Pricing tops and fronts

[ajay]

I need to get a sound advice from my fellow mat owners. Here's my Situation.

situation: I'm in a poor neighborhood where 80% of my customers walk over. I have a competition 10 houses down from me. SInce I have taken over this store, I replaced every front there and put brand new machines(5-30lb, 3-40lb, 2-55lb, 4-18lb).

problem: I'm getting 40 turns/week per top load(total of 6) because they are priced $1.00. That's right folks, One freakin dollar. ***My copetition is $1.00 as well**

question: What would you do in this situation?

Ans:

1) Would you raise prices? Consequence? Customers walkin to the other store.

2) would you buy new tops(maytags) and price them at $1.50 and keep few of the $1.00 washers. Multi price tops with cold@$1.00, warm and hot at $1.50).

3) Would you replace all tops and put more of the 18lb(i.e. horizons) - Note: I currently own 4 continental Aurora.

4) What else would you recommend?


Note: this store is attended 90% of time.

Thank You

[MSKLAUNDRY.]

Raise prices!!! It's obvious that the other new equipment didn't do anything for you so why buy more new stuff. It's inevitable, you will have to raise prices sooner or later, so do it now. Sure you will get some moaning and groaning but it will disappear in a week or so.

What is the price down the street?

You would have to go down over 5 turns per machine per week to be doing less $ than you are doing now.

[kyle mcpeck]

I'm in a similar competition setting. My tops are $1.25 and theirs are $1.00. I am really struggling to figure out what to do.

[ajay]

Marc - After I added new fronts, my business is up 50%. but from turns prospective, I'm doing most turns on Tops.

[pete f]

You do not say how old the tops are, or how much the Conti's are.. I think newer ones use slightly less water. Buy new ones with flexible pricing, putting cold at 1.00, warm at 1.25, hot at 1.50. If nothing else you will confuse them into using the Contis'!
If no flex price than just new ones at 1.25. At some point people expect to pay a little more. And a new washer helps them do that.

[mike]

I would hold with what you have (equipment & price)

I have maytags at $1.50 Canadian ($1.00 U.S.)

and new fronts (4 Wasco 640) (3 Wasco 630) which I priced higher than my old fronts.

People come for the tops, and will not wait, so they use the fronts.

Wait for the other stores to die !

[BWJR]

Sometimes it sounds like I work for Maytag Corp., but The Neptune commands a much higher vend price and uses far less of all your commodities. (water, gas, electric) Your customers will love them and it will solve your problem.


BWJR

[BWP]

keep your current machines and just raise the prices. If you spend all that money on new machines to raise the price, they may go elsewhere anyway. Plys if they choose to use the tops, they may not want to be bothered with the fronts, so why would you get new neptunes??

[Rich]

I would just make them 1.25 . As long as your store is clean and well maintained you should be OK. But I am not a seasoned vet to this biz (1 year ). I think there are many die-hard top users out there. I would keep the tops for now.

[Pete_tx]

Is your pricing for frontloaders equal to the tops per lb.?

Do your customers only do 1 or two loads at a time?

As long as your pricing is even or a bit in favor of the frontloaders you can have your attendants explain to customers that the frontloaders are a better deal. (This might require you to increase the price on your tops.)

If most of your customers walk up with two loads (one color, one white) you probably won't be able to solve this with bigger machines.

pete

[Jim]

If 80% of your customers are walking to your mat then you have a major problem right there...most of them are only going to do 2 loads or $2.00 and raising your price a quarter is only giving you $2.50...Your larger machines are not going to help much because your customers are carrying their laundry, again smaller loads.

It sounds to me it might be better to go talk to your competition and have both of you raise your prices...This way your not taking a chance in losing the customers you have, and trust me you will lose them if the other mat is only 10 houses away even for a quarter....The only way you will not lose them is if the other mat is run down and dirty. If your competitor is willing I would raise your price by $.50 and adjust your dryer times accordingly.

Remember your in business to make money not to just get by... Let your competitor know this and both of you will profit, otherwise buying new equipment is going to help your competitor not you. More debt never helps you if your struggling already. It will give your competitor the advantage because he will not be struggling like you will be.

...and if that fails then buy the bum out and live prosperous..

Good Luck...

[fluffy]

From the information provided, I'm not sure the problem is so dramatic. In my area a $1 top loader could even be considered on the high side...I used to think our utilities were lower here, but according to the utilities poll in another thread, you have lower water and I assume gas prices there.
With nearly 6 TPD on the tops, you're making money of course. Do a what-if scenario and figure out if the TPD went to 4 when you raise to $1.25 if it's worthwhile.

