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Self-Service Laundry Pricing Strategies (Conclusion)

Don’t fear basing vend prices on your operational value

CHICAGO — How should you price your self-service equipment when you’ve just opened a brand-new laundromat? What about adjusting prices in a store you’ve had for a while? When do you know it’s time to raise prices? There are plenty of factors at play, including revenue, store quality and the competitive landscape.

American Coin-Op invited representatives from some vended laundry equipment distributors to answer several questions about vend pricing strategies and weighing your bottom-line desires against the needs of your customer base and any pressures brought by nearby competitors. Let’s conclude:

Q: What impact, if any, has the COVID-19 pandemic had on wash and dry vend pricing?

Dan Schulte, sales manager, Laundry Solutions Co., headquartered in Springfield, Missouri: There were a lot of people who chose not to change prices during COVID, just because it was such a difficult situation at the time. We actually have built a cycle in a lot of our machines that have the technology to do that. … We called it a sanitize cycle. That cycle would be a 30-minute runtime vs. 18 for the standard (and store owners would charge, for example, $2 more).

Russ Arbuckle, president of distributor Wholesale Commercial Laundry Equipment S.E., Southside, Alabama, and owner of two self-service laundries: I have not seen nor heard of any of that from any of my customers. It just has not been an issue. Of course, here in the Southeast, the lockdowns were nowhere near as restrictive nor as lengthy. In some of the areas where they were longer and more severe, that may have had an impact (on pricing) but I don’t know. My own experience has been zero, we haven’t seen anything there.

Craig Dakauskas, president of CLEC Distribution LLC, Gulf Breeze, Florida: You’re starting to see some new products because of COVID. Some people are looking to add soap (using an injection system) to the machines. You’re seeing ozone being implemented in the laundry industry. You’re seeing some new stuff coming in. Ozone has been around for a long time but people are starting to look at it differently.

Q: What types of pricing promotions do you think that customers favor most? What types are least popular or effective?

Arbuckle: My lead response to that would be off-day pricing, to be able to shift some customers from busy days to off days. They enjoy that because they get to save a little bit of money and the store owner can see other customers on those busy weekends. And like many others in this industry, I hate free dry. I’ve talked to a lot of people over the years and what most people don’t understand or realize, you are not going to put the guy down the street out of business. … By you either dropping washer price or going free dry, you’re not going to impact your competitors that much.

One of the promotions that we do for grand openings, or we’ve even done them as a thank-you to our customers at Christmastime, is a free wash day. Everybody says, “Omigod, you’re giving away all that,” but when you look at the cost of water, electric, sewer, and some gas on the hot, it really isn’t that expensive. Certainly, that’s going to pull people into your store.

Dakauskas: I think they like discounted time-of-day pricing, things like that discount the actual cost, especially if they’re flexible (in their scheduling). Let’s say there’s a mother doing laundry and she’s not working. You can save a few dollars coming in on a Wednesday instead of a Saturday, and she’s going to do that. For her family, it may save her 10 bucks. Ten bucks a week, 40 bucks a month, 500 dollars a year, that’s real money.

Schulte: If it’s an existing laundry that doesn’t have all the technology bells and whistles, a lot of people will have a punch card where if you buy five washes, the next one is free. What’s really nice about the new technology is, especially in stores where it’s becoming popular to use the store app to start the machines, you can incentivize them to download the app—“We’ll give you 5 bucks if you download the app”—and add money to their account if they add so much—“For 20 bucks, we’ll give you another 10%.” And a lot of people offer that once you spend so much using the app, you’ll get a free dry cycle.

I think offering free dry (as an ongoing promotion) is least effective. It’s like telling your customers, “Don’t you realize you’re paying more for this wash to get this free dry?”

Q: What’s the one mistake you see self-service laundry owners make most often when they’re establishing their vend prices?

Dakauskas: They’re too low for new equipment. I think it’s because of the cost of new equipment, technology and the new machines, I think they sometimes think they have to be with their competitor vs. they have a whole different product now. If you’ve done a retool or a brand-new store, you have something that’s shiny, bright, and you’ve obviously invested a lot of money in it. … They undervalue their own investment, is what I would say.

Schulte: I don’t think they take advantage of being the market leader in price. I think they try to react too much to surrounding competition. … The whole key to it is (to understand your operation’s value and not base your value on anyone else’s).

You’re getting more savvy investors in the coin laundry industry right now. When they’re investing a million dollars in this project, it’s kind of counterproductive to try to be the cheapest guy in town.

Arbuckle: Trying to follow the leader relative to the market. I don’t understand that. I want our customers to be the price leaders in the market, especially if it’s a new store or a rehab. You need to be the guy at the front of the line relative to price levels. You’re not the discount, down-and-dirty store, merchandise laying all over the place. You have a modern, clean store that deserves to get paid a reasonable vend price.

The biggest mistake I see is when they’re afraid to be that price leader. They’ll say, “Well, the guy down the street is $4 for this particular size of machine and I’ve got to be the same or maybe even less.” No, no, no. First of all, that guy’s machines are 10 or 12 years old, whatever that number is. I’ve always felt that you need to be the guy up front. And if you provide the service, the atmosphere, the equipment that (customers) want when they want it, you can be the price leader and it’s not going to be a problem.

Q: Is there anything else you’d like to add about self-service laundry pricing strategies?

Schulte: Don’t be afraid to tout your whole experience that you’re offering people. I see more and more people with a smile on their face when they go to a nice laundry vs. the ones where I see people (thinking,) “I can’t believe I’m here doing this.”

Dakauskas: I think it’s something that store owners really need to continue to look at and truly understand the impact that a price increase has on their business. The overall value that a price increase can have on your business allows you to continue to reinvest, offer different services, upgrade your Wi-Fi, whatever it is. I truly believe customers want to do business with store owners that reinvest in their business.

Miss earlier parts of this article? You can them here: Part 1 - Part 2

Self-Service Laundry Pricing Strategies

(Photo: © Ladanifer/Depositphotos)

Have a question or comment? E-mail our editor Bruce Beggs at [email protected] .