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Washer, Dryer Prices Starting to Rise

CHICAGO — It seems that rising utility bills have dominated industry news for quite some time. Yet, the story isn’t really that old. However, the industry has now had sufficient time to deal with rising bills, which brings us to this year’s State of the Industry survey.Have operators adjusted to the times? We’re hoping that we can provide some answers as to how coin laundry operators have dealt with the situation. One area to look at is prices. Have the prices operators charge for washers and dryers gone up or are they still lagging behind the times?American Coin-Op’s annual State of the Industry survey is a random mail poll of American Coin-Op readers (coin laundry owners) dealing with coin laundry business activity as well as a number of other industry subjects.2006 BUSINESS VS. 2005 BUSINESSIt is somewhat of a mixed bag when it comes to coin laundry business from last year. A majority of operators saw a business increase last year when compared to 2005.More specifically, in terms of overall coin laundry business (gross dollar volume), 60 percent of the respondents report an increase in 2006 compared to 2005. In the last two surveys, this figure was 65 percent (2006 survey) and 47 percent (2005 survey). Six years ago, a whopping 70 percent of the respondents reported an increase.The average business increase in 2006 was 8.1 percent, down a bit from last year’s number (9.3 percent).As you might expect, there is some fluctuation when it comes to the business increases. Here’s a closer look at the 2006 business increases:• operators with a business increase of less than 10 percent last year:  53.8 percent• operators with a business increase of 10 to 15 percent lastyear:  42.3 percent, and• operators with a business increase of more than 15 percent last year: 3.9 percent.The largest increase in 2006 was 30 percent.Forty percent of the survey respondents report a decrease in business last year. In last year’s survey, that figure was 35 percent. On average, the 2006 business decrease was 15.2 percent, comparable to the last survey’s average business decrease (14.6 percent).Let’s break down the 2006 business decreases a bit:• operators experiencing a business reduction of less than 10 percent: 29.2 percent• operators experiencing a business reduction of 10 to 15 percent: 41.4 percent, and• operators experiencing a business reduction of more than 15 percent: 29.4 percent.The largest reported decrease is 50 percent.In all, we see more operators reporting an increase, albeit a modest one, in business. However, the average business decrease is higher than it has been in recent surveys.DROP-OFF BUSINESSDrop-off business is the No. 1 extra profit center for operators. How did this service fare last year? Sixty percent of the respondents report an increase in drop-off service (gross dollar volume) in 2006. Last year, the number was a bit higher (65 percent). Prior to last year, this number had slipped below 50 percent for three consecutive surveys.The average drop-off business increase is 13.5 percent, up from last year’s figure (10.8 percent). The largest increase is 50 percent.Forty percent of the respondents saw their drop-off business decrease. On top of this, the average drop is 23.2 percent. In the last two surveys, this figure was 10. 2 percent and 15.3 percent.DRYCLEANINGTwenty-four percent of the respondents offer drop-off drycleaning. One half of these respondents report an increase (gross dollar volume) in 2006 for this extra service.VENDING SALESVending is another one of the coin laundry industry’s most popular extra profit centers. Fifty-eight percent of the respondents had an increase in vending sales in 2006. In last year’s survey, 60 percent of the respondents had an increase in vending sales.The average vending gain is 7.6 percent, down a bit from last year’s average increase (11 percent).For those reporting a decrease in vending sales (42 percent), the average decrease is 15 percent. This figure was 12.9 percent and 12.1 percent in the last two surveys.WASHER PRICESPrice is always a hot topic of conversation in the coin laundry industry. Everyone in the industry has been wondering how the operators would respond to the recent utility rate hikes. We asked respondents about their current prices and if they raised prices or intended to raise prices this year. First, we’re going to look at the current prices of dryers as well as some of the more popular washers.When you look at the most popular prices and then the number of people intending to raise prices in 2007, you get