At Tommy Car Wash Systens, one of the most common questions we receive from clients is “how should I price my car washes?” Since this is such a common question, we’d like to address it here in our blog.
There are a lot of variables to consider when establishing pricing for your car wash, so there’s no single simple answer to this question. We’ve narrowed our answer down to address a few most important points.
Location, location, location. It’s a critical factor when choosing where to build your car wash, and it’s just as critical when setting your pricing per car. If your car wash is located in a high income suburb or an area where cost of living is high, it might make sense to set your base price as high as $10 per car, with $7 extra for Rain X. If your car wash is built in a less well-off neighborhood, you’ll want to make sure your pricing is low enough to entice customers without eating into your profit margin too much. The best thing to do is to prowl the area to get a feel for how other products and services are priced, then set your car wash prices accordingly.
It’s a basic but often overlooked step: crunch the numbers to determine exactly how much it costs for you to wash each car. This price should factor in everything, including utilities, chemicals and labor. Keep in mind that average wash prices for larger facilities may be slightly higher. With the rising cost of utilities, chemicals and minimum wage, this cost could be rising, so it’s a good idea to re-evaluate this cost analysis each year. During a car wash conference call last year, we learned that average car wash pricing per wash comes to about $2.75 per basic car wash package. Our numbers at Tommy were right in line with this.
Evaluate your gross margin and increase pricing accordingly. At a hypothetical cost of $2.75 per wash, let’s say Joe Smith car wash owner sets his base car wash price at $3 in an attempt to attract a higher number of customers. That’s a pitiful $0.25 in gross margin per car – hardly enough income to keep your car wash in business! By increasing his base price by only $1, Joe Smith could increase his profit margin to $1.25, a 500% gross profit increase, and $4 is not a high enough price to drive customers away. When you take the time to lay the numbers out, it seems like a no brainer!
Sure, the idea of setting your pricing low is to attract a high volume of customers and upsell them on a la carte items and wash upgrades. But keep in mind that most car washes see 30-50% of their customer base purchasing the basic wash only, and a profit margin of a mere quarter for 30-50% of all washes is just not enough. Do your business a favor and make sure your base price is high enough for you to turn a decent profit so that during down times your car wash will remain afloat.
Keep in mind that our advice in this post is only meant to be a set of suggestions – not a definitive guide. The most authoritative source on how best to price your individual car wash is the market expert him or herself – you. Of course, if you’d like a pricing consultation for your car wash specifically, our sales reps would be happy to consult with you.
Originally Published at tommycarwash.wordpress.com