Monthly Washer Costs vs Dryer Costs

[Adamski]

To All:

I've taken a few minutes to estimate my monthly DIRECT operating costs for my washers and dryers. You may wish to do the same for your stores.

First, I calculated washer rent based on square feet used for washers, rear service areas, aisles near the washers and space occupied by my water heating system. Total washer usage was 788 sq ft. Next, I calculated dryer rent based on square feet used for dryers, rear service areas, tables and aisles near dryers and tables. Total dryer usage was 1,620 sq ft. I pay myself rent at the rate of $4,000/month for my 3,700 sq ft building so the rate per month is $1.08/sq ft.

Since my 30, 40 and 80 lb washers are 3 phase, I used my 3 phase electric bill and added $150 from my 1 phase electric bill for my 10 and 20 lb 1 phase washers to get my total washer electric cost. I used the remainder of my 1 phase electric bill minus $150 for my dryer electric cost. The remaining $150 is for lights, furnace blowers, CCTV, TV's, sign, etc.

Since 71% of my washers are efficient frontloaders, I used 30% of last month's gas bill as estimated water heating costs and 50% of last month's gas bill as estimated dryer heating costs. That left 20% ($447) of my gas bill to heat my building in February.

I applied 95% of my water/sewer bill to my washer costs leaving 5% for the restroom.

Since I have my parts costs broken down by machine catagory; I took last year's total washer parts costs and divided it by 12 to get an average monthly washer parts cost. I did the same procedure for the dryer parts cost.

Here are my estimated monthly washer and dryer DIRECT operating costs:

WASHERS
Rent $851
Elect $222
Gas $671
Water $687
Parts $248
Total $2,679 (45% of total direct costs)

DRYERS
Rent $1,750
Elect $300
Gas $1,119
Water $0
Parts $57
Total $3,226 (55% of total direct costs)

I assume that all INDIRECT operating costs such as labor, insurance, taxes, etc. should be shared equally among all pieces of equipment so there is no need to make a breakdown for this exercise.

This exercise shows that 45% of my DIRECT operating costs are applicable to my washers and 55% of my DIRECT operating costs are applicable to my dryers. If that's the case; then shouldn't I receive about 45% of my income from my washers and about 55% of my income from my dryers? What do you guys (and gals) think?

Larry /ubbthreads/images/graemlins/cool.gif

[Howard]

Larry, that is a very interesting analysis. I think you might need to add one more item, and that is the monthly allocations of capital cost for the washers versus dryers - they do wear as you use them /ubbthreads/images/graemlins/smile.gif I think that would shift the numbers more to the washer - but probably not all that much.

That said, this is interesting data - but what does one do with it? I assume that your dryers currently generate about 50% of what your washers generate in income. Do you plan to raise your dryer prices and lower your washer prices based on this?

Most businesses do not earn the same margin per square foot or per pound of product for all the products that they sell -- so why should we? Since the majority of our customers buy our products (washer and dryer usage) in the same fixed ratio - does it really matter how much one service costs or vends for rather than looking at the total return from a load of laundry that enters our store?

[Steven04]

I guess Larry did a more detailed version. But Larry, I don't agree with you about how the folding tables should be added as rent for the dryers. I think the folding tables are more a convenience like a parking lot for customers to park their cars. Granted it takes up floor space and it doesn't generate any income, but is definitely required in a mat. That loss of space should be split 50/50 as rent to both washer and dryer rent costs. Maybe I'm not thinking straight, please enlighten us.

[Steven04]

The data tells us how much its costing us to run a washer compared to a dryer. Some people like me, like to charge for what the customer uses in relation to our costs to run.

Yes, its really the same thing if you charge more for the washer but thats like "free dry mentality" where they jack up washer prices to have cheap or free dry.

Its up to you to decide which pricing is right for your store, but I'd like to stay away from cheap/free dry. So thats why I need to understand how much it's costing me to run my dryers and to be able to compare it to my washers.

[Adamski]

Steven,

I view our folding tables and dryers more like a dry/fold department. The dryers require the tables and the tables require the dryers. I allocate 1 table per every 3 dryers and that therefore requires more floor space than what the dryers alone require. Perhaps we should restate the issue as "Wash dept and dry/fold dept. direct costs".

My folding areas include some seating units (which take up floor space) but then again, my wash areas include some seating units as well.

Removing my folding areas from the dryer rent calculation would probably cut the dryer rent expense in half. That's a substantial change so we should hear all opinions about this folding table issue before changing it.

Larry /ubbthreads/images/graemlins/cool.gif

[Adamski]

[ QUOTE ]
...I think you might need to add one more item, and that is the monthly allocations of capital cost for the washers versus dryers - they do wear as you use them /ubbthreads/images/graemlins/smile.gif I think that would shift the numbers more to the washer - but probably not all that much.