[smellysocks]

raise prices , i would rather lose 10% business to make more money with the customers you have, do the math it works out, you have to make money, so many mats just get by, be the price leader but make sure service is better also. If you take care of your customers you never have to worry about compitition, its that simple. good luck

[William]

Raise the prices, for all you know the other mat will raise theirs as soon as you do!

[TJB]

I replaced 25 Maytag tops with new Maytag tops about 3 months ago, I'm charging $1 per load, with a early bird special for $.75 between 6 and 8 AM on weekdays. I do 9.5 turns per day. I'm 90% attended and very busy, but my competition in my area is only $75. Nobody is A dollar in my area. I just hate to be the highest price in the area.

[Gary C]

I am with BWJR on this one. I am getting rid of most of my tops and installing neptunes. I would think about IPSO if the dist. would ever get back to me. You my want to consider the 12 pd IPSO better on utilities than the tops and you can price them the same.

Gary

[BWJR]

If you put Neptunes in, you could still charge $1.00 a load, get more business since they are bigger and better, and make more money on the margin too. This could turn a tough situation into an opportunity. Go for it!!!!!1

BWJR

[Gary C]

Or put up a sign. GET DOUBLE THE LOAD FOR 25 CENTS MORE

You could do well with the neptunes

Gary

[Anonymous]

1. I would junk 3 of the tops and make the other 3 more busy like 10 to 12 TPD.
2. I would ask my attendant to promote front load machines. Even do some promotions. The objective is to rise the TPD for fronts. That would help not to lose clients due to busy tops.
3. After few weeks if everithig is going well and the TPD for fronts are up and for tops are down to 8 than I would rise the price for the tops.
4. Again I would instruct my attendant to keep eye on clients, to respond nice to those who protest for that price rise and to ivite them to use frontload machines.
5. If everiting go well, after few month I would replace all tops with Neptunes.
6. Again a lot of selling, explaining that frontload is better deal.
7. Celebrate :-)

Before doing everetinh I wold do some research on CRM - Client Relationship Management. It is a new advertising concept. Should be books writen about it.
The main concept is based on 80% - 20% ratio - I is said 20% of your clients bring you 80% of your revenue. Find tose 20% clients and treat them as gold.

[ajay]

Thank you for your comments team. To answer few of your questions. My continental are at $1.75 for all water except superwash(2.00). I have 6 computer whirlpool tops - overall they wash good - customers love the fact they are $1.00. My fronts are as follows:

25lb 2.50/2.75(super wash)
35lb 3.25/3.50(super wash)
55lb 4.00/4.25(super wash)

Question: for those of you who have raised prices in the past, what percentage of customers did you end up losing as a result and what impact did it have on your overall TPD?


ajay

[Jim]

Originally posted by ajay

Question: for those of you who have raised prices in the past, what percentage of customers did you end up losing as a result and what impact did it have on your overall TPD? ajay

0% for me....but my competition wasn't 10 houses away so that maybe why.

[pete f]

Your other machines are priced in line. You are way behind in tops. I would raise all to 1.25, if you wanted you could leave the last two machines cold water only for $1.00 if that is possible. I noticed my money collection bags get heavy after raising price. What happens is about 25% will use other machines, like your 1.75 conti's. All but maybe 10% will just pay more. You could lose 15% of the customers and still make about the same revenue.
I have Maytag tops, and for some reason or another I had the service door off, doing something. Somehow I set the price to $2. All the rest are $1.75. Guess what? It was still full of money.

[Andy]

I suggest you do the math. I do not know what your cost structure is but I'll give you an example:

Let's say your current cost to complete a cycle is $0.60, this does not change.

You are doing an average of 6tpd so you have:

vend revenue: $1x6tpd=6.00
expense:$0.60x6tpd=$3.60
net=$2.40

Lets say now you raise your vend price to $1.50 and you lose over half of your customers (assume 2.75 tpd) because of the price increase:

vend revenue: $1.50x2.75=$4.125
expense:$0.60x2.75=$1.65
net=$2.475

So you can see that you actually lost 3.25 customers per machine per day on average but you made more money. The bonus here is the machines will last longer and you have less traffic in your store to clean up after. The downside is if you sell soda and snacks those 2.75 people are unlikely to drink and eat as much as the 6 did previously. I just chose some random numbers for your expenses so this example might not be at all correct for you but you should know these numbers.

[pete f]

I somewhat agree with Andy, but you loose the dry revenue also, that is why I say if you had a 15% customer loss overall is going to be a wash, total revenue wise, on a 25 cent hike. never thought about the soda/snack angle... hmmmm

[Coinwash]

This is an old topic but what about Pricing.

Do to the Gas prices going sky high, natural gas and at the pump,
not to mention electric.

Is it right to hike your prices too...

If you have Pick-up & Deliver how are you going to make a go of it ?

Also how about the customer who have to drive that extra mile to your Mat...