an interesting industry perspective. It’s also helpful to keep a close eye on this year’s average prices compared to last year’s average prices.We’ll start with top loaders. The price range for a top-load wash ranges from 75 cents to $3. This is the same as last year.Here are the most popular top-load prices followed by the percentage of respondents using the top-four prices:1) $1.50 (36.4 percent)2) $1.75 (21.4 percent)3) $1.25 (20.5 percent)4) $2 (13 percent)5) $2.25 (tie)5) $1 (tie)How do the top-loader prices stack up with last year’s prices? First, in terms of the most popular prices, the numbers are quite similar to last year’s numbers, but the $1.75 price has taken over the No. 2 spot from $1.25.As for the percentage of operators charging these prices, two years ago, 72 percent of the respondents charged either $1.50 or $1.25 for a wash. This year the figure is 56.9 percent. The $1.25 and $1 prices are also starting to drop in popularity.The most common price for a small front loader (18 pounds) is $2 followed by $1.75. Last year, $1.75 took top honors followed by $2. The price range for an 18-pound machine is 75 cents to $3.25.Two dollars is the most popular price for a 20-pound washer, followed by $2.50. Again, we are looking at a subtle difference. Last year $2.25 finished in second place. The price range for a 20-pound machine is $2 to $3.Moving up in size, the most popular prize for a 25-pound wash is $3, followed by $2.75 and $2.50. Last year, $2.50 was the most popular prize in this category. The high-end price is $4.The price range for a 30-pound machine is $2.75 to $6. Three dollars, once again, is the most popular price. The No. 2 most popular price, which is closing in on the top spot, is $3.50.Here are the most popular prices for a 35-pound machine:1) $3.502) $43) $3.754) $3The $4 price has really grown in popularity; last year it wasn’t among the top four prices for a 35-pound machine.While customers continue to clamor for the larger front loaders (40 pounds and larger), the pricing for these washers varies greatly.The most popular price for a 40-pound machine is $4 followed by $3.75. The lowest price for a 40-pound wash is $3.50 and the highest price is $5.25.For 50-pound front loaders, the price range is fairly wide — $3.50 to $6. Five dollars is the most popular price for a 50-pound machine.There has been some movement in washer pricing. For the last couple of years, respondents said they were going to raise washer prices. Some of the respondents said customers accepted higher washer prices better than higher drying prices. It looks like a good deal of the respondents stuck to their guns.It’s hard to get uniform price changes due to the fact that respondents are in different regions and deal with a host of different pricing factors, such as competition. However, higher prices have begun to replace lower prices in certain categories. In addition, where the prices are similar to last year’s prices, the gap between some of the prices is narrowing — with the higher prices closing in on the lower prices.DRYER PRICESWhen it comes to the pricing part of the survey, most of the comments we receive revolve around dryer pricing.You know the old story: Despite a painful rise in natural gas bills, dryer pricing has basically stayed the same for a number of reasons, according to respondents.Here are the most popular 2007 drying prices followed by the percentage of respondents using them:1) 25 cents/8 minutes (31.7 percent)      2) 25 cents/6 minutes (tie 19.8 percent)2) 25 cents/7 minutes (tie 19.8 percent)4) 25 cents/10 minutes (11.1 percent)5) 25 cents/5 minutes (5.5 percent)There has been movement in the dryer pricing category. Twenty-five cents/10 minutes has tumbled from the No. 2 spot to the No. 4 spot. The gap between 25 cents/8 minutes and 25 cents/10 minutes has widened substantially.In the last two years, the number of respondents charging 25 cents/12 minutes has almost dropped off the board. None of the respondents offer free dry.PRICING ODDS AND ENDSDrop-off service pricing (per pound) ranges from 50 cents to $2. Here are the most popular drop-off service prices:1) $12) 95 cents3) 80 cents4) 90 cents (tie)4) 70 cents (tie)Last year, 75 cents was the most popular drop-off price; this year it dropped to sixth place.Sixty-three percent of the respondents charge 75 cents for a box of vended detergent. Last year, 75 cents passed 50 cents as the most popular price. A handful of respondents charge $1 for detergent.KEEPING UP WITH THE TIMESWe asked operators if they have already raised prices or plan to raise prices in 2007.A little background information