Buying customers

[markshields]

I have a competitor that just opened a short distance away. He has a sign up for $.75 washes every day on his top loaders. I know he is just buying the customers to get them in to his mat. I am 1.50 and do not want to change. Has anyone encountered this type of competition from a new store, and have any suggestions on what to do in this situation? Thanks.

[Steven04]

Whats his dryer prices, maybe his dryers are priced higher?

[Bluestreak]

I think at $.75 he is losing money on every load of laundry that is done in his store. Perhaps the best solution is to encourage as many people as possible to go get a $.75 wash. The more people that wash there, the faster he goes broke?

I'm rather new at this, but if he is shopping for the most price-sensitive customer, I would argue that he is also shopping for the most troublesome customer. Maybe raise your tops to $1.75 to drive the trouble over to him, and let him go broke, one wash at a time.

Anyone got an opinion on whether a $.75 toploader wash is a loss or not under todays utility, insurance, and rent costs? My gut tells me that $1-$1.25 is break even but I have no statistics to back me up.

[AlanR]

I'm too new to the business to offer definitive advice, but let me say this. My top loaders are at $1.50, my triple loaders are $3.25 and my dryers are at 8 minutes per quarter. Overall that mat makes some money but I don't need a Brinks truck when I go to the bank. Unless you have free utilities, you're probably losing money faster than you can't count it at .75 per turn.

[Adamski]

Mark,

The 75 cent wash is a common temporary come-on for newly opened laundromats. There is a refurbished and re-opened laundromat where I live that has been offering 50 cent and more recently, 75 cent Neptunes for at least 6 months now. Fortunately, that mat is not competing with my laundromat.

The owner's theory, as you guessed, is to get people in the door and establish a customer base as quickly as possible. Since the mat by me is still doing the 75 cent wash (complete with large exterior banner advertising); I'd say this tactic is not really all that effective at QUICKLY establishing a customer base.

I recommend that you hold your prices where they are as you make small, customer friendly improvements. If your store is not extremely clean, begin with that improvement first.

Larry /ubbthreads/images/graemlins/cool.gif

[Howard]

You guys are kidding, right? He is making lots of money at 75 cents. Think of it this way, his machines are installed, his rent is being paid, the lights are on and he is paying insurance. With no business he has no contribution margin. At 75 cents he gets people in the door and the incremental cost for water and electricity to run that machine is less than 75 cents. Thus, given his two options of having no business or low margin business that will help him build a base which do you think makes more sense.

[Adamski]

Mark,

Here's another thought. Recon that new laundromat and determine what are its strong points and what are its weak points. Try to exploit its weak points with your laundromat.

Larry /ubbthreads/images/graemlins/cool.gif

[markshields]

Howard, that is the way I see it also, at .75 that will cover your variable cost and some of the fixed, and that is better than not covering any of the fixed. So he can do this till he has a large enght base that he thinks he can up the price.

And Larry that is a good point to to figure out his weak points and hit that. I have done very limited advertising and need to pick up some ads stressing my strong features. Thanks

[SonomaJoe]

Mark,
What is your BP? I have one store with no top loaders, so my closeset competition offering 75 cent washes would not concern me. I decided to differenciate myself with large front loaders & go coinless.
Understand your own strengths & weaknesses, & then do the same with your competition /ubbthreads/images/graemlins/grin.gif

[neal]

[ QUOTE ]
I have a competitor that just opened a short distance away. He has a sign up for $.75 washes every day on his top loaders. I know he is just buying the customers to get them in to his mat. I am 1.50 and do not want to change. Has anyone encountered this type of competition from a new store, and have any suggestions on what to do in this situation? Thanks.

[/ QUOTE ]

What did his low prices do to your business? Be honest! I like the lower price idea on a new store for a while but not on the toploaders maybe the larger machines .

[markshields]

He only has been open for less than a month, but it looks like a 15-20% drop for me. His 30# dryers are also 10 min per quarter.

[petefritz]

You can expect 20% to 40% loss of business within 3 months. After that, about 10% should come back. From there, it depends on market, ie, new customers moving into the area.
Your pie has been sliced.
I had a store once a guy was 75 cents, me $1.50. I held the price for 2 years, he went to $1.25 I went to $1. Was not the best. I suggest dropping to $1 as a "fall special" If you hold prices high it just gives him more leverage.