cleaning up mud
Member
Can you profit when you offer unlimited washes for $15.00 a month? I only have ss and iba, a full serve in town is now offering this. just wondering.
Question for tunnel owner
- Thread starter cleaning up mud
- Start date
Maybe but doubtful depending on what his payment structure and operating costs are as well as several other factors. Most that I am aware of charge much more than $15 depending on the wash package they choose. Programs like this depend on having a large number enroll, allowing monthly automatic charging to credit cards to guarantee income flow and to a lesser extent the weather. At one time unlimited wash programs were very popular but not as much today.
robert roman
Bob Roman
Profitability of unlimited washing is mostly a function distributive efficiency. This occurs when products are consumed by those who need them most.
However, as consumption of a product increases, consumers tend to get diminishing marginal utility.
So, the question becomes how many customers will actually want unlimited and how big is the customer base.
For example, express unlimited may capture 5 percent of customer base.
In-bay benchmark captures 2,785 unique visitors or 11,140 washes annually.
Unlimited usage rate is between 4 and 5 per month.
So, 5% would be 139 customers or 7,500 washes annually (139 X 4.5 washes X 12 months)
2,785 – 139 = 2,646 X 4 washes = 10,584
New total washes = 10,584 + 7,500 = 18,084
Benefit cost analysis would show how profitable this might be.
Trick of the tale is getting 139 to join and keeping them enrolled.
This is less difficult for exterior express because its value proposition is stronger than self-service, in-bay.
For example, express features RFID, virtually no waiting, attended, hand finished qualities, free use vacuums, etc, plus customer base is usually very large.
However, as consumption of a product increases, consumers tend to get diminishing marginal utility.
So, the question becomes how many customers will actually want unlimited and how big is the customer base.
For example, express unlimited may capture 5 percent of customer base.
In-bay benchmark captures 2,785 unique visitors or 11,140 washes annually.
Unlimited usage rate is between 4 and 5 per month.
So, 5% would be 139 customers or 7,500 washes annually (139 X 4.5 washes X 12 months)
2,785 – 139 = 2,646 X 4 washes = 10,584
New total washes = 10,584 + 7,500 = 18,084
Benefit cost analysis would show how profitable this might be.
Trick of the tale is getting 139 to join and keeping them enrolled.
This is less difficult for exterior express because its value proposition is stronger than self-service, in-bay.
For example, express features RFID, virtually no waiting, attended, hand finished qualities, free use vacuums, etc, plus customer base is usually very large.
Earl Weiss
Well-known member
- Joined
- Aug 31, 2007
- Messages
- 6,342
- Reaction score
- 926
- Points
- 113
An elements overlooked by respondents:
1. Average use game. If you Charge $3.00 for a wash and Charge $15.00 for unlimited and your incremental cost to put a cas thru the tunnel is $1.50 willl the average unlimited user wash more or less than 10 times a month. I suspect much less.
2. If you are new the object is to get people in the door / sign up. Once that is done then after a year or so you increase the price of the unlimited. Say you increase $1.50 a year. How many will leave after a couple of increases. Probably few. (In this area that has been what has happened.
3. There may be a cap on unlimited Perhaps marketed as "Monthly" instead, capping at 3 x a week or X a month.
Now that I said that I note some of the RFID marketers always advertise volume and revenue increases. Yet, as we know and can figure from above, you could increase volume / revenue yet still have negative profitability.
I can recall this upstart company called Amazon that sold books and seem to lose on every deal as the pundits on CNBC would say. They lost on every sale but made it up in volume. Fast forward a decade and...
1. Average use game. If you Charge $3.00 for a wash and Charge $15.00 for unlimited and your incremental cost to put a cas thru the tunnel is $1.50 willl the average unlimited user wash more or less than 10 times a month. I suspect much less.
2. If you are new the object is to get people in the door / sign up. Once that is done then after a year or so you increase the price of the unlimited. Say you increase $1.50 a year. How many will leave after a couple of increases. Probably few. (In this area that has been what has happened.
3. There may be a cap on unlimited Perhaps marketed as "Monthly" instead, capping at 3 x a week or X a month.
Now that I said that I note some of the RFID marketers always advertise volume and revenue increases. Yet, as we know and can figure from above, you could increase volume / revenue yet still have negative profitability.
I can recall this upstart company called Amazon that sold books and seem to lose on every deal as the pundits on CNBC would say. They lost on every sale but made it up in volume. Fast forward a decade and...
JMMUSTANG
car wash owner
Earl interesting analogy.
I especially like the last sentence.
I especially like the last sentence.
Car_Wash_Guy
Well-known member
The only EE that is in my area, which is about 3 miles from me, is $35/unlimited and that includes 6 other locations within the state.
No way to compete with that.
No way to compete with that.
Earl Weiss
Well-known member
- Joined
- Aug 31, 2007
- Messages
- 6,342
- Reaction score
- 926
- Points
- 113
Read this again.
Is the $15.00 for unlimited Full Service washes? That would be a tough one. What's his regular price?
We have a 90' tunnel and we offer "Monthly Subscriptions" witch is 1 wash per day for one month. We offer 2 options; express package which is our $7 wash for 1 month for $27.99 or our works package which is our $10 wash for 1 month for $32.99. Right now we have about 90 regular works accounts and about 8 regular expression accounts. I don't know specifically, as I haven't checked in a while, but the last I knew our accounts were averaging about 5 uses a month. So for us, it is still profitable but not as much as a regular customer that were to buy individual washes 5 times a month. I have noticed that when customers first purchase the subscription, they use it 2-3 times per week, then they taper off to around once per week.
