Price increase % on P&L

[Kimberly Berg]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

 

[MudMoney]

I'm blunt with realtors and future buyers of this haggling back and forth. This is my price and it's fair ,there is no reduction in price. Realtors only have self interest and moving on to the next victim.

 

[Dan kamsickas]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

It's not. There can be a multitude of reasons for not seeing the full 33% increase in revenue. Regardless of some of the spin you see the economy is not strong. It can be easily argued that cost of living has increased by 20-30% in the last 4 years. That alone will lead to people washing their cars less frequently. It's a discretionary purchase. Weather plays a factor. Some people, I'm sure, saw the price increase and either went somewhere else or are washing less frequently. Another way to spin it is you increased revenue by 17% and reduced wear and tear on the equipment by 16%.

AND

If that is your agent, fire them. They are not looking out for your best interest.

 

[Axxlrod]

A 33% price increase will not translate into a 33% increase in top-line revenue. If your "realtor" is saying this to you, you've hired the wrong person. You need a broker representing you that understands small businesses.

To illustrate the point further, if you theoretically raised your prices 100% (or even 500%), you would not receive a 100% (or 500%) increase in total revenue, right? A certain % of your customers would not come back or patronize your business less frequently, resulting in a less than 100% increase in revenue.

A 17% increase in revenue from a 33% price increase sounds about right.

I just sold one of my washes last month so I just went through this.

 

[Earl Weiss]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L

Either they are dingbats or BSing you.

 

[Keno]

Either they are dingbats or BSing you.

agent is the dingbat, buyer trying to lower price by BSing

 

[Roz]

At end of the day the buyer is going to look at the multiple of revenue or the CAP rate, and decide if it is enough of a return for them and if any additional investment is necessary for the place to remain competitive.

Curious what multiple of revenue or cap rate you seek or are discussing. I am considering the sale of one of my locations after being approached and I have heard multiple recommendations all over the spectrum. I am trying to decide on the listing group between 4 contender's. Never a scientific process. with respect to the price increase you cannot assume an increase will generate more revenue as the last several years where crazy for all. That’s why most buyers/sellers look at the last three years of numbers to smooth out the numbers and see the revenue range.

Good luck. You and the buyer need to feel good about the sale.

 

[Kimberly Berg]

I appreciate all of your feedback! Cap rate is 11% - 12%.

 

[sjb]

They are trying to bamboozulle you with some California Math… don’t get swayed from your position. This is your deal!

I would bet you have one of the nicest and most efficiently run SS washes in the game…

How close is your closest competitors….?

Do you think the local government would even allow a new wash to be built in your area…. ?

What does your crystal ball say the revenue/net could be in 5 or 10 years…. How about 20 years…?

Over 100,000 cars go by every day… that’s a staggering number!

I think your new sals price needs to begin with a “3”!!

Best of luck!
sjb

 

[Axxlrod]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

You and the buyer's appraiser are probably going to want to use my wash that I just sold as a comp.

DM me to discuss if that comes up.

 

[Aurora]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

You're right that a 33% price increase won't always lead to a 33% rise in total income. Factors like customer behavior, competition, seasonal variations, and service quality play a role. Customers might wash their cars less frequently due to the higher price, affecting overall sales. It's great that you're consulting your CPA for a clearer analysis, as they can help you understand the dynamics at play in your specific situation.

 

[edredtop]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

The missing part of this equation is a car count imho.
As an example: (pretending you only wash cars and there's no vacs or vend) If you washed 100,000 cars last year and made $300,000 (100,000 x $3) and raised your prices to $4 this year, your buyers are expecting to see $400,000 in sales this year (100,000 x $4) and if you miss that mark it means less cars washed than the previous year. Yes, you may be showing an increase in sales but to them, they see the reduction in wash volume (car count).
There's no question you did the right thing because of your increased gross.
Fwiw, and understanding everybody's circumstances are different,
I've flipped a bunch of condos and houses and the one thing I've learned is don't let anybody instill FUD in your mind. Be willing to walk away from any deal that makes you uncomfortable or doesn't meet your expectations. Be gracious, thank everybody for their time and consideration and move on. The buyer wants a deal and will exploit any weaknesses they can find to achieve that goal and your realtor doesn't get paid unless you close so they will try to apply pressure too, albeit more subtly than a buyer would. Whenever I've had trouble selling a property I have raised the price on the listing to show strength and confidence in my position and it's worked every time.
You have a beautiful operation, the equivalent of an In-N-Out Burger, be willing to pass on a less than optimal deal if at all possible.
Good luck Kim!

