.9)
T = $41,900 (rounded)

Since you mentioned that price level is principal constraint, I believe the analysis shows a combination of strategies may provide the most benefit.

In other words, develop a strategy (i.e. price/product combination) that has a good chance of increasing both average revenue and sales volumes.

Hope this helps.

 

[Waxman]

Another idea is to offer a super-duper ding ding.

This is a wash with extra presoak and HP passes. Maybe 1 more of each.

You would charge say $13.

If you eliminated your $4 wash and added the s.d.d.d., you would definitely get some customers trying it. Some get the top pkg no matter what (price inelastic).

 

[Bubbles Galore]

For those of you that are asking, here are the numbers for the wash breakdown:

• $9 - 22.32%
• $8 - 17.18%
• $6 - 36.26%
• $4 - 24.23%

Here's a quick list of our wash passes and what washes they are used on.

PH Pass 1 - all washes
PH Pass 2 - all washes
HP Rinse - all washes
HP Kleer Kote/Drying Agent - all washes
LP Wax - $6
Triple Foam - $8 and $9
Magic Bond - $9
Flex Pass Spot Free - $4, $6 and $8
Arch Spot Free - $9

I will try to respond to the previous comments once I get back to my computer.

 

[Bubbles Galore]

Bubbles,

What are the sales % for each of the 4 washes?

Also, is there sales tax on the washes? What I'm getting at is the Gas bar down the road may charge his price plus tax. I know here in Ontario its 13%, so a significant difference as my prices include tax and the gas bars do not (add it over and above).

Here in Michigan, there is currently no sales tax on washes.

 

[Bubbles Galore]

"I can't raise prices" is a mistake.

I know because I've made the same mistake.

What %age use each wash? That'll tell you if your price can/should go up.

Please see my post below

Do you take CC?

Yes

Are you putting out a good quality wash?

Yes. We "shop" our competition at least twice a month to check wash quality and I would say we are at least on par if not better than all surrounding competition.

Are you attended?

No.

Do you offer free towel dry station?

Tried this at the beginning and had over 200 towels stolen in the first week...I attribute this to being unattended.

I don't see how you can pay for your new automatic at your current prices.

That's what we are trying to improve.

 

[Bubbles Galore]

Another idea is to offer a super-duper ding ding.

This is a wash with extra presoak and HP passes. Maybe 1 more of each.

You would charge say $13.

If you eliminated your $4 wash and added the s.d.d.d., you would definitely get some customers trying it. Some get the top pkg no matter what (price inelastic).

I will have to check with Washworld, but I believe I might be tapped out on "cycles" that can be input into the PLC. Don't quote me on that though, I haven't checked that for the S.D.D.D.

I like the idea though...