How much is a quarter worth ?

[Jim]

Something funny happened yesterday when I was at one of my mats.

The owner of another mat, my competition, came down to talk to me. He asked if I noticed any increase in business and I said yes it started about 2 weeks ago. He told me he had raised his prices from $1.25 to $1.50 on toploaders because he purchased new equipment.
I told him I thought it was a good idea because that is what my prices are at.

He then went on to tell me alot of his customers had stopped coming to him even ones that had been coming to his mat for years suddenly stopped because of the increase. He said in the past week his business was down about 70% if not more (funny mine seemed to up about 60%). He mentioned that his customers had spoke to him about the increase and said they were upset. While we were talking a customer of his was in my mat.
He was now thinking of lowering the price back to $1.25. I told him to leave the price at $1.50 because his customers aren't responsible for his mortgage he is, and that is what they are paying now at my mat, so they will return.

Has anyone lowered their prices after raising them ?

Has anyone lost that much business after raising their prices?

[mike]

I suspect the quarter was just the last straw of unhappy
(ignored, or taken for granted customers)

I raise my prices on new equipment (it is easier to justify)

Business is always up after I raise my prices.
(of course, I only raise when I buy new equipment, or 10 years passes, whichever comes first :-)

I have advice for him to get some customers back, but seeing as he does not post here, I decline to give it :-)

[BWJR]

Rule #1 - Never Lower Prices
Rule #2 - Never Lower Prices
Rule #3 - Only Lower Prices if you plan to go out of business.

BWJR

[Jim]

Mike...
--------------------------------------------------------------------------
I suspect the quarter was just the last straw of unhappy
(ignored, or taken for granted customers)
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...your absolutly correct...I was talking to some of his customers today....they were complaining how dirty the inside of the machine are...apparently he allows a auto repair place to bring there rags and uniforms there.

Me thinks this is where I tell the guy he should sell the place to me.....hmmm got to go and think about this one.

BWJR.... I agree with you....never lower prices!!!

[mike]

Jim, It may be an opportune time to make an offer:

He has bought new equipment, but his business is still down.
(I suspect he does not even know why)

Gas is going up, it is winter, etc.

NOW is the time for a low offer.

[djlpartners]

Well Mike, I am happy he doesn't post here. That way you can share your ideas on how to get the business back. I would be interested in knowing so that I can use your knowledge - thanks

[pete f]

If you where not a regular here I would say this was a hoax, kind of like the Bill Gates will send you $100 if you email this to 25 of your friends so he can test his tracking program...

I say coincidence, just an off week.
I put in new tops about 2 months ago, went from 1.50 to 1.75, my comp is at 1.50. Result: A little less top biz for a week or two, some shifted to other machines. Overall: more revenue for me.

Let's do the math. If he has an old store, with lots of tops, then maybe his wash revenue is 50% tops, 50% front loaders. He would have to loose almost all his top load customers to be off 60% ! I have raised top prices many times at different stores, the result is about the same, for a week or two it is the same, people change to different machines, you loose a few. Over time, within a month, the revenue is higher, the tops get used as much as they did before. Putting in brand new tops is a given for a price increase, and he is just comming up to your level. I say a week does not make a month, keep us informed, I bet things level back they way they were, people come to you, no better deal, go back to him becuase he is closer to them. same old rotation. Given that senareo, sure make him an offer while he is down, and maybe concerned.

[Jim]

Pete...
Here in Buffalo our stores probably have more tops than other places. In my 2 stores the only front loaders I have are the triple loaders. The people here don't seem willing to try new things as easily... The store I just sold I had 6 front loaders and they were hardly ever used...my guess is, when the tops where all taken then someone would use them...I know it sounds strange but it just wasn't easy trying to break people of there habits..

I just looked at my books for the store I just sold and in 2 1/2 years time the frontloaders never paid for themselves.

Also I believe the customers kinda organized and got together on this "boycotting" thing (or whatever you want to call it).

