Coin-Op 101: Power Profits with Data-Driven Pricing (Part 1)

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Rockwell Bonecutter |

Assessing your store quality vs. others in market is first step

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.

QUALITY EXPERIENCE DATA

Assessing the quality of your store versus others in the market is the first step in letting data drive pricing decisions. True, it’s not a computer that’s spitting out this information, but it is still data — first-hand observations data — and it is just as important.

When I first opened, I toured other Laundromats around the area and determined the pricing the market would bear. However, it soon dawned on me that if I was providing a high-quality experience, a cleaner store and bathrooms, newer equipment (with no out-of-order signs), I should get more for the experience I created.

In deploying this strategy, owners have to know up front and be comfortable with the fact that there is a small group of “price shoppers” that will always go with the lowest price in the market. While they may visit if you host promotions, they won’t be regulars. And it’s OK to not have them as regulars.

So the first step in using data to guide pricing is building a strategy around the information gleaned from visits to the competition. How does your store stack up? How do your equipment capacities, speed, efficiency and cycle flexibility measure up? All are worthy of consideration in developing your pricing plan.

The second part of setting up to make good data-driven pricing decisions is investing in the controls/management systems that provide easy access to operations information.

FINDING BALANCE BETWEEN TOPS AND FRONTS

As an IT professional in my day job, I’m definitely one to connect directly to data in driving decisions; it’s the main reason I networked my machines. Using Quantum® controls on my Speed Queen machines, I’m able to spot trends in data and identify areas I want to act on. The more user-friendly and intuitive the management system, the more helpful it is for the owner.

About six months after opening, the first data points I unearthed and acted upon concerned the difference in top-load usage versus my front loaders. Priced at $2 per cycle, data showed me that my top loads were far too attractive to customers. I needed a mechanism to get a better balance between the top-load washers and my 40-pound front loaders. By increasing the vend price on my top-load washers to $3, I narrowed the gap to the $5 vend on the 40s. Obviously, the hope is that customers see the smaller price difference and perceive the noticeably larger 40-pound washers as a much better deal (which it really is to everyone involved). The customer definitely benefits from higher g-force and shorter dry times to get in and out faster.

I can tell you that in this case, my data-driven pricing decision worked perfectly. My 40-pound washers are seeing a significant upturn since the change.

Check back Thursday for the conclusion!

About the author

Rockwell Bonecutter

Bonecutter Laundromat

Owner

Rockwell Bonecutter owns and operates Bonecutter Laundromat, a Speed Queen vended laundry in Mt. Gilead, Ohio. He can be contacted at rock@bonecutter.net or 419-751-2220.

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