can lend some perspective to this section. Last year, 48.8 percent of the respondents said they raised/would raise washer prices in 2006. Nearly 33 percent of the respondents said they raised/would raise dryer prices last year.Thirty-five percent of the respondents say they have raised washer prices in 2007 or intend to raise prices by the end of the year.With dryer pricing, 23 percent of respondents say they have bumped up the prices or will do so by the end of 2007.It’s hard to get a total grasp on the pricing question for several reasons. First, we don’t survey the same people every year. Therefore, our respondents may have raised prices in the recent past, but will not do it this year.However, a couple of things do stand out. The number of respondents who committed to raising prices has jumped substantially in the last few years. The average equipment vend prices (see last section) have also been climbing, albeit too slowly for some.SHOPPING IN 2006Did you buy any coin laundry equipment last year? We asked respondents if they purchased a washer, dryer, water heater, vender or changer for their stores in 2006.Nearly 45 percent of the respondents purchased at least one piece of the above-mentioned equipment last year. If you just look at washer and/or dryer purchases, the number drops to 34.4 percent.Let’s break the purchases down by equipment type.• Last year, 16 percent of the respondents purchased at least one top loader. The average purchase was 9.8 top loaders.• As for double loaders, 13.6 percent of the respondents added one of these washers in 2006, with the average purchase being 7.6 machines.• Nearly 11 percent of the respondents bought at least one triple loader last year. The average purchase was 3.8 machines.• Thirteen percent of the respondents purchased at least one dryer last year. The average purchase was 9.4 dryers.Other 2006 purchases included: water heaters (12 percent purchased at least one unit last year) and venders (10.4 percent added at least one vender in 2006).These equipment purchase numbers are comparable to last year’s numbers.LOOKING TO ADDHave you bought, or do you plan to buy, any new equipment in 2007? Thirty-two percent of the respondents have bought, or plan to buy something (washer, dryer, vender or water heater) this year. If you just focus on washers and/or dryer purchases, the number drops a bit to 29.6 percent.Here’s what respondents have to say about their purchases:• Top loaders: 16 percent plan to add at least one top loader; average expected purchase: 6.1 machines.• Double loaders: Eight percent plan to add at least one double loader; average expected purchase: eight machines.• Triple loaders (and larger): 12 percent plan to add at least one triple loader; average expected purchase: 4.8 machines.• Dryers: Eight percent plan to add at least one dryer; average expected purchase: 12.3 machines.• Water heaters: Five percent plan to add at least one water heater.• Venders: Four percent plan to add at least one vender.WHAT A HEADACHE!Respondents were asked about their biggest industry “headaches.” Twenty-three different problems were mentioned.Here are the Top 10 industry problems:1) High utility rates2) Too many coin laundries3) Equipment maintenance4) Rent5) Dealing with employees6) Cost of doing business7) Worries about raising prices8) Impact fees9) Vandalism10) Dwindling customer baseTwo problems from last year, “insurance” and “customers not respecting the store” don’t appear this time around. This year’s new problems are “impact fees” and “dwindling customer base.”BUSINESS PROJECTIONSRespondents were asked to predict how their businesses will do in 2007 compared to 2006. Sixty percent of the respondents  believe 2007 will be the same as last year. Thirty-one percent of the respondents believe 2007 will be a better year than 2006, while only 9 percent expect a drop in business this year.For those who believe their business will drop this year, the No. 1 reason given for this belief is that there are too many coin laundries in the area. For those who see business staying the same, the top reasons for this belief include a stagnant local economy and a lack of new customers moving into the area.For the “optimistic” respondents, several reasons are cited. Some expect business to rise because they have purchased new equipment. Others are citing a greater emphasis on customer service.TURNS-PER-DAYThe average turns-per-day for top loaders is 3.69. In last year’s survey, the number was 3.2. The average turns-per-day for a front loader is 4.2, up a bit from 3.9 in 2006. 

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