My Outdated Prices in This Troubled Economy! Increase My Prices?

[Carl]

I opened a 6 & 2 carwash in July of 2003. I've been too afraid to raise my prices despite years coming here to the Forum reading cheerleaders supporting anyone who raises the topic of possibly raising his prices to keep up w/ increased costs. I'm installing Unitec's WashPay system soon to tie together my 6 handbays, 2 dog washes and 2 Wash Select IIs. On my non-PCI compliant credit card system I was charging $2.00 for 2.5 minutes in my dog washes, $1.50 for four minutes in my handbays, $1.00 for 5 minute vacuums & $4, $5, $6 & $7 at my Water Wizards. (I can't afford to add my eight vacs to WashPay so coins only from now on at the vacs.) I NEED TO RAISE MY PRICES FINALLY BUT I'M WORRIED IT'LL SCARE CUSTOMERS OFF 'cause of the $5 Express Washes w/ free vacs all over the place now!

I think my handbay customers like the $1.50 per swipe feature 'cause they can control their costs in $1.50 per swipe increments, but I know many of you ask for $5.00 minimum charge to a credit card just to start-up the bay? I'm worried that's asking too much of a change in what my regulars are used to so I'm gunshy to raise my start-up credit card price but darn it, EVERYTHING has gone up so I feel like I deserve a price increase because I do run a good facility w/ excellent soaps & service. (customers do often times hate the hassle of having to reswipe after that $1.50 worth of time runs out two extra times a wash!) In my dog wash I feel like I need to at least raise my start-up price to $4.00 or $5.00 because I'm getting people quickly washing bigger dogs for just $2 in those 2.5 minutes! In my auto bays I want to raise each of my washes by $1.00, but I hate to lose many of my college customers and budget conscious customers who can afford spending $5.00 but won't want to spend anymore. If I raise just my top two washes and leave the bottom two the same in price, I feel like I'm asking more of the "well-to-do" to handle a price increase and something feels strange about this strategy of only raising the price on my top two washes?

This is just so difficult for me. (increasing prices) I tell myself that instead of raising prices, I will just find more customers like Wal-Mart does. (higher volume, cheap prices) Never happens and sales only go down yearly 'cause of increased competition. I know you can't advise me exactly what to do so if anyone wants to help me put a different "mindset" in place as I debate with myself as to whether to raise my prices or not; I sure would welcome that here now 'cause in this troubled economy, it just seems ill-advised to raise prices? Or maybe I'm dead wrong about this. Maybe if I don't raise my prices, my business will be "dead" soon if I don't wisen up! (sigh)

Thanks in advance for any comments you have about yet another "I want to raise my prices" post. - Carl

 

[Reds]

Not sure where you're at, but at 4 - 5 - 6 - 7 I don't see how you can make any money. I am also hesitating on raising my prices, but my costs are going to force the issue.

 

[Whale of a Wash]

Why not go to $2 on a one month trial basis. If it doesn't go well go back to $1.75. I know in my climate the bank would own my washes at $1.50.
For the dozen that complain give them a free wash and they will feel better also. In the 22yrs in the wash business it was always known to me, the raising of the prices was hardest on owner. Order some $2 decals today, and in a month or whenever report back to us, on how it's going. Then next month tackle the IBA pricing.

 

[Greg Pack]

I am 5,7,8,10 in autos. The $10 has the premium CCP option. I will have to check but I think the $10 is still the most popular by far. Even though you have first generation wizards, you can do some modifying and add a low pressure service if you are not using the reclaim output. I'd consider going up at least $1 and replace your least popular wash with a newer high level service with a Rain-X type product for $2 over you existing best wash.

Doing the math on the 2.00 SS startup- you have to lose a significant percentage of customers to come close to losing on a price increase. However, the "2" starts to offer some buying resistance. It seems my busiest years were back in the day when startup prices were much lower, but that was also before expresses started popping up everywhere.