... what does one do with it? I assume that your dryers currently generate about 50% of what your washers generate in income. Do you plan to raise your dryer prices and lower your washer prices based on this?

[/ QUOTE ]

Howard,

Thanks for your comments. I'll have to think about how one would allocate capital costs. Any suggestions?

You're right ... my dryers provide a third of my sales while my washers currently provide two thirds. This is far from the calculations obtained by my exercise. My current thought is to first educate ourselves on where our operating costs truely originate. Then we may decide to concentrate future price increases in such a way that eventually our sales will get in sinc with our costs. Does that make sense?

Larry /ubbthreads/images/graemlins/cool.gif

[Howard]

I agree that folding space should be allocated to the dryers for the simple reason is that they are only used by customers that dry. Customers that wash only take their clothing home wet and don't fold.

[MatNapper]

Well done Adamski - it's a detailed analysis and a reminder to us all to actually charge for the services we provide - starting with raising our dryer prices across the board. I'm chomping at the bit now to raise again and I'm at 45 cents for 8 minutes!

[EcoWash]

I like Larry's analysis because it proves an important point for the Laundry Owner/Operator/Businessman. There a two schools of thought which need to be implemented proportionately in order to reach maximum efficiency.
1) Increase Revenues
2) Decrease Expenses
Here we are talkin about Washers vs. Dryers. In order to maximize the 45%/55% relationship of expenses, one can either increase Dryer pricing and hopefully directly increase Dryer Revenue; or decrease Dryer Expenses. More about the expense side: Some mats have single stack dryers, convert to double stacks and you pay the same per Sq.Ft in this rent inclusive equation. Secondly, newer more efficient dryers will utilize less gas and thus save on utility expense. This has to be done within reason and within balance (hot dryers = less dry time and more "turns" vs. efficient dryers = less gas, but potentially more dry time)
We spend our money on low-water, low-voltage frontloaders and high-effiiciency boilers to keep our expenses down, but this only reflects savings for our washers. And might prove out the 45%/50% offset Larry has pointed out. What our industry needs now is a Quality HOT Efficient Dryer solution! Other than Maytag's Solaris - which I've heard nothing positive about, when will we see the next leap?
Sorry to get philosophical, but I'd love to hear others opinions!

[Howard]

I'm still not sold on the fact that you need to charge for washers and dryers based on their individual cost to operate since the majority of customers buy both services in a relatively fixed ratio. Customers are buying clean dried clothing.

Let me try it another way. When you take your car in for a tune-up you are buying parts and labor. Does it really matter if they charge 20% for the parts and 80% for the labor versus 40% for the parts and 60% for the labor as you are still buying a tune-up and their internal allocation of the cost has little if anything to do with what you as the customer ultimately pay for the service?

[Adamski]

EcoWash and All:

First of all, since you guys expressed interest in this exercise, I've gone back and recalculated my square footage costs for the washers and dryers more accurately. The new rent figures are: Washers - $1,039 and Dryers - $1,496. This adjustment makes the washer/dryer total direct costs virtually a dead heat at 49% and 51% respectively.

Now, keep in mind that I have all single dryers (not stacked) so my dryers and their service areas would be larger than a laundromat with half as many stacked dryers. However, the table/folding area should be of similar square footage.

The end result still indicates that my dryers cost as much to run as my washers.

Larry /ubbthreads/images/graemlins/cool.gif

[Steven04]

If your store like mine has dry only customers, then you wouldn't be able to profit from them and possibly be taking a loss at this time. It depends on the store and if you allow dry only, but my customers often come in to dry large blankets/sleeping bags, others may have a broken dryer at home, and some who only own washers due to limited space.

If the auto service allowed me to buy parts for 20% I would buy the parts only and do the labor myself. And vice versa, I would buy the parts elsewhere and do the labor there. But we all know the auto service dept would not allow that. You have to pay for both and you have no choice.

Whereas at my mat they aren't forced to do both wash and dry. They can dry only where its not our money making machine at this moment when nat. gas is expensive.

Am I the only one that allows dry only customers and how would you stop them from coming in?

[Steven04]

[ QUOTE ]

Washer
Gas $671

DRYERS
Gas $1,119


[/ QUOTE ]
Your gas expense seems low? Did you average it out from last year? Unless you think gas prices will come down, I would use the current gas rates.

[Howard]

Steve - so maybe the auto example was not the best, but you get my point. For most stores it does not matter if you decouple the wash versus dry. If you have many dry only it might be different. But do you really want to double your dry charge and cut your washer cost by 30%? Customers seem to bitch the most about dryer cost and if you did that you might end up loosing a lot of customers for a gambit that really should have almost zero impact on total revenue.

