I need help on this one...pricing issues

[coincarwash.ca]

We raised our start up from $2 for 2 minutes 56 seconds(22 seconds per quarter) to $3 for 3 minutes and 48 seconds (19 seconds per quarter)
We did this to combat a new HST tax in Canada. We also agreed with our competiton down the street we would both go to the $3 start up.

Today I drove by the competition and he is back to his original start up and pricing....he didn't even give me the heads up he was doing so....even after promising that he would talk to me before making any changes. Oh well thats what competition is all about. I have always been a second a quarter more expensive than him anyway.

Now what do I do? Do I drop back to $2 or?

I was thinking of running a special for a dollar start up, but charging $1 a minute (15 seconds per quarter)
This would give me the momentum of more volume, and also a larger price increase.
I could end this special at any time, or run it for a long time if I like the results.
I don't feel I am starting a price war, as I am planning on being more per minute period.

Any comments would be great.

 

[washme1]

I don't know what the laws are in Canada, but if you colluded with another operator on prices in the United States you could be charged with an anti-trust violation of price fixing.

 

[bigleo48]

Coincarwash,

Putting the collusion aside, I don't think you are taking the right approach with regards to pricing.

I don't know the competitive nature of your location, but I think price setting is a bit of navel gazing. What I mean is that you set your price based on what you think your customers will be willing to pay and what you need in ROI. Has raising your startup to $3 caused any complaints? If so, are they from the core customer group or just the old people who think gas should still be at 25 cents a gallon?

The flip side is that if you go back to $2 to start or even $1, your going to draw attention to your real pricing, tick people off by having the "low time" buzzer constantly going off and basically confusing everyone. Anyway, can anyone wash a car for $2 at 19 cents a min...not really...

I'd stay at $3 and not be so concerned about the other guy. I try to have a clean well run wash with all the options. $3 in the GTA is below the amount people think about.

Big

 

[pitzerwm]

Reading info provided by others and then making your own decisions isn't illegal yet, but could be down the road.

Getting together and agreeing on setting prices is illegal.

 

[MEP001]

Run a better wash than the competition and keep the higher price, and you'll have the more profitable business.

 

[PaulLovesJamie]

You changed to a $3 startup because you thought that was the best thing for your wash, right? Did that change?

Your market is certainly different than my tiny rural market, but my advice would be to leave your startup at $3, focus on growing your business and ignore the other guy. Try to avoid letting other people dictate your actions.

btw, obviously IANAL (i am not a lawyer), but I think 2 dinky carwashes in the gta does not constitute a trust, especially since your prices are different. I wouldnt waste a minute worrying about that.