The SS industry in my immediate area is in a severe state of contraction and doesn't look likely to make a strong comeback. Many have closed, many more are on life support. Several operators are converting their IBAs to mini expresses. One local guy is about to convert his 6/1 to an express. I don't know if this is an option for you to consider, but there have been some success stories with conversions.

 

[PaulLovesJamie]

I keep a spreadsheet of the price of every wash in my area, I update it every year or 2. At $1.50/4 min, you would be cheaper than the most ramshackle self serve in my area. As Reds asked - where are you, geographically & demographically? Btw... would you happen to be the Carl in the same county as me?

The economy scares me regarding raising prices right now too. My advice is to start with the very basics - 1) what do the wash's financials look like. eg If you're losing $, your decision is already made. 2) competition - that would dictate how I would increase. I agree - express washes are a concern.

 

[bigleo48]

A few thoughts...
1- Startup price for your petwash needs to go to $5 today!
2-Why $1.50/swipe? Let them swipe and press stop when they're done with a $10 walkaway. By doing the $1.50 per swipe, I am sure you are discouraging you customers from spending and taking away a good selling feature. I tell my customers "Swipe, Wash, Stop...that easy and you pay exactly what you use...so if its $4.58, you will be charged $4.58 and you'll walk away with a cleaner car as you will leave when its done to YOUR satisfaction...no leaving with the car not completely waxed or rinsed because you need a few more secs and didn't want to spend the extra $1.50." This way they spend 60% more than cash in my SS bays.
3-People are creatures of habit. Once they are your customers, they need to change to be someone else's. Raise your price and get some signage and be there to explain to people why. They have bills too and they know everything is going up...it's called inflation and historically runs at about 3% compounding.
4-Be innovative. Did you see my posting on "Subscriptions or Conditional Unlimited Washing" That's the best part of your new Washpay server. Sell subscriptions that pay monthly for programs like "Wash weekly for $12/month" (that would be your lowest wash once a week, but have programs for the better washes). Also have a "Wash Every Day" program in the SS bays for $20/mth. Do the math...it doesn't take too many accounts to make this fly and little risk. This also helps to eliminate the weather man and guaranty income before you even start the month.

 

[robert roman]

Carl,

In response to your concerns about price increases, you may want to read the self-service industry outlook that I recently submitted to Bill Pitzer. You can find this report at;

http://www.autocareforum.com/self-serve.html

Some of the information in this report is excerpts taken from my Car Washing in U.S., Industry Report 2011.

As for mimicking Wal-Mart’s “everyday low prices,” experience has shown it can and does work for Wal-Mart and other big-box stores. However, this strategy will probably not work as well for you because of the law of retail gravitation; the share of customers that a retail outlet attracts is inversely proportional to the distance shoppers must travel (economic distance) and directly related to store dimension (attributes and benefits).

For instance, the average size of a Wal-Mart Neighborhood Market store is roughly 42,000 SF and the store may draw customers from a market range or trade area of perhaps several miles. On the other hand, the average size of a Wal-Mart Super Center is roughly 186,000 SF and the store may draw customers from a market range of perhaps 20 miles or more.

Carwash is more like a convenience store, gas station, fast-food and other support service. The market range of the trade area for these types of businesses is typically quite small between two and three miles.

Consequently, you would probably find that you would almost have to give it away to clear the market where you are located.

As for converting an in-bay automatic to a mini-tunnel, this may work if you actually have the market potential to wash some real volume. Otherwise, you may end up spinning your wheels.

As for exterior express sucking share away from self-service wands or in-bay automatic at self-service and gasoline sites, I find little empirical evidence to show that low-price of $3.00 or $4.00 is the primary culprit.

If you want more than anecdotal evidence of this, please visit the home page of my website at www.carwashplan.com and read the short story of a full-service owner who put the kibosh on a brand new $3.00 express wash.

Hope this helps.

 

[Kool Wash]

I went through the same back and forth for about a year. A little background. I am in a very populated area in north Tx, there are 5 self serve sites with at least 6 bays each, 6 express tunnels, and too many to count automatics within a 3 mile radius of my site. I have a 6 bay ss. I keep my wash better than my competition (cleaner, better quality products, staff on site more often).

