Monthly unlimited

[BBE]

It seems to me that the monthly passes didn't start to become a huge craze until maybe the last 5-6 years. Somewhat coinciding with the economy taking a dive around 07-08. Most of the locations that I have seen who have been successful with it have it accounting for a significant chunk of their overall volume. For example if 500 cars were washed one day, 250 of them were monthly unlimited customers.

Is anyone who has it currently implemented worried that with the gas prices going down, and the economy perhaps coming back a bit, and if it ever comes back to pre recession levels that you will be left with a program that is shooting yourself in the foot as far as profits go? Also, if your location did not currently have it, would you be weary of going whole hog on implementing it?

 

[robert roman]

Redemption varies but most unlimited customers wash between four and six times per month.

There is also variation in participation ranging from 400 to 500 members per month to 1,000 or more.

Generally, unlimited will drop average per car revenue by about a $1.00.

On the other hand, most operators I know like the $20,000 to $40,000 that comes in at the beginning of each month.

As far as living and dying by the sword, license plate recognition should reduce cost of implementation and improve customer acceptance.

Considering most new construction is express washes, the trend should continue upward.

 

[Earl Weiss]

The solution to the problem is simple . I have seen it with a very low price to build volume and then the price is ismply raised as demand and capacity dictates.

 

[robert roman]

Based on what I learned at the show, there is another approach being used.

Unlimited price of $9.99 for basic wash.

Apparently, this price is so low people are less concern if they don't wash a lot as compared to paying $24.95.

 

[TEEBOX]

I don't know about you but if that happens as a norm in future, I'm selling!

 

[mmurra]

The tanning industry has had unlimited tanning for $9.99/mo for quite some time. It works under the right circumstances. Mark

 

[Waxman]

wow. $9.99? how many sales of unlimited are required to make any money? I mean i guess if you had a thousand or 2 thousand it would work?

 

[BBE]

Here is an article of a gentleman who did exactly that at his wash in syracuse:

http://www.drbsystems.com/public/resources/featured_owners/syracuse_Hammond/index.cfm

Note: I am not affiliated with drb in any form or fashion, but they have some interesting case studies/articles of different marketing strategies that have worked for different owners. It's also worth noting, that this guy actually did end up raising his monthly unlimited pricing by 2 bucks per package, so he no longer does a 9.99 he does an 11.99 instead. All of his monthly passes are now priced at exactly 2x the wash price.

 

[Earl Weiss]

wow. $9.99? how many sales of unlimited are required to make any money? I mean i guess if you had a thousand or 2 thousand it would work?

If the base price is $3.00 the math is simple 3.333 Times a month and it's the same as the retail basic wash.

As with many things the biggest hurdle is getting people in the door. Once that is done and heaven forbid demand exceeds supply the price can always be raised to regulate demand, and as the case study noted the person raised it by $2.00. Would have been interesting to know if he did it to simply make more $ or to reduce demand.

 

[Washmee]

I guess if you have a very low performing site it might make sense to offer such a low price. 2000 monthlys at $10 is $20,000 plus about another $20,000 from single wash sales works out to 8000 cars per month volume. He also must be operating an express wash with very low labor costs.

 

[anyusufaly]

We have been offering monthly unlimited plans at our flex serve for the last 3 years. We start pricing at $12.95 for our basic $5 express exterior car wash and go up from there. We started out higher on our pricing, but found that customers were more hesitant to sign up when the price was higher. After a while, we saw that the average number of washes per month was only about 2.7 washes per customer. We then altered our pricing accordingly and dropped the price. The lower price has significantly increased the number of monthly members that we have while also lowering the average number of washes per month. We found that after a customer signs up, if the price is low enough, they won't bother to cancel it even if they aren't using it how they should be. It is the gym membership mentality. They like to know that when they do want to come in and get it washed, they can.

You will always have those that abuse the service and wash their car 10 or 15 times a month, but that comes with offering the service. Heck, I would be one of those people if I had a monthly plan.

As far as our revenue, the percentage of our revenue that comes from the monthly plans is about 19%, while the cars that use the monthly plans account for about 17% of our total car count. The revenue from the monthly plans comes in handy during the slower months because the usage usually goes down during that time as well, so it's just more money in your pocket.

 

[BBE]

We have been offering monthly unlimited plans at our flex serve for the last 3 years. We start pricing at $12.95 for our basic $5 express exterior car wash and go up from there. We started out higher on our pricing, but found that customers were more hesitant to sign up when the price was higher. After a while, we saw that the average number of washes per month was only about 2.7 washes per customer. We then altered our pricing accordingly and dropped the price. The lower price has significantly increased the number of monthly members that we have while also lowering the average number of washes per month. We found that after a customer signs up, if the price is low enough, they won't bother to cancel it even if they aren't using it how they should be. It is the gym membership mentality. They like to know that when they do want to come in and get it washed, they can.

