Getting the volume back

As many of you know, we have been strong proponents of the one price approach since we switched to it in 1998. However, I have begun to question our approach as due to weather and the economy, we have seen a steady trend to lower annual wash volumes. Nothing precipitous, just steady and identifiable. despite the good deals that our 5 wash book for $35 and $50 a month Club Cards represent. I cannot get rid of this feeling gnawing at me that we've somehow lost the cheap seats as our prices have gone up over the years.

What I am now contemplating is going back to a two tier price structure of $7 for the basic wash (with 5 wash book for $20) and continue $10 for the Works and the 5 wash book for $35.

While I know that revenue will undoubtedly take a hit, I am hoping that the increase in wash volume and book sales will overcome that.

Any opinions are appreciated.

Bill
Chief's Auto Wash

Bill we have been doing exterior washing in Portland for more than 30 years with so much rain full service is near impossible to offer.

The key to the success of the exterior concept here has been the low price. About 15 years ago there were operators offering only an exterior wash for $4.00 and some who were advocating the need for hand drying at $4.95

In the end the lower priced service won out. A lot of talk about the motorist wanting service, but the reality was that the lower priced exteriors were out washing the other washes by more than double.

We are still a $5.00 base price exterior wash market, although some have gone to $6.00

PACKAGES

Had an ex-marketing manager for AMMCO the nationally recognized transmission franchisor tell me that they spent several hundred thousand dollars to have a marketing firm do a study to determine to market their transmission packages. The conclusion was that if AMMCO offered three packages instead of only two they would sell more of the middle and top packages.

The conclusion was that with only two packages, in essence, an expensive and a cheaper one, the majority of customers would purchase only the cheap one. He indicated that they took the advise and that what the marketing firm told them proved to be true.

In our market almost all of the washes have a 3 package offering.

In conclusion I have to say that my experience in the carwash business indicates that price is a MAJOR factor in driving car wash volume. The lower your price the better chance you have of attracting MORE people, MORE often.

Regards
Bud Abraham

Bud, I know your experience far out weighs mine. I don't think price is as important as we think. No matter what it is a factor but to what degree? Again I am 25 and only been around car washes since I was 17, but here are my 2 cents. Something that I think that many people over look is convince for the customer, location is a main factor in convince but not the only one. People like the comfort of a busy wash (because they don't want to be the only idiot at a crappy wash) but they don't want to be waiting all day. When it's time for me to wash my truck I go to the most convenient, place that does a decent job, or self sever that actually has the functions I use working properly (nearest to my house). This mainly saves time (the most valuable resource around) and money. More and more people are making choices based on convince, I think that is the bigger draw to an express over price. You can get pretty much the same wash in a third of the time and less than half the price. I always tell my customers if you give a little more you can charge a little more. Something that scares me about a 3 dollar wash is where do you go from there? You could accomplish the same revenue at 6 dollars washing half as many cars, and actually giving the customers something worth coming back for. Something I was taught early in my sales career was that if you sell on price you lose on price, the market is to over saturated to give it away. The reason why I am talking about exprees is because of your last sentences about price association with volume. That is pretty much the express model.

That is very useful info on the transmission service price structure findings, thank you.

-Tyler

Bill...

The guy from AAMCO could have saved his money and simply did some marketing research on optimum choice strategies. THREE has been the magic number for cluster choices since "good, better, best" became a business mantra in the Fifties. It's been applied effectively for many decades in gasoline, automobiles, and a vast array of consumer products for half a century.

But to your point: Consumers have repeatedly and overwhelmingly indicated their preference for CHOICES in purchasing.

The fundamental purchasing question started with a simple "yes of no" based on a single offering. Shrewd marketers have long proven that shifting the consumer decision process from answering "yes or no" to "which one" was based on introducing a choice of more than one. Scientific studies have reinforced that strategy and savvy marketers have settled on THREE as a sensible alternative.

If my recollection is accurate, your single price philosophy wasn't always an ironclad one-choice decision. You did offer a choice of an upgrade, didn't you?

I suggest revisiting the GOOD-BETTER-BEST concept. It would be easy to implement in your operation, and the spread would likely produce significant changes in customer purchasing patterns; controllable changes. The key is in how you formulate and merchandise the choices. Demographics, as well as ethnographic and psychographic stimuli are some important building blocks to consider when packaging your choices.

If I can be of any help, please don't hesitate to contact me directly.

Best personal regards and ... HAPPY HOLIDAYS!!!

-STEVE

www.SMOKUN.com

Bill,

I have always found that it is more efficient to first identify the cause(s) for a downward trend before prescribing any remedies.

This means examining both external and internal factors that may be responsible for weaker sales volumes. For example, maybe it isn’t your single price or price level that is causing volumes to fall. If not, then a change from a single price to something else may be ineffective and might actually disrupt your business.

Before I would jump at changing price structure, naming convention and service selection, I would thoroughly examine the environment to determine the potential causes of the trend.

Once these are identified, you will be in a much better position to identify potential strategies and tactics and weigh their benefits and costs and risks.

Bill:

Everyone has made good points. Here's a few more:

(1) Since this is a marketing question, I think the first question is what do your customers say? Some informal surveys should provide some insight. Perhaps you can create a sample menu on an 8.5"x11" sheet of paper and hand it to some customers. Tell them your thinking of changing your menu and you would appreciate their input. Then ask them what they would choose if this was the menu today. Marketing is about listening, learning and reacting to your customers so take the time to talk with them.

(2) What we're talking about is "Price Elasticity of Demand". That's the fancy name for the relationship between price and quantity sold. With a higher price the quantity always drops off. The question is, how steep is that drop off? If it's not too bad, then an increase is well worth it. If you want to do some formal testing then conjoint analysis is the way to go. You can google it and find some software to help. It basically helps you determine what attributes are most valuable to your customers. That's important because it's not what customers say they want, it's what they're willing to pay for.

(3)The ultimate arbiter of price is perceived value. The question is, based on the quality, aesthetics, marketing campaigns and overall experience, do your customers perceive that your value matches these new prices.

I think the bottom line is that pricing is extremely important and shouldn't be a gut decision. You are to be commended for thinking it through and getting opinions. Too many operators just go with their gut without a real understanding of the market.

Also, I agree that 3 packages is the best way to go.

-Kyle
www.carwashimage.com