To raise, or not to raise the price...that is the question.

[MDrost1]

Folks,

I have been toying with the idea of raising my SS price(actually cutting the time). I am currently at $2 for 4 minutes to start. Thinking about $2 for 3:30 to start and $3 for 5 minutes minimum with CC.

A little background. I have a 5 bay SS with an IBA. Everything works properly. Tire Cleaner, Engine Degreaser, Foam Brush, Spot Free, HP Wax, HP Soap, Pre Soak, HP Rinse. If I ever have an issue it is dealt with in a quick fashion, and I don't let unsatisfied customers leave without a sense of satisfaction.

I have spent the first 2 1/2 years of my ownership dealing with a lot of deferred maintenance. I have made a lot of upgrades. Cryptopay on all bays, 2 vacs. New meter doors. I keep everything clean and well maintained as I live a mile from the site.

For 16 years this wash has been at $2 for 4minutes to start. As I mentioned above, thinking about $2 for 3:30 to start, and $3 for 5 minute minimum with CC. My only competition is 3 miles away. They operate from a distance. I checked out their wash yesterday and it is $2 for 5:30 to start. They don't have pre soak(didn't work), Spot free, HP wax(didn't work). Only functions that worked were HP rinse, HP soap, FB(very poor show, all air), tri foam, and tire cleaner. They have an M5 that doesn't accept CC(broken).

Would you cut time? Thanks for your advice!

 

[chaz]

Leave the time as is. Raise the price. I'm $3 for 4 minutes, went up $1 two years ago. Same price cash or credit but credit is count up. If you want to see more $ in your pocket, raise the start price. You will also notice less mess!

I've been afraid to raise my vac price from $1 for four minutes cause that's the price most others charge. Well, one vac filled with wet cement made my decision easier. New decals in production $2 for 6 minutes.

 

[Randy]

My wash is in a small town of about 6500 people. About 5 years ago I cut my bay time from 4 minutes for $2 to 3:30 minutes and lowered my vac time down to 3:30 minutes from 4 minutes for a dollar, not a single complaint. This last January 1st I raised my bay prices to $2.25 to start for 3:30 minutes and raised the vac’s to $1.25 for 3:30 minutes, again not a single complaint. On January 1st I’m going to raise the prices again to $2.50 for 3:30 minutes in the bays and $1:50 for 3:30 minutes on the vac’s. The only thing I’m seeing is more revenue. Mike I wouldn't hesitate one minute to raise my prices.

 

[Waxman]

I like a $3 start because it raises the price for those who just want to spend 1 cycle worth of money. You could raise the startup price and slightly lower time per coin and have the best of both worlds.

BTW; I can't believe you have been at $2 for 16 years and you are fretting about raising the price.

 

[MEP001]

FWIW I like to raise the price AND the time. I routinely creep the time per coin down, then at some point I'll raise the price and bring the time per coin way up. After a few months I'll start creeping the time per coin down again.

 

[robert roman]

“…..toying with the idea of raising my SS price….cutting the time….currently at $2 for 4 minutes….”

This means base price is $0.50 per minute, $2.00 for 3.5 minutes is $0.57 per minute, and $3.00 for 5 minutes is $0.60 per minute.

So, strategy is to increase price plus customers have 30 seconds less time to solve their problems whereas they get more time (1.5 minutes) with credit card purchase but at a higher price per minute.

Without knowing what the goal and objective is, it’s hard to determine if this (squeezing more money from existing customers) is a good or bad strategy.

For example, it’s very difficult for a mature self-serve (16 years old) to increase wand-bay sales volumes (attracting new customers) without significant improvement like changing business model to pay-one-price, wash-all-you-want.

In most cases, the greatest gains today come from improving in-bay performance.

Washing a couple of thousand more cars a year in the in-bay is going to generate a lot more money than incremental changes proposed for wands.

One way to improve in-bay performance is with a website and mobile marketing strategy to promote the wash and attract the younger generation.

Do you have a website or virtual store?

On the other hand, if you want to get existing wand-bay users to buy more, loyalty rewards program is a proven strategy.

 

[MDrost1]

Great advice from all! Thank you.

The wash has been around since 1987 actually. 1999 was the last price hike. This was done by the previous owner. I bought is 2 1/2 years ago, and things are going well. I don't need to raise prices, but considering the upgrades, maintenance, and 16 years since the last price raise, I thought it might be a good time.

I do not have a web site or virtual store. Though, I am tech savvy enough to make that happen soon. Haven't seen a need for it yet.

I have been thinking about upgrading my "ExpressKey" loyalty system to the new CryptoPay System or the "Touch4Wash" system. Anybody have experience with either?

Thanks!!!

 

[chaz]

First thing I'd do, like TODAY is raise the price. I'd go $3 for four minutes. You'll Likely notice more $ in your pocket quickly, and your customers will not feel like you are cheating them on time. Used to be you could buy a half gallon of ice creme. Now the carton looks the same, but much less product, for I guess the same $. I'm not an idiot, nor are my customers...if you need or want to raise your price, then do so just don't give me less time for the same money.

Good luck.

 

[soapy]

Here is a way to look at your profit when comparing your price raise. Lets say you are at $2 for 4 minutes now. A general industry rule of thumb is a 35% variable cost for soaps, water etc. So at $2 you are making $1.30 per cycle. Raise your price to $3 per cycle and your COGS does not change but profit becomes $2.30 for the same cycle. In order to make the same amount of money you have to wash almost twice as many cars to make the same amount of money. ( 1.76 X). Factor in all the wear and tear you save on equipment at the higher rate and you are very close to needing double the number of washes to make the same profit. Too many times SS operators look only at keeping the bays full instead of the bottom line. I personally would rather wash 1/2 the cars and make the same amount of profit. Express tunnels are setup so that they need large volume to pay for themselves. I think SS washes need to look at profitability per cycle and not settle for small profits that rely on large volume.

 

[rph9168]

I worked for a company that was driven in their pricing strategy more by what the market will bear than straight percentages. In some cases they made what many would consider less than a good percentage on profits while on others they tripled the price over the cost. In the end they were extremely profitable. While it is important to know what your competitors are charging it is also is important to make sure you can live with your wash's profitability. There are many washes out there that went under trying to be the cheapest in town or thought matching competitors' pricing was the way to go. Go with pricing you can live with.

 

[chaz]

Yep. I don't care if I have the busiest bays....I just want the most profitable! Plus my higher pricing seems to chase most of the slobs away.

 

[MDrost1]

Update...

Just raised my prices. Thanks for the advice! Hopefully all goes well!

 

[chaz]

What's your new price and time?

 

[MDrost1]

I felt comfortable with $3 for 5 minutes.

 

[BBE]

So you are 3 dollars to start now?

 

[MDrost1]

Correct, Sir. Sorry.