CHICAGO — There are plenty of theories when it comes to pricing. Rising utility costs have finally forced some operators to raise prices. Others believe the industry still has a long way to go when it comes to charging appropriate prices.
Pricing is the focus of the final part of American Coin-Op’s annual State of the Industry survey.
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.
At this point, you would be hard-pressed to find an operator who believes utility prices are going to come down. How operators deal with this reality is another matter. Raising prices, especially washer prices, has always been a major tactic to combat rising expenses. Still, for a variety of reasons, some operators have been leery of doing this.
We asked respondents about their current washer prices and if they raised prices in 2008 or intend to do so by the end of the year.
A look at the most popular washer prices may have you questioning your prices. Are operators across the country finally bringing prices up?
Let’s start with top loaders, still a part of many stores. Nearly 80% of respondents are using top loaders.
The price for a top-load wash ranges from $1 to $4. The 75-cent wash is no longer part of the equation for our respondents.
Here are the most popular top-load prices followed by the percentages of respondents using them:
1) $1.75 (31.%)
2) $1.50 (29%)
3) $2 (20.5%)
4) $1.25 (12.8%)
5) $1 (6%)
Things have been changing with top-loader prices. Last year $1.75 had climbed to the No. 2 spot. This year, it’s the most popular price. Two dollars is now the third most popular price, climbing from the fourth spot last year.
Three years ago, 72% of respondents charged either $1.50 or $1.25 for top loaders. Last year, that figure dropped to 56.9%. This year it is down to about 42%.
The most common price for a small front loader (18 pounds) is $2, closely followed by $2.50, $1.75 and $2.25. The price range for an 18-pound wash is $1.25 to $3.
Prices have changed for 20-pound washers. The most popular price is now $2.50, followed by $2 and $2.25. Last year, $2 was the most popular price. The price range for a 20-pound washer is $1.75 to $3.
Moving up in size, the most popular price for a 25-pound wash is $2.75 closely followed by $2.50 and $3. The high-end price is $3.75.
The price range for a 30-pound wash is $2 to $4.50. Here are the most popular prices for a 30-pound wash:
3) $3.25 (tie)
3) $4 (tie)
There has been some movement in this category. There is a new No. 1 price: $3.50. Last year’s most popular price ($3) has dropped to second place.
The most popular price for a 35-pound wash is $4, followed closely by $3.50. The price range in this category is $2.50 to $5.25. Once again, the most common price has increased from last year.
Are your customers clamoring for more large washers? You aren’t alone. Operators really vary when it comes to the larger machines (40 pounds and larger).
The most popular price for a 40-pound wash is $4 followed by $4.25. The price range in this category is $2.50 to $5.50.
For 50-pounders, the price range is $3.50 to $6.25. The most popular prices are $5 and $4.50. This is nearly the same as last year.
What’s the bottom line? Prices continue to climb, albeit too slowly for some in the industry. A good number of operators still believe that it’s easier to raise washer prices (less complaints) than to lower dryer time in order to boost revenue, according to a Wire survey.
Prices are climbing, but it’s still always going to be difficult to attain uniform prices for a variety of reasons — location, competition, etc. However, it’s good to see that a fair number of operators have boosted their prices when compared to last year’s survey. How high will prices go? Only time will tell.
Over the years, I’ve heard many “horror” stories from operators regarding dryer pricing. There’s something about tinkering with the customer’s last step in the process. But with natural gas prices on the rise, operators realize that if they don’t adjust dryer pricing/time, they may be telling the “horror” stories.
With that in mind, here are the most popular dryer prices followed by the percentage of coin laundry operators using them:
1) 25 cents/8 minutes (29.5%)
2) 25 cents/6 minutes (18.8%)
3) 25 cents/7 minutes (18.2%)
4) 25 cents/5 minutes (8.8%)
5) 25 cents/10 minutes (8.1%)
How does this compare to last year’s survey? Here are the 2007 most popular dryer prices:
1) 25 cents/8 minutes (31.7%)
2) 25 cents/6 minutes (tie, 19.8%)
2) 25 cents/7 minutes (tie, 19.8%)
4) 25 cents/10 minutes (11.1%)
5) 25 cents/5 minutes (5.5%)
There has been very little change in dryer pricing since last year. Keep in mind, though, that last year represented a major change in pricing. For example, 25 cents/10 minutes tumbled from the No. 2 spot to the No. 4 spot. This year, it’s holding the fifth position.
In addition, the number of operators charging 25 cents/12 minutes has shrunk again. Only one respondent reports charging 25 cents/15 minutes and no one is offering free dry.
PRICING ODDS AND ENDS
Drop-off service pricing (per pound) ranges from 60 cents to $2.50. Here are the most popular drop-off service prices:
1) 85 cents
2) 90 cents
4) 75 cents (tie)
4) 80 cents (tie)
Last year, $1 was the most popular price. While $1 has dropped to third, the difference between the top three prices is quite small.
Sixty-one percent of respondents charge 75 cents for a box of vended detergent and 25% charge 60 cents. Not much change here except that a few more operators are charging $1 a box.
TIME FOR A CHANGE?
We asked operators if they have already raised washer and/or dryer prices in 2008 or intend to do so before year’s end.
Before we get into the numbers, there is something to note: It’s hard to get a total grasp of the pricing situation since we don’t survey the same people every year. Therefore, this year’s respondents may have raised prices recently, but will not do so this year. However, it’s always interesting to see what a large group of operators are thinking.
Last year, 35% of respondents said they had raised washer prices or intended to do so by the end of the year. With drying, 23% of respondents said they had lowered the minutes (in most cases) or were going to lower them before 2007 came to an end.
This year, 43% of respondents say they have already raised washer prices this year or intend to raise prices by the end of the year. That’s one of the higher figures in recent times. Two years ago, nearly 49% planned to hike washer prices.
With dryer pricing, 19.6% of respondents have lowered minutes/raised prices or plan to do so by the end of the year.
With rising utility rates, it’s not a surprise to see that number of respondents committed to making a change.
To read Part I of the survey story, click here.
To read Part II of the survey story, click here.