 

[Roz]

I appreciate all of your feedback! Cap rate is 11% - 12%.

I have seen many Express and Full Service tunnels for sale in the 5%-7% cap range so I would think a IBA/SS that is offering a 12%-13% cap rate would sell quickly especially with your amazing car count driving past the place. I would talk with anyone who is within 10% of your ask and be patient as I would expect you to have multiple interested parties. The agents I am speaking with are suggesting an ask in the 12%-15% range to possibly get multiple people interested early on. We are living in some interesting times on prices for everything so no right or wrong answer - just do not take things personally as there are realistic buyers and tire kickers. Sometimes it can be hard to tell the difference between them. Agents are always looking to close a deal at any cost and quickly so they can move on to the next deal therefore you will need to be your own counsel. If the ask and offer are close it is not unreasonable to ask the agent to kick in some of the difference from their commission to make the deal happen.

Interested to hear how it goes for you, I would expect we hear that you are closing a deal soon.

 

[OurTown]

I have seen many Express and Full Service tunnels for sale in the 5%-7% cap range so I would think a IBA/SS that is offering a 12%-13% cap rate would sell quickly

Do those include the business? The ones I have seen are property only.

 

[1carwash1]

If you only raised the wash bays by 33% then only that portion of the total income should increase. Perhaps the interested party is under the impression that you raised the prices on all your services (vacuums, vending, etc) by 33%. If possible break out the wash bays revenue, before & after the price increase, and then calculate the percent increase.

 

[edredtop]

If you only raised the wash bays by 33% then only that portion of the total income should increase. Perhaps the interested party is under the impression that you raised the prices on all your services (vacuums, vending, etc) by 33%. If possible break out the wash bays revenue, before & after the price increase, and then calculate the percent increase.

Cryptopay analytics?

 

[Kimberly Berg]

I just adore you guys! THANK YOU for all your helpful replies!! Here's the short answer I received in a DM from Mike in Atlanta....

If you only raised the wash bays by 33% then only that portion of the total income should increase. Perhaps the interested party is under the impression that you raised the prices on all your services (vacuums, vending, etc) by 33%. If possible break out the wash bays revenue, before & after the price increase, and then calculate the percent increase.

 

[Roz]

Do those include the business? The ones I have seen are property only.

Many are property only however I have seen more that include both especially as tunnels have over expand

 

[Car_Wash_Guy]

In January 2024, I raised my SS wash price from $3 for 5 minutes to $4 for 5 minutes. 33% increase. I'm in the process of selling my car wash and the potential buyers and my real estate agent are telling me that this 33% price increase should be showing at least 33% increase on the Total Income on my P&L (compared to last year). And, it's not. So, far I'm showing a 17% increase over last year ($50K). But they're telling me that my business went down 16% (33% - 17%). I disagree! My car wash is beautiful, modern and busier than ever. I'm not an accountant and waiting to hear back from my CPA. I know the 33% price increase is going to increase the Total Income on my P&L, but I don't think it's going to directly correlate to a 33% increase in Total Income. Your thoughts??

Just curious....are you using a gross multiplier to arrive at a sales price and if so and you dont mind me asking what is that multiplier?

 

[Waxman]

this is why I am hopefully going to sell my car wash on my own without a realtor someday. My feeling is that all I need is a lawyer. Not too many realtors are going to know their way around the car wash business I'm sorry to say. The ones I've met can barely handle a house sale.

Who cares if you washed less cars if you made more money? We're in business to make money. It's actually better, profit wise, if you make more money washing less cars because your net will be even higher due to a lower cost of goods sold. The money going into your bank account is what matters the most.