Washmee
Fullservice Tunnel
I know operators who have over 1000 customers signed up for monthly plans starting at $15. I offer plans starting at $25 for my budget wash and up to $50 for my best full service wash. My average plan customer is washing 5 times per month. The guys I know who charge $15 are averaging 3 washes per month. I generate enough revenue from my plans to cover 50% of my labor expense at my flexserve wash.
Full service unlimited for $15 seems extremely low. I think it would be very difficult to profit from that price point for full service (interior + exterior). For exterior packages though, I have seen many car washes with the $15 unlimited plans. Our basic exterior plan starts at $19.99 but our full service plan is $69.99.
most likely being a full serve he is looking to expand his customer base a bit more to include the typical cheaper EE customers and is now offering a low priced monthly unlimited for an EE option at his facility.
it's an interesting topic to me. how worthwhile is it to lock people in at a discounted rate when they are likely going to come to you anyway? there has been a lot of drb marketing that has gone into this and i think many operators have accepted it as a panacea. i think for a full serve it makes less sense unless you're competing with another full serve within 3 mile radius (with minimal natural geographic separation) and with your wash showing maturing numbers and volume. these are the advantages of not doing it:
1) most people that want unlimited you dont want to give it to them because there's a better than average chance they're higher utilizers. and if you try to kick them off because of it, they'll post on yelp and google and on your fb page
2) it cheapens your brand by discounting your wash and the work that went into it
3) this business is still about trying to control a local monopoly and if you're fortunate enough to have somewhat limited competition, you're going get these customers on your lot anyway
4) the frequent utilizers will add more cars to your lot and it'll affect your throughput and the quality of work for your other customers that aren't as price sensitive and are more concerned about other variables.
my advice, do a good job: monitor the car length of stay like a hawk and vacuum the heck out of crevices, make sure the windshield is spotless and that your preppers love getting rid of brake dust. and then find a niche and market the heck out of millennials and understand that 1/2 your customers are women.
1) most people that want unlimited you dont want to give it to them because there's a better than average chance they're higher utilizers. and if you try to kick them off because of it, they'll post on yelp and google and on your fb page
2) it cheapens your brand by discounting your wash and the work that went into it
3) this business is still about trying to control a local monopoly and if you're fortunate enough to have somewhat limited competition, you're going get these customers on your lot anyway
4) the frequent utilizers will add more cars to your lot and it'll affect your throughput and the quality of work for your other customers that aren't as price sensitive and are more concerned about other variables.
my advice, do a good job: monitor the car length of stay like a hawk and vacuum the heck out of crevices, make sure the windshield is spotless and that your preppers love getting rid of brake dust. and then find a niche and market the heck out of millennials and understand that 1/2 your customers are women.
Last edited:
robert roman
Bob Roman
“How worthwhile is it to lock people in at a discounted rate when they are likely going to come to you anyway?”
Since worthwhile is synonymous with value, look at two main ways in which a person gains from an investment.
First is capital gain or difference between purchase and sale price of investment and second is investment income generated from business operations.
Modeling 100,000 CPY against average price of $8.50, variable unit cost $2.13 and fixed cost $212,500 equals business-only value is $1.487 million.
Here, “average” customer value is $34 and lifetime value is $170.
If 1,000 customers (4.0% of customer base) enroll in unlimited at $19.95 under same assumptions, this would lead to a $77,900 increase in EBITDA and business-only value increases to $1.76 million.
Here, average customer value increases to $42 and lifetime value to $211.
Modeling unlimited price of $15.00 under same assumptions would lead to $34,000 increase in EBITDA and business-only value is $1.55 million.
So, even at $15, there is an increase in capital gain and investment income.
However, what many analysis (and this one) leave out is change in cost.
For example, under the unlimited assumptions 100,000 CPY becomes 156,000 cars washed. So, over five years, this would be another 280,000 vehicle’s worth of wear and tear.
Moreover, there is cost of investment including equipment and software upgrades as well as promotional expense, training, etc.
“….this business is still about trying to control a local monopoly….”
This is aim of unlimited. It increases switching costs for customers.
“There has been a lot of drb marketing that has gone into this and i think many operators have accepted it as a panacea.”
More like drug addiction than panacea.
“…..find a niche and market the heck out of millennials and understand that 1/2 your customers are women.”
That’s good advice.
Since worthwhile is synonymous with value, look at two main ways in which a person gains from an investment.
First is capital gain or difference between purchase and sale price of investment and second is investment income generated from business operations.
Modeling 100,000 CPY against average price of $8.50, variable unit cost $2.13 and fixed cost $212,500 equals business-only value is $1.487 million.
Here, “average” customer value is $34 and lifetime value is $170.
If 1,000 customers (4.0% of customer base) enroll in unlimited at $19.95 under same assumptions, this would lead to a $77,900 increase in EBITDA and business-only value increases to $1.76 million.
Here, average customer value increases to $42 and lifetime value to $211.
Modeling unlimited price of $15.00 under same assumptions would lead to $34,000 increase in EBITDA and business-only value is $1.55 million.
So, even at $15, there is an increase in capital gain and investment income.
However, what many analysis (and this one) leave out is change in cost.
For example, under the unlimited assumptions 100,000 CPY becomes 156,000 cars washed. So, over five years, this would be another 280,000 vehicle’s worth of wear and tear.
Moreover, there is cost of investment including equipment and software upgrades as well as promotional expense, training, etc.
“….this business is still about trying to control a local monopoly….”
This is aim of unlimited. It increases switching costs for customers.
“There has been a lot of drb marketing that has gone into this and i think many operators have accepted it as a panacea.”
More like drug addiction than panacea.
“…..find a niche and market the heck out of millennials and understand that 1/2 your customers are women.”
That’s good advice.
