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Self-Service Laundry Pricing Strategies (Part 2)

How has new payment technology influenced wash/dry vends?

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 continue:

Q: Is there a time of month or season of year when it’s best for a store owner to implement a price change?

Craig Dakauskas, president of CLEC Distribution LLC, Gulf Breeze, Florida: I don’t know if there’s a particular month or season. I think what justifies price increases is when your costs go up, whether it be the utilities, the rent, things that impact your cost of your business. How do you have to change your price in order to survive in the marketplace?

Dan Schulte, sales manager, Laundry Solutions Co., headquartered in Springfield, Missouri: If they’re just going to do a regular price change, I suggest they do it at the end of the summer before school starts so they can maximize (revenue) at that peak time.

Russ Arbuckle, president of distributor Wholesale Commercial Laundry Equipment S.E., Southside, Alabama, and owner of two self-service laundries: I don’t know that there’s a particular time of the month or year or season to do that. In my case, and this is what I preach to my customers, if you’re building a new store or you’ve got a store that you built three or five years ago, we go back and we look at what our operating costs were at the same time last year—typically on the anniversary of the opening—then we’re going to plug our numbers in with what our operating costs are now. That’s when we need to be raising prices, if we’re seeing increased costs to operate. Now’s the time to raise those prices.

It’s always been the hardest thing to get across in this industry is you can’t keep charging the same thing year after year. Unfortunately, the fear of chasing customers away has sometimes taken over store owners’ thought process. The best thing you can do is do an annual review, and also if you’re doing any type of upgrades: we’re painting, putting in new lighting, maybe new equipment, maybe even an expansion or some new services. That’s the best time to do the price increase. The customers see you investing capital in your business and you’re just not going to get any pushback.

Q: Should a store owner alert customers in advance before changing prices? Should he/she publicize price increases at all?

Schulte: I don’t think that’s necessary. … I have found that not even alerting customers to it has generated very few complaints, and sometimes the complainers need to move on anyway. … Personally, I went into Walmart the other day and they didn’t tell me my two-pack of deodorant was going to be almost $10.

Arbuckle: Does your supermarket, your convenience store, your gas station tell you when they’re raising prices? I think (announcing) it is a mistake. If you’re not giving them notice, the first time they’re going to know it is when they come in the store. “Ah, the price went up,” but they’re not really going to push back. When you give them the opportunity by saying, “Hey, we’re raising prices next week,” now you’ve got a week’s worth of customers complaining about that. I’ve never done it. I don’t recommend it to be done. I don’t know of any other business that does it. I would say absolutely not.

Dakauskas: I would say no. Car dealers don’t say, “Hey, our prices are going up, so buy a car today.” What we’re seeing right now in the marketplace with the gas and the wood and the food costs and nobody’s really alerting customers to it, we’re all just noticing it.

Q: Today’s advanced equipment controls and payment systems have given store owners great flexibility in setting prices. How has this technology influenced wash and dry vend pricing?

Arbuckle: One of the biggest things, in my opinion, is the ability to charge more or less for different cycles. For years, the customer using hot water for a $3 washer, for sake of argument, it cost you more to provide that service to that customer than it did to the customer coming up next that’s using cold water. The ability to now charge more for something that costs us operators more is great.

The other thing that the technology allows us nowadays is to have extra options. We can give you an extended wash or an additional wash and rinse cycle (and) here’s what it’s going to cost, and let the customer make that decision. I can tell you, from my customers and our operations, our extra options are averaging 30%-plus. Thirty percent of our customers are spending an extra quarter or 50 cents, up to 75 cents on the larger machines, to get that extra rinse or extended wash time.

As for payment systems, when you’re not dealing with a hybrid system where you’re not accepting coins, now they have the ability to go up in penny increments. They could pump it up a few pennies at a time every couple of weeks and nobody’s really going to notice. Technology has been a big boon for operators that are willing to use it.

Dakauskas: Because machines are more efficient and technology actually allows you to control your costs in penny increments vs. a quarter at a time, you can go up in price based on what the market is dictating. ... You can run certain promotions with technology. Some of the machines out there can do modifiers, which means you can add a longer cycle and the customer is willing to pay for maybe a longer wash cycle.

Schulte: What I think is really exciting about the new equipment is that it allows the customer to actually shop and decide what they want to pay. You can offer a good/better/best kind of pricing strategy. Start out at the suggestion of $1.50 per 10-pound load and then they can build their own cycle with some of the new technology.

Let’s say a customer comes in with an extremely dirty load. He walks up to a machine, a 20-pound washer that’s defaulted at $3, then he can choose his (water) temperature, which is an additional price. He can also choose length of cycle that he wants and he can also choose different options on some of the chemicals going in. It’s almost like a la carte shopping, even somewhat like a car wash. … You might be able to get an additional $1.50, depending on how he chooses to set his cycle.

Check back Tuesday for the conclusion: COVID-19’s impact, the value of promotions, and the mistake made most often.

If you missed Part 1, you can read it HERE.

Self-Service Laundry Pricing Strategies

(Photo: © Ladanifer/Depositphotos)

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