MOUNT GILEAD, Ohio — Laundromat owners are in this business to make a profit on their investment. On that point, we can all agree. Obviously, a solid pricing strategy is a key component to that goal. Just what that strategy is and how we deploy it can vary greatly and may be dependent upon geography, market, competition, etc.
It is also likely driven by how we develop and maintain our stores. For instance, if you provide a far better customer experience than the store down the street, you really don’t need to meet/compete or be lower. I may not have seen it that way as a relative newcomer to this business a couple years ago, but I definitely do today. Making data-driven decisions on pricing isn’t just a “nice to have.” From my side, it’s the only approach to effectively managing your business.
As I described in Part 1, I believe your first step in using data to guide pricing is building a strategy around information gleaned from visits to the competition. Second is investing in the controls/management systems that provide easy access to operations information.
A significant “aha” data moment came in reviewing my washer-extractor cycle information. Until doing this deep dive in the data, I had been charging a flat vend for cycles: $5 for 40s and $6 for 60-pound washers.
Digging into my data, I found that a high percentage of cycles were utilizing hot water washes and extra rinses. As an owner, I’m paying to heat that water and not recouping the expense; same for the extra water included in the additional rinses. So the data helped me see the need for cycle modifiers and how they can at least recapture that expense. And the result of the data-driven pricing change? My reports show a 10-12% lift in revenue, with no real drop in cycle modifier use.
While not significantly different from what other owners experience, my usage reports show heavier turns on the weekends. Being a smaller store in a rural market, it’s more important for me to balance out turns compared to much larger super stores in metro areas capable of handling much larger volumes during busy times.
Again, like most owners, I have used this data to drive a bit higher vend price on weekends to try and push some customers to weekdays and create a flatter balance across the full week. Being in a more rural area, time-of-day pricing doesn’t really fit into my pricing model as perhaps it would in a metro area.
THE VALUE OF DATA
Today’s laundry business depends not only on creating an excellent experience for customers, but understanding how customers interact with your store. As I begin developing my second store in the months ahead, I’ll use the data gathered from my current Laundromat to drive a pricing baseline.
That’s when the real work of data review begins. Once you have the information that shows customer interactions, you can begin to identify trends. Trends will drive pricing, promotions, and basically arm you with the detail to make informed decisions on operations.
Our time as owners is at a premium. We can’t be in the store 24/7 watching which machines are being used or what our busy days are.
Manufacturers’ networked solutions are more powerful than ever before. Information is not only available when and where we want it, we are now able to slice it up and tailor at-a-glance reports that give us the detail we want and need to make pricing decisions virtually instantaneously.
Technology is no longer a luxury item for vended laundries, it is the single most important tool to managing your business, as well as being able to scale it.
The key is selecting a system that streamlines all operations data into a single report. The quicker we can read and digest information, the faster we can develop a pricing strategy that levels out the peaks and valleys during the week and spreads out turns throughout all capacities.
There’s a reason it’s called a pricing strategy; it doesn’t happen by accident.
Miss Part 1? You can read it HERE.