[Steven04]

Yea Howard I agree, in the end it all comes down to what the customer is willing to pay. I'm just thinking ahead to whats going to happen to our industry in the future when gas prices continues to increase. When it becomes 30secs of dry time per quarter. The time will run out before they have time to put the next quarter in.

[Adamski]

[ QUOTE ]

Washer
Gas $671

DRYERS
Gas $1,119

Your gas expense seems low? Did you average it out from last year? Unless you think gas prices will come down, I would use the current gas rates.

[/ QUOTE ]

Steven,

That was from my March 2008 gas bill which was for Feb/Mar gas useage. Keep in mind that I allowed 20% of my gas bill for heating the building so that portion is not included in the washer/dryer cost calculation.

I allow dry-only customers and, at this point, it appears that my wash/dry customers are subsidizing my dry-only customers. I don't think that's a good thing.

Larry

[Adamski]

[ QUOTE ]
... do you really want to double your dry charge and cut your washer cost by 30%? Customers seem to bitch the most about dryer cost and if you did that you might end up loosing a lot of customers for a gambit that really should have almost zero impact on total revenue.

[/ QUOTE ]

Howard,

You're correct, of course, when you say that suddenly making substantial adjustments to our washer and dryer prices to bring them in line with our actual direct operating costs is risky. It's especially risky when you consider that our competitors may choose to maintain their current pricing ratios.

We are, however, awakening to a very significant reality here. We cannot and should not ignore the fact that our dryer operating costs appear to be approximately equal to our washer operating costs. Regardless of how laundromats have done business in the past (2/3 wash revenue, 1/3 dryer revenue); we must plan now to gradually raise our dryer prices while stabilizing our washer prices at their present levels. This is the most fiscally sound option for the long run.

Further, I don't think we should ask our top tier customers, those that both wash and dry, to subsidize the dryer costs for our second tier customers, those that dry only. If anything, it should be the other way around.

Larry /ubbthreads/images/graemlins/cool.gif

[Adamski]

[ QUOTE ]
...it's a detailed analysis and a reminder to us all to actually charge for the services we provide - starting with raising our dryer prices across the board. I'm chomping at the bit now to raise again and I'm at 45 cents for 8 minutes!

[/ QUOTE ]

MatNapper,

Thanks for your comments. Right now, my 35 lb dryers are at 5 min/qtr which is $1.50 per 30 minute dry cycle. If I were to make my dryer price equal to my current average wash price; I'd be at 7 min/$1.00 coin which is $4.00 per 28 minute cycle or $5.00 per 35 minute cycle. This dramatizes how far off we are with our dryer prices today. We've got a lot of work ahead of us.

Larry /ubbthreads/images/graemlins/cool.gif

[jeffw]

Larry,

If you are talking about revenue then all you would have to do is double your dryer price. If you are at 2/3 and 1/3 then then doubling the price of your dryers would give you 50/50 in revenue. WOuldn't it be nice though?

Jeff

[Howard]

Then again we have to keep in mind that things like rent (real or imputed), water, sewer and labor costs all vary significantly by area. Since sewer costs in my area are roughly double what gas costs are I think the current pricing makes sense since my washers cost much more to run than my dryers. But then again, my washers are priced based on those costs.

[Adamski]

Jeff,

You're right, of course, about simply doubling my current dryer prices to get the 50/50 ratio. I guess I let my math confuse the hell out of me there. The doubled price would be 10 minutes per dollar coin which equals $3.00 per 30 minute cycle. Simple ... let's do it.

Larry /ubbthreads/images/graemlins/cool.gif

[Adamski]

Howard,

Your situation is unique. Few operators pay more for sewage than they pay for gas. You must have a brand new, very expensive sewage treatment plant there.

I was thinking about the OLD days (1966) when my dad first started in the laundromat business. I was 16 years old then. Toploaders were 25 cents and dryers were 10 minutes per dime. My dad had a couple of Mi-T-Boy frontload washers (rated at 20 lbs back then - they'd be rated at 25-30 lbs today) priced at 50 cents.

Today, my toploaders are $2.50 and my 30 lb washers are $4.00 while my dryers are 10 minutes for 50 cents. So my toploaders are priced 1000 % higher, my frontloaders are 800 % higher and my dryers are 500 % higher than those 1966 prices my dad charged. This is just one more indication that I have not raised my dryer prices as much or as often as I should have over the past 4 decades. I think it's time to pay more attention to dryer pricing.

Larry /ubbthreads/images/graemlins/cool.gif

[Steven04]

If you do the 50 cents per 10 mins dryer cycles, do your customers get confused if they put only 1 quarter and the dryer wont start?

I need to raise my dryer prices as well, but I cant decide on a good pricing strategy.
In the daytime, I get many elderly customers who might have problems figuring that out. Although, the dryer on-screen display would say insert 50 cents. I would like to set my dryers 15 mins for 50 cents. And then maybe make it 7 or 8 mins when they add extra quarters before the dryer stops?

