Wash price and gross margins ($3,$4)

Pricing, Costing, and gross margins in the express car wash environment.

 

Price points is one of the number one questions we get here at Tommy's. What's the right price and what should my cost per car be. The first advise of coarse is price your wash for your market. I have heard stories of people with $10 base price and selling Rain X for $7. If you can, you should.

For the rest of us, here's my logic on pricing from our experience at our car washes.

 

Our wash prices are $6, $8, $10, and $12 works which includes tire gloss and Rain X typically $2 ea ala carte

 

Last year I was listening to an associations conference call where they we're discussiong the utility costs increasing. Along with utilities, also chemicals continue to increase. Minimum wage here in Michigan has also jumped in the last year. So I thought it would be a good time to go back and analyze what our numbers we're and compare to what I had heard on the conference call. Similar to the numbers discussed on the call, we we're right in line, at $2.75 cost to wash a basic wash.

This cost factors in everything, utitlies, chemicals, labor, etc. Also consider this is a large facility, gas / cstore / wash, 180' tunnel capable of 200 cars per hour therefore costs are slightly above express wash average.

 

So here's my math.

If it costs $2.75 total cost to wash a car.

 

At $3 base price that's $.25 in gross margin per car.

 

If you we're to increase your base price to $4 the costs are the same.

Therefore your gross marging would become $1.25

 

Therefore only a 25% price increase to the consumer = 500% gross profit increase in your pocket.

 

Correct me if I am wrong, but WOW, A no brainer.

 

Now I understand the idea of $3 is to upsell, but still that's the point of any higher wash package to upsell from the base price. Still most people see 30-50% of people buying the base wash. For a quarter, just not worth it. Therefore your only option would be to greatly reduce costs and reduce quality which will make customers one time visitors.

 

Author:

Ryan Essenburg

 

 

*This document is for informational purposes only, it is not intended to alter your concepts on car wash pricing. We recommend you use your best judgment in your marketplace.

 

Comments can be sent to ryane@tommycarwash.com