I'm going to take a drive over to that mat today and see what condition it is in...and possible ask the owner if he wants to sell.

[Jim]

Yikes!!!

I went to my competitors mat today....What a mess and smell.

The place is so dirty I wouldn't do my wash there for free !

He has 17 tops, 2 triples, and 10 dryers....only 4 tops are new and the rest of the equipment looks like it's from the 1800's.
9 tops and 4 dryers are out of service...

The machines are extremely dirty inside and out, the floor is a mess and the vending machines are empty....
There is a electric burning smell coming from the dryer area, this place is just asking for a fire.

Other than that it's a nice place ???

I think I'm going to offer to take it off his hands for nothing, or maybe if he pays me a small fee....

[mike]

Jim,

If he rents, he'll be gone soon,

If he owns, we'll get Kirby to explain the facts of life to him
(about return on capital tied up)

Some people are just stubborn ! (I have a guy up the street from me doing $1.00 washes, that's about 75¢ U.S.)

He's old, he'll die :-)


djlpartners,

I guess my "secret advice" would just be:

Renovate, replace, and schmooze, (I mean appreciate the customers a little more)

[pete f]

well, I could be wrong, if it is THAT bad! And judging by the equipment list, I can see a 60% drop, all he has are toploaders. Sounds like a mat for a renovation, question is, if you bought it and renovated would you steal your own business?

[Jim]

Pete...
That is a good question ....I might ...

As far as locations...his is better, it is a lower income area (better for mats) mine is in a higher income area but nicer area.

I think his customers maybe here to stay even though I'm 2 miles farther for them to drive, I'm going to start giving some free washes to them starting tomorrow and schmooze them alittle.
(like mike says).

[Gary C]

If you buy it you might steal some of your own customers, but if someone else buys it they will be stealing some of your customers. Keep that in mind before you offer to buy. Be sure you are willing to go through with it becase once you plant the idea he may sell to anyone.

It sounds like a real dump. But if it is cheap enough it would help you put a lock on the area. That's what I just did and so far so good. The place I bought is in good shape but if someone doesn't like it they can go down the street. Either way I GET THEIR DOLLAR.

Gary

[mike]

GaryC is right,

Be your own competition, instead of having someone else.

OWN the market !!

[Jim]

I spoke to the owner today...wouldn't you know it, he is not interested in selling.

I tried BS'ing him a little, but he just won't budge. I left it open but I don't see him selling in the near future.

He says if the biz dosn't return he is going to lower his prices.

Oh well....I tried..

[Gary C]

That's ok. At least you know what your comp. is. Should be easy to keep his customers.

Gary

[mike]

Jim,

Don't give up on him, keep your ear to the ground,

It takes a while for some people to grasp reality.
(He dreams that they're all coming back next week !
Without new equipment or lower prices, they're not).

[Follow]

I am with Mark..."be your own competition" you will own that area market, money will stay in your pocket instead of warring about someone else coming remodeling the place getting your customers..
If the owner is not selling, be nice to him and wait, you want him to come back to you when he wants to sell instead of going for someone else -when his business does not picks up- (he does not know how to run service business)

good luck

[Joe]

For some price is king. the mat can be a dump but if it is cheeper you will get customers that feel a wash is a wash so why spend the extra .25. Sad but true. If he drops his prices he will get a lot of his customers back. He can not compete with your store any other way. If you dopped your prices after he did, advertised a bit, you could put him out of business. Something to think about if he wont sell. Of corse you have to be willing to endure the price war that might follow. I know some say never lower prices but if this guy is almost dead now that may be the final nail. You also would have the perfect excuse to get preditory, he did it first. Crank your numbers with the increased business and the lower price. Short term your net may still be higher. The big question is can you get that other store or will he sell to someone else who may really want to fix it up and compete. If thats a real danger better to let him be, lower prices and all. He is obviously no threat to you.