Help!!!

[mikekoh]

Hello, I just took over my first mat a little less than a month ago. The store was running as free dryers and washer prices were 2.75-18lb, 4.50-30lb., and 6.00-50lb. One of my competitors down the street was running the same prices and free dries, but he just switched over to charging for the dryers at 25cents-8min and dropped to 1.75, 3.75,4.75 for the washers.

Now I can't decide what to do. Do I pay 15k to install 54 card readers and match his prices or do I keep it as free dry and raise the washer prices? I'm pretty sure i'm the only mat left in the area with free dryers and I really think its a great marketing tool to increase my volume. but on the other hand i'm getting too many customers who are abusing the free dryers and filling up 1/4 to 1/3 the capacity and using multiple dryers. I've put up signs telling people to fill it up at least half way or we will stop the dryer. And I have my attendants making announcements over the PA and going around every 10-20 mins to check on them. But now my attendants are spending all their time looking after dryers instead of keeping the place clean. If I kept the free dryers I was thinking I would have to raise my prices to 3.25-18lb, 5.50-30lb, 7.00-50lb.

Sorry for rambling on but i'm pulling out my hair trying to decide what to do. Anybody have any suggestions/input?

[CharlieS]

When people don't pay directly for a service they will tend to abuse it. Your competitors are making changes for astute business reasons. Maybe that should tell you something.

Charlie

[alesser738]

Personially I would start to charge for the drying process. The problem I see is that it's to drastic of a change from free to paying.
I would buy brand new dryers (if yours are over 5+ years old) and equipe the whole store with a card reader system. With most card readers you can set bonus starts on the dryers for every washer used (example.. 20 minutes free dry for ever washer used) this would slowly wean them off the free dry.

[Kitty]

Mike try to run a search on the topics of free dry and the topic of pricing strategies, you may have to use different variations of the words but you will get different threads to read over. Try the advanced search option as well.

If you purchased just over a month ago you are just getting your feet wet. Most liketly you did your due dilligence prior to your purchase and as you comment you knew what pricing your competitors were opertating prior to and now afterwards since your take over. But the biggest hurdle in this business is not really how your competitor prices, although it is a big part of your equation, you must price your equipment for your profitability first and foremost, hopefully, you had fully understood what this was prior to you opened your doors the first day.

As Charlie said, free dry is a concept that is easily abused by the customer and it was a marketing tool solely intended purpose to be used for a short period of time that got out of control in some markets. Your machines should be priced for profit whether they be the washers or the dryers for single users.

If your competitor has eliminated free dry it is good for your market, take a hard look at your pricing and see where your vending pricing should be and where your profit margins where will fall. I always say take a hard look at your store and see what your competitors may see as a weakness as they may try to capitilze on those shorcomings and you take a look at their stores and do the same. Capitilize on your strengths and work hard. Be sure to hire and train excellent staff keep the cleanest laundromat in town!

P.S don't forget to Join the Premium section ;)

Happy laundromat! Great luck to you.
Kitty

[anonymous]

Brian Wallace, head of the CLA, is currently on tour giving talks about dryer economics.

He has talked at great lengths about the merits of free dry. Most free dry is what he calls reactive, but some is pro active. The pro active free dry is a great strategy and if you can do it you will most likely kill all the competition around you. I would suggest you talk to Brian or go hear one of his talks on this important marketing technique.

[Ken]

I saw some stores in Free Dry market offer "discount dry" to stop customers use 2,3 dryers for one toploade or add Bock to cut dowm the drying time.They still charge high price for washer but they charge 1 quarter for 30 mins or something like that.They will not allow any dry only customers.

[Kitty]

Could you please elaborate what you are saying please?


I can understand the concept of the procative marketing strategy of utilizing a campaign in order to bring customers into your store, we utilized the power of a free unlimited wash strategy that was an excellent campaign that won customer loylaty, but I don't think the strategy should be world wide used. People should think outside the box.

However, I wouldn't think I would want every tom, dick and harry out utilizing a marketing concept that was constructed to slaughter the competition. Are you saying this strategy is out on the circuit being discussed and condoned by the industry leaders?

Competition is a good thing and it would be most beneficial for the industry and the store owners/investors to have discussions of learing how to deal with the challenges of actually competing in these tighter markets and how to promote a store that enters these waters versus giving away the services.

The industry is challenged because of how it stands today and I know from a sales standpoint we are not selling if we give it away. The challenge lies in showing the consumer the value in what we are promoting and get them to purchase. If the proprietor cannot do that then maybe there was no reason for the store?

[Ken]

This is a great time for you to get out free dry since other store decide not to offer free dry anymore.
I don't see how free dry can put anyone out of business ,maybe a few small,not runing well stores.
Brian Wallace doesn't own laundromats,I spoke Mike in CLA last year,he owns laundromat in Chicago area,he doesn't offere free dry.
If you feel free dry is the only reason customers go to your store,keep the free dry.

[pete f]

I do not have free dry around me, so I will approach this based on numbers. Forget running a dryer 1/2 empty or 1/4 empty, it takes a certain amount of BTU and air to evaporate moisture (dry) so if they stick a top load of wash in 2 dryers it will dry in 1/2 the time of using one dryer. More or less.

Generally dry revenue is 1/2 of wash , so your price structure with free dry should be as follows, to match the competition.
18# 2.62 35# 5.62 50# 7.12 ( Something in this pricing is not quite right, you should have a uniform cost per pound , ie, 15 cent a pound wash.free dry )

People who use a laundry every week know exactly what it costs to do it. Like you commute to work every week, you know how much you spend on gas. You know what it costs for food every week. Same deal.