You will always have those that abuse the service and wash their car 10 or 15 times a month, but that comes with offering the service. Heck, I would be one of those people if I had a monthly plan.

As far as our revenue, the percentage of our revenue that comes from the monthly plans is about 19%, while the cars that use the monthly plans account for about 17% of our total car count. The revenue from the monthly plans comes in handy during the slower months because the usage usually goes down during that time as well, so it's just more money in your pocket.

What was your monthly unlimited price on the 5 dollar wash BEFORE you lowered it?

 

[anyusufaly]

We originally priced it at $19.95, thinking people would come in once a week. But once we saw that usage was less, we dropped the price to sign up more users. There was a very big difference in sign ups once we dropped the price. The additional members more than made up for the price differential.

 

[DiamondWash]

I'm considering the Monthly Unlimited program from WashCard for my Automatics, my prices are $8, $9, $10 what would be a good pricing structure for the Unlimited program with my prices.

 

[robert roman]

“My prices are $8, $9, $10 what would be a good pricing structure for the Unlimited program with my prices.”

Typical express wash is $5.00 and unlimited might be $14.95 (say $15) or lower. If customer visits four times, this is same as buy three get one free or 20 percent discount.

If in-bay price is $8.00, then unlimited would be $23.95 (say $24). So, competition would be $9.00 lower plus it offers free use vacuums.

2.7 times a month is not typical and a very low redemption rate. Most see 5 to 6 visits.

So, unlimited may not be a good fit with in-bay unless customers and operator are willing to put up with more frequent waiting line problems – long waiting line and average waiting time.

Customers purchased the legal right to use unlimited service so it’s not abuse if they chose to visit 9 or 10 times a month or even 20 times a month.

 

[Earl Weiss]

Anyone exclude certain types of vehicles or have a different pricing structure for them? For example, in Chicago I could see taxis washing daily or even more often. In some areas near airports I could see limos doing the same.

 

[DavidM]

Steve - We offer unlimiteds at our tunnel but not at our automatics. The higher price point required at a automatic would probably mean fewer members and a higher redemption rate.

Bob - You have quoted the 5-6 washes per month number a few times. Have you noticed the correlation between price and visits? Or maybe it is regional. From polling operators I have seen a direct corelation between price and visits. If you talk to the operators priced at 2 - 2.5x washes their average usage seems to be around 3 (2.6-3.5). Am I missing a variable?

Earl - Some operators choose to exclude vehicles for hire (livery) or offer it to them at a different price.

 

[robert roman]

“….have you noticed the correlation between price and visits?”

A correlation between price and visits (unlimited use) is similar to correlation between traffic counts and wash volume (capture rate).

Capture rate is unbiased but it is not an efficient or consistent estimator of wash volumes and the potential for very large errors exists. The reason is it’s the behavior of people not the change in traffic counts that causes wash volumes to fluctuate.

Likewise it’s people not the change in prices that causes unlimited use to fluctuate.

People do things mostly based on need. For instance, one of my friends is well off but hasn’t washed his car for three years. He simply doesn’t care about it and probably wouldn’t buy unlimited if it was $5.00.

My wife might pay $20 a month, and she would wash her car several times a week. However, we live in an area with over 3,000 people per sq mi and no carwash offers unlimited washing.

Then you have the areas where the average is 2.7 times a month and others that are seeing an average of 6 to 7 visits a month.

“Am I missing a variable?”

Yes, this would include information that is shared amongst members of the enhancement groups. These groups are basically clubs for certain operators to share experiences and data and require invitation.

“….monthly passes…..huge craze until maybe the last 5-6 years….coinciding with the economy taking a dive around 07-08.”

Craze also coincides with carwash equipment spending taking a dive and craze of buying tunnels, POS (self-pay terminals, RFID) and central vacuum systems.

 

[DavidM]

It seems like you are assuming price doesn't change behavior. I believe that price does change behavior. We could debate how much the price has to change to make a noticable difference in behavior but I think you would agree that the price of a good or service can change behavior.

Both of your examples (wife and friend) are based on guessing what they might do. It would be more valuable if you shared what people actually do when offered an unlimited program. When we started our program many customers made very unexpected decisions. I had many customers sign up that had never used a professional carwash before. I would not have guessed that might happen.

I am not sure what not being a part of an enhancement group has to do with the conversation.

 

[DavidM]

A big part of the monthly unlimited craze is driven by technology. I think DRB started in 2007 with automatic monthly billing and RFID and ICS around the same time or shortly after.

RFID makes it quick and easy and helps limit it to one vehicle and the automatic credit card payments allow the plan to be monthly instead of annual which made it more attractive to customers and easier to manage for operators.