A Fair Price for a Good Service (Part II)

Paul Partyka |

CHICAGO — Are you thinking about raising prices early in the new year? For years, operators have struggled with pricing decisions. Many have perceived this industry as being very price-conscious. Operators feared losing customers to the laundry down the street.The good news is that attitudes are changing. In this article, operators comment on the need to inform customers about price hikes, dryer pricing, keeping up with utility prices and the industry’s future in regard to pricing.IT’S TIME FOR A CHANGE“I believe pricing is less important to customers,” says Chris Mirisciotta, Canon Coin Laundry, Canonsburg, Pa. “It’s operators who look at pricing too much. People are complacent about raises because they get raises all the time.”Mirisciotta, an eight-year industry veteran, has just opened his fifth laundry. “My competition is older, they are hooked on prices. They just don’t raise their prices. My last raise was dropping the time on dryers. I put up signs blaming gas hikes for this. There were no complaints. This tells me other raises are possible. The number of customers you lose will be minimal.”Mirisciotta admits to being more price-conscious in the past. “I’m just not as concerned about pricing today. It would be nicer if there were all card stores and operators could go with smaller price hikes.”When deciding on prices in the past, he has relied on distributor input. “Now I like to keep utilities at 25 percent or less. I watch the utilities and other expenses, such as garbage rates. I keep an eye on the competition. You don’t want to be the highest-priced coin laundry.”Mirisciotta raised his prices about a year and a half ago. It was his first washer price hike in eight years. Currently, his top loaders are $1.50, the 18-pound washers are priced at $2, the 35-pound washers are $3, the 45/50-pound washers are $4 and the 80-pound washer is $7. Drying is six minutes for a quarter.“I would like to see washer prices raised in the near future. The utility hikes might [bring this about]. The dryers are OK. ”He also believes in letting customers know about his pricing decisions. “I put signs up before and after, letting customers know that the prices are going up and that we need to make a living too. This helps them understand.“The customers have more concerns about dryer pricing. They always think the dryers should dry quicker. I get more complaints about dryers than washers. Some believe everything should be dried for a $1, no matter how much they jam the machine up.”Some older operators think they will lose customers if they raise prices, he says. So, if they are still ahead of the curve or aren’t losing money, they’ll let the utilities eat at them, he adds.“This mentality has to change. If you want to provide nicer stores with better equipment, you need to make money. Some of the mom-and-pop stores need to get out, and we need to get some new owners who look at the business in a different manner.”A BALANCING ACT“In the beginning, I met with the distributor. I looked at the competition and went by what the market would bear, keeping in mind who I service,” says John Steele, Wash & Dry Coin Laundry, Harrisburg, N.C.Steele, who has been in business for more than 20 years, charges $1 per 10 pounds of washer capacity. Top loaders cost more because they are more expensive to run and maintain. His 30-pound dryers are six minutes for a quarter and his 50-pound dryers are four minutes for a quarter.“Now I don’t check my competitors, but they are typically a bit lower than me. That doesn’t bother me.”Steele usually doesn’t raise prices unless he puts in new machines. “That’s when I make a substantial increase. I brought in larger-capacity equipment to take in more money and I could charge more. Handling more poundage means more money.“When gas really went up a couple of years ago, I made some price adjustments. If gas goes up this winter like it did a couple of years ago, I’ll react much quicker. I also raised prices because of remodeling.”While complaints about pricing are infrequent, there are the occasional gripes about drying. “People see the minutes and sometimes remark, but it’s nothing serious. I ask them how much their total dry costs. I give them a look when they realize that it only cost $1.25 or $1.50 for the dry. The conversation then stops.”What’s the pricing bottom line? It’s a balancing act, he says. “Customers appreciate store upgrades, and it helps to understand your customers a bit.“You have to be conscious of the fact that some of your customers are low-income people. It’s hard to imagine how tight their budgets are, but a quarter price bump today is not really much. In the end, they realize the bump isn’t that big.”However, Steele doesn’t see the industry concern about pricing fading away. “As long as there is competition and your store is subject to a drop in business, operators will care about price.“I just keep the store clean and safe. I don’t get crazy with prices. That’s what drives business”PRESERVING THE BOTTOM LINE“I agree with surveys that show cleanliness, brightness and machine availability are the most important drawing factors, but pricing still has to be in the top five drawing factors,” says Mark Baumgarten, Monroe Wash & Dry, Monroe, N.Y. He has been in the business four years.At one of Baumgarten’s stores, the 20-pound washers are $2.50 and the 40-pounders are $4.50. At his other store, it’s 30-pound washers for $3.50 and 60-pound washers for $6.50. The dryers are 25 cents for eight minutes. His prices are about the same as his competitors, he adds.Baumgarten’s older store deals with high water costs. He raised prices to compensate for this. His new store is closer to New York; it has a more upscale clientele, and he took a close look at what the competition was charging when he set those prices.Pricing is about preserving the bottom line, he says. “When expenses increase, that’s a concern. I haven’t raised prices this year; I’ll play any raise by ear.”When high water rates forced a price hike in the past, signs let the people know about the hike. “Everyone got the same water increase. No one said ‘boo.’”“In my new store, I started with 20 pounders at $2.50. One night I quietly brought the prices up. No one noticed. I know this was sneaky, but it worked.”Baumgarten hasn’t tinkered with drying prices. “I haven’t changed the price or minutes on the dryers. I’ll compensate and raise the washers a quarter. People don’t care about raising washer prices, but raise dryer prices and you’re dead.”He says it would be easier if prices went up in smaller increments, but that isn’t possible for the majority of operators. “I think things will change over time. I’ve changed my thoughts. I was scared to lose even one customer. Now, if I raise prices and lose a customer, I’ll still make the same monthly gross because of the hike and my expenses will go down because I’m using less water. I’ve never noticed a major loss of customers.”When it comes to pricing, he even borrowed an old grocer’s trick.“I raised my drop-off price from 85 cents to 89 cents per pound. I was afraid of the perception that went with 90 cents per pound. Four cents made a huge difference to me, but not going that extra penny was a big difference to customers.”To read Part I of this article, click here

About the author

Paul Partyka

American Coin-Op

Paul Partyka was editor of American Coin-Op from 1997 through May 2011.


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