Now I know how the card systems got cheap in these big stores, don't use them in dryers.
I guess you do not get many dry only customers.
My dry revenue is now way beyond the 50% rule, and I like that. The 15k to outfit the dryers with card swipes and allow you to re-price in a normal way, now that the other guy did it sounds like a great option.

[Boxer]

Brian Wallace doesn't own laundromats,I spoke Mike in CLA last year,he owns laundromat in Chicago area,he doesn't offere free dry.
If you feel free dry is the only reason customers go to your store,keep the free dry.
NO FREE DRY !!

When you go to fill up your car is it FREE GAS !!!

[kbc747]

You must never get caught up in your own propaganda, there is no such thing as FREE dry you are overcharging on the wash and then giving it back on the dry cycle period. Althought you have fallen for it hook, line and sinker your customers are more likely a little ahead of the curve here(ie taking it to you on the dry side). Step back and look at this, all others in the area have dropped it and the pre-owner of your store sold out rather than deal with it. Ever feel like you were the last one to get the joke?

[SmartCard]

Well the results are in. at one of our stores we had been running 25 cent wash on neptunes everyday, started in late december and ended Feb 1. We killed the competition, other mat owners were calling begging me to stop! A planned,I cut back the 25cent washes to Tuesdays and Thursdays only. Business has been up nearly 40% and holding since promo ended. The beauty of the neptune is the cost of the wash is low, so it's not to painful The store was jammed almost everyday. I couldn't keep the snack and soda machines full. Collected the video games today and the Revenue had DOUBLED! Screw FREE DRY!

[kbc747]

Well the results are in. at one of our stores we had been running 25 cent wash on neptunes everyday, started in late december and ended Feb 1. We killed the competition, other mat owners were calling begging me to stop! A planned,I cut back the 25cent washes to Tuesdays and Thursdays only. Business has been up nearly 40% and holding since promo ended. The beauty of the neptune is the cost of the wash is low, so it's not to painful The store was jammed almost everyday. I couldn't keep the snack and soda machines full. Collected the video games today and the Revenue had DOUBLED! Screw FREE DRY!

So are turns up 40% or money, because you do do it for the money right, good thing your competition isn't smart or they would have matched your price, better yet run it now you have and are ready to make some money now is the time when I would take a run at your promo. People let this be a lesson set 5% aside for equipment and 5% for wars like this one. So you gave away thousands of dollars to gain 40% and if your competition goes to .25 cents washes you will loose it all because the sales are based on nothing more than the lowest price. Wow, why hadn't I thought of that, give everything away and they will come till the next lower price comes along. Smart, very very Smart.

[pete f]

Well the results are in. at one of our stores we had been running 25 cent wash on neptunes everyday, started in late december and ended Feb 1. We killed the competition, other mat owners were calling begging me to stop! A planned,I cut back the 25cent washes to Tuesdays and Thursdays only. Business has been up nearly 40% and holding since promo ended. The beauty of the neptune is the cost of the wash is low, so it's not to painful The store was jammed almost everyday. I couldn't keep the snack and soda machines full. Collected the video games today and the Revenue had DOUBLED! Screw FREE DRY!

I have been trying to figure a way to get more turns out of the Neptunes. Never though of vending them for a quarter. Great idea. Maybe I just let them wash for free! Even then I don't think the customers will use them.
I rasied all my prices at one store back on Oct, I am now up about 45% from then. I did lower prices 20% at one store last year and it is now up 40% also. Everything depends on location. Still, 25 cents?

[anonymous]

OK, what Brian is talking about is a strategy that works very well for some stores as a long-term competition killing aproach to business. Similar to the way a Wal-Mart drives out less cost effective competition. It is not a strategy for most to stores to use, but where it can be used it will kill all other stores. So here goes:

You build a large mega store that can accomodate many many customers. You have a huge parking lot so that parking is no problem. You then offer free dry with washers prices at the going rate or maybe just very slightly above those rates. If you figurer that normal dryer income is about 50% of washer income you only have to have about 40% more customers to have this strategy break even. Since the customers are not paying any more for washing and are getting the drying for free they flock to the store and tell everyone else about it.

This won't work for a small store or one that does not have excess dryer capacity. I would not advocate trying it, but Brian claims there are quite a few stores out there that do this and are very profitable.

[goingtoarizona]

Being a newbie, I don't know much, but if most of my biggest expense is nat gas, and I give away the drys, isn't that bad ? Just wondering...

[Kitty]

Hey Howard,

Capitilism is the American way and we have the right to earn income and to sell and to purchase labor for wages with little or no government control or other industry control for that matter.

However, take a hard look at your industry and see how hard it is to make a buck or to and see what you need to do. The key to to your business is to bring customer into your doors. We have had this discussion before about promotional pricing, whether or not you agree wth it, it works. Its not a price war per se. Consumers have the perception that all laundromats offer the same services, by offering something as discounted pricing or free wash etc. you are giving a good enough reason for a customer to leave their current place of doing business to go to a competitor store to try them out to see what they have to offer. If they do not have what suits them, or if their location does not meet their requirements, they will be back to your store. But, it the perception of todays consumer still needs some boosting, thus the strategy for such a promotion. IF it brings in customers and the store owner is able to retain them, then it is well worth it. It is of course in the best interest of all owners to keep their laundromats the brightest, cleanest and friendliest in town!


Cleanclothes, as far as your reference to Mr. Wallaces approach to the business, I think we had a thread on the subject last fall.

http://www.coinwash.com/mb/showthread.php?t=5072&highlight=walmart+strategy