CHICAGO — Pricing of wash and dry cycles is quite literally the foundation of any self-service laundry business. The decisions you make now can make or break your operation down the road.
There are a lot of variables at play in your store or stores, plus there’s the pressure you might feel from a nearby competitor willing to price their equipment lower than yours.
But upon interviewing representatives from some of our industry’s distributors, it became clear that no matter what data or experiences you may use to set prices, it’s important to balance vend price with service value. The greater the value you provide your customers, the higher the price they’ll be willing to pay.
Let’s hear what those distributor company executives have to say about pricing strategies and their recommendations for investors as well as current store owners.
DO AVAILABLE PAYMENT METHODS INFLUENCE PRICING?
How might the available payment methods—coin (cash), card (debit, credit, EBT, store and/or loyalty), and/or mobile pay—influence pricing strategies?
Karl Hinrichs, president of HK Laundry Equipment, Armonk, N.Y., says he doesn’t believe the different ways that a customer can pay to do their laundry today have affected pricing.
“Most of today’s payment systems offer multiple choices for laundry customers,” says John Antene, president of coin laundry sales and marketing for Coin-O-Matic, Alsip, Ill. “These range in categories of value add or bonuses toward additional services or discounts. These promotions give the laundry owner the option of varying the vend pricing for a grouping of washers/dryers or any singular machine, which certainly enhances pricing strategy. Today’s payment system technologies are continually becoming more user-friendly, advancing and improving features to make the laundry customer wash experience a pleasurable one.”
“Out of all of our store owners that have implemented these systems in the past few years, I cannot think of one that charges any differently from that of a cash transaction,” says Greg Reese, sales manager for Commercial & Coin Laundry Equipment Co., Gulf Breeze, Fla.
“I believe the payment options you offer in your laundry can influence the pricing,” David Hoffman, sales manager for Gold Coin Laundry Equipment, Jamaica, N.Y., says. “So if you operate a coin laundry and have to raise the prices in quarter increments, you may have to wait much longer to raise the prices, whereas a card store can raise the prices in smaller denominations, thereby not having to wait as long.”
“If you add a payment system to an existing laundry, again, it’s an improvement in the laundry, so that would be a good time to raise prices,” says Dan Baker, vice president of The Minnesota Chemical Co., St. Paul, Minn. “And certain payment systems offer flexibility as to rewarding good customers and you could almost call that a price reduction or a gift … I’m not a big believer in two-level pricing: one price for coin, one price for card.”
WHAT PROMOTIONS DO CUSTOMERS FAVOR MOST?
“We find any type of additional owner offering is welcomed: time-of-day pricing, customer loyalty bonuses, co-marketing agreements between neighboring businesses and raffles such as wash/dryer awards totaling, in some cases, for a year,” Antene says. “Any and all ideas have been tried with success. It all amounts to individual effort and the owner’s comfort zone.”
“I think using a day-of-the-week special with discounts helps to bring in the customer on a budget or looking for a deal,” Hoffman says. “With some card payments, you can also offer loyalty discounts to your repeat customers. Whatever type of promotion you decide to do, just keep in simple.”
“I’ve got stores that are open 24 hours (a day) and they go down a dollar (on each machine) from midnight to 7 o’clock,” Robert Gonzalez, vice president of Steiner-Atlantic Corp.’s coin laundry division in Miami, says. “I’ve seen Tuesday, Wednesday, and Thursday promos; time-of-day pricing for people who don’t have to use the laundry on the weekend, people who don’t work, retirees.”
WHEN YOUR COMPETITOR UNDERCUTS YOU...
If a competitor is undercutting your store on price, how can you respond?
“In some instances, with all the laundry location choices available to customers, it all reverts back to what you do best, what makes you special, and why customers come to your laundry in the first place,” Antene advises. “Statistics show that price is not the No. 1 reason customers choose where to wash. Know that by continuing to provide the top-notch service you pride yourself on now will always be paramount!”
“The store owner should consider if there are any additional incentives/services that they can add to their business that would demonstrate to the customers the appreciation of their continued loyalty,” Reese advises. “If the store is attended, maybe offer free coffee. Offer free detergent from low-cost bulk containers. Establish a drawing for a significant prize (bicycle?) based on continued attendance. A store owner should never lower their prices to compete. It will only result in a ‘race to the bottom.’”
“For most customers who are looking for a Laundromat to clean their clothes, pricing is way down on the list,” Hoffman believes. “I think the first thing people look for is convenience and cleanliness. If you maintain your laundry and keep things up to date and fresh-looking, and have friendly attendants working in the store, then price is not the most important thing.”
“It all depends on who’s giving the free dry,” Gonzalez says. “If it’s ‘Little Joe’ with a 1,500-square-foot store, he’s going to be limited because people will flock there. If big stores with nice equipment are giving free dry, then you gotta go with it.”
“I think the first thing to do is make sure your store is in good shape,” Baker advises. “Typically, your better customers will stay with you for a 10% price increase. You’re going to lose a few customers, but they’re the customers you don’t want anyway. … They’re the first to go across the street to save some money.
“After that, maybe you have to respond with some promotions, or maybe some amenities. Maybe free coffee is enough to keep their business. I think the last resort is to lower prices.”
When all is said and done, building and maintaining a high-quality store may be your best support for a vend pricing strategy.
“Don’t pay much attention to your competitors’ pricing but rather be a price leader,” Hoffman advises. “If you keep your store and equipment in the best shape it can be, you will always demand and get higher vend prices.”
“A store that has the most reliable equipment, provides superior security for the customers’ benefit, is always kept clean, and has enough equipment to keep up with demand should command the highest price in the market,” Reese believes.
Miss the previous parts to this story? You can read them here:
Part 1 — Criteria to use to set vend prices; announcing price changes
Part 2 — Best time to raise prices; pricing flexibility through advanced controls; formula for calculating vend prices