[Adamski]

Steven,

Sorry, I didn't mean to confuse you. My dryers are priced at 5 minutes per quarter. I used the 10 minutes per 50 cents to clearly show how much my dryer price has gone up on the same 10 minute time increment.

Some laundromats have been experimenting with 2 quarter starts and a few have tried full cycle (30 minute) pricing as well. My plan is to continue providing x minutes per quarter until I get down to 4 minutes. At that point I may just set my dryers up for 16 minutes per dollar coin.

Larry /ubbthreads/images/graemlins/cool.gif

[Steven04]

Oh I see,
Your getting close to the 4mins. Soon you wont have to mess with quarters anymore.

[Adamski]

Steve,

When I recently installed 13 new frontloaders, they started with quarters for the first 8 days or so. Customers immediately began asking: "Are you going to put these on dollar coins?". I reassured them that I'd be converting them to dollar coins soon.

I now have all 24 of my Huebsch frontload washers on dollar coins ONLY. They range in size from 20 - 80 pounds and require from 3 - 9 coins to start. The place runs like a well-oiled machine and my customers like using the dollar coins vs. quarters.

Larry /ubbthreads/images/graemlins/cool.gif

[jpb]

Larry,

I am about to close on the purchase of my first laundromat and like the idea of using dollar coins. Do your washers and dryers accept only dollar coins or do you have dual coin drops? What about your other vending machines? I am thinking about converting some of my newer machines to dual coin drops and replacing some very old ones with new machines with dual coin drops. It seems that accepting both quarters and dollars gives you more flexibility in pricing but also is more complicated (collecting both quarters and dollars and separating them) and expensive (at least two change machines for quarters and dollars).

John

[Adamski]

jpb,

I don't use dual coin drops as I think their use is inconvenient and short-sighted. Yes, dual coin drops do provide additional pricing flexibility but I've found that customers don't expect price increases to come in quarter increments when machines start with dollar coins only. So quarter-increment pricing is unnecessary on the washers that I have on dollar coins. I even do my washer up charging in dollar coin increments. The quarter is rapidly following the path of the lowly dime as its value decreases with each passing year.

While my dryers are still on quarters; I look forward to the day when all of my equipment is on DOLLAR COINS ONLY.

Presently, my venders accept all coins except pennies and half-dollars. Customers can even buy high-quality, custom printed nylon laundry bags from my laundry supply vender. These bags sell for $7.00 and customers generally insert dollar coins when buying them. Since I no longer sell these bags over the counter, I don't need to worry about employee fraud or theft.

My store has 3 Rowe BC1400 bill changers. One is loaded with dollar coins and the other 2 are loaded with quarters. Once I am totally converted to dollar coins, obviously, all 3 will pay out dollar coins. On Rowe changers, hoppers with red printing on them will handle the larger dollar coin and hoppers with black printing will only handle coins up to quarter size. My 2 older Rowe changers have hoppers with the black printing so I'll have to buy new hoppers when I start using them to pay out dollar coins.

Currently, Alliance does NOT offer a dollar coin only meter as an option (except the electronic World meter which is quite expensive). I've written Alliance recently, urging them to begin offering a simple, mechanical DOLLAR COIN ONLY meter as a NO ADDITIONAL COST OPTION on their washers and dryers. Their response indicates an interest in moving in that direction. I also advised them to stop the ultra-low vend price programming they do on their equipment prior to shipping it out ($1.50 vend price on a 30 lb washer). Ultra low factory suggested vend prices do a disservice to both the laundromat operator and the manufacturer.

Larry /ubbthreads/images/graemlins/cool.gif

[jpb]

Thanks Larry.

When you started using the dollar coin, did you switch all of your washers over at once or did you start with the larger machines?

I may wait for Alliance to offer a dollar coin meter before I buy any new equipment.

What laundry supply vender do you use?

Thanks, John

[Adamski]

jpb,

I began programming my washers to use the dollar coin in 2004. Initially, I reprogrammed my eleven 80 and 40 lb Huebsch so their B micro would recognize that each coin inserted is worth a dollar. Then I removed the quarter coin accepters and made a few easy gateway changes which caused them to accept dollar coins and reject quarters. The gateway is the part of the accepter that is connected to the chassis with a large, spring clip that slides in 2 grooves.

Unfortunately, the quarter coin accepters that Huebsch uses today are different than what they used in 2002. Although they are the same brand, the accepter manufacturer has made some changes to the accepter's gateway. I had to actually switch gateways with the accepters on my Maytag toploaders so that I could install the older style gateway on my new washers. Then I easily converted these old style gateways to accept dollar coins and reject quarters.

I bought my equipment through Curtis Equipment.

Larry /ubbthreads/images/graemlins/cool.gif