4 months ago I decided to finally go up in price. I raised my start up by %25 and decreased my time per credit by %20. The way I figure it I raised my prices oveall in the bays by %22 (give or take). I have not had anyone complain about the prices. Some asked, but no one complained. As far as volume goes, I am up about %10. My attitude is better every time I go up there knowing that I am making more money now. Place is cleaner, I think it got rid of the customer who constantly washed off their pickup bed and nothing else. All in all, I wish I did this sooner. I understand this is a tough choice, but if you are what you say and give the customer better service than competition, then you should have no problems raising your prices. Go for it.

 

[MudMoney]

Are you in this business to make money or work for nothing and grow old at it?Have you considered being the leader in your market or just react to what your competitor does? Maybe consider another line of work as your indecisiveness will cause your business to suffer.

 

[Carl]

Thanks, All!

Wanted to thank all of you for your replies, especially the last one which was a "tough love" kind of approach which is shaking some sense into me before it becomes too late.

Was an exhausting day. WashPay installation still a work-in-progress. We finished all the CAT6 runs today w/ good termination of all the cable ends. Programming of the site server and self-service bays tomorrow. Hope it all works! Big Leo...those are great suggestions w/ how to maximize WashPay's marketing opportunities! (and the $5 dog wash start-up prices makes so much sense!) PaulLovesJamie...nope, I'm actually in southwest Missouri not PA. Robert Roman, I will check out that interesting information. I do agree w/ your target radius market for any carwash being a more immediate one rather than a more huge one. I made a mistake two years ago purchasing a year's worth of TV ads that encompassed way too big a viewing radius so I instead will begin to target market a tighter radius of two to three miles around me rather than "waste" on expensive TV ads ever again.

Lastly, I find myself rereading the last post put up before this latest one of mine by another member. Amazing how simple explanations often times can be the most penetrating and effective ones! He wrote two questions and one sentence, and I find myself staring at that post, reflecting hard about my business and the disrespect I've given it by remaining at 2003's same prices when I opened up in July of that year. I began to set my goals lower and lower w/ the wrongheaded mindset of "at least I'm able to pay all my bills". {The horrid Occupy Movement would be so proud seeing me accept little profit and almost "giveaway" services at low '03 prices as now I realize I'm doing!} Gotta give my business the respect it deserves by pricing its high quality accordingly.

Thanks for kicking my a** swampdonkey. Been good for me! Thanks, All! - Carl

 

[JMMUSTANG]

Increase your price per bay and offer Bonus Time too.
If the customer puts $5 in the bay give them 4-8 minutes Bonus Time FREE.
This will increase your dollars per car and soften the price increase.
Do the same to your vacuums.

 

[robert roman]

Although you are welcome Carl, I believe you need to give yourself more credit.

It was not tough love or any of the other responses that brought you to your senses rather it was your inquisitiveness that caused you to ask the questions that needed to be asked.

Years ago, Robert Fripp invented something that virtually all musicians thought impossible; a new method for tuning guitar.

When asked to describe the process used to achieve this, Fripp responded by saying it came to me when I finally asked the right question.

 

[Waxman]

I raised my prices last year in SS/IBA/Detail. This was precipitated by my review of my p&l and the desire to improve revenues and cash flow.

Everyone has to decide for themselves because all our situations are different (even if only slightly).

I have a young family. I am passionate about my work, my business and my customers. I run my place the way it should be run, putting service, quality, and the customer first. I deserve to make money at this. The community is better served with a place like mine running and thriving vs. bankrupt and closed.

Do you think tyhe water dept or sewer dept feels sad and blue when they raise rates? What about Verizon or your propane/natural gas supplier? Do you think Kleen Rite frets over price increases? No. They don't. They charge whatever the market will bear and then some. Why should you (we) fret when a price increase is necessary and prudent? You shouldn't. We are better than that. We are professionals.