dryer pricing and time?

[DanD]

I am new to this business.I set my dryers to run for 10 minutes per quarter because the competition has theirs set that way.I have brand new wascomat gas dryers,but cannot see how it is possible to make any money when all I take in is $1.50 an hour.I'm thinking that we should all lower our time down to 8 minutes and stay together and maybe make some profit.Any thoughts?

[mn5563]

Try approaching the other owner and see if you can both agree to lower the minutes/raise the dryer price. I'm looking at the gas price chart from my local gas supplier and prices from 01/02 - 01/04 are up about 40%. You either make money together or go broke together. If you both agree, where are the customers going to go?

[Duane]

Be very careful, price fixing is illegal. Approach your competitor and let him know you are changing your prices. He will probably make the move soon after you.

[mn5563]

What I suggested was a LONG way from price fixing. I was trying to suggest avoiding a price war.

[Duane]

Sorry I took your post wrong, but you said "Try approaching the other owner and see if you can both agree to lower the minutes/raise the dryer price." and finished with "If you both agree, where are the customers going to go?"

From your post it is price fixing to "agree" to a price. What if your competitor decides to do you in by reporting your price fixing proposal?


Explanation of Price fixing from: http://business-law.freeadvice.com/trade_regulation/price_fixing.htm

WHAT IS PRICE FIXING?

Most state statutes provide that fixing the price of a product or service in agreement with another individual or business is illegal. The general rule provides that a vendor may not in combination with another vendor agree to set a certain price thereby creating a fixed price within a certain market. A business acting on its own and not in concert with another may use legitimate efforts to obtain the best price they can, including their ability to raise prices to the detriment of the general public. Also, conformity of prices within a given product is not illegal unless such conformity was created by a combination of vendors agreeing on a set price. For example, where competitors agree to sell their goods or services at a specified price, minimum price or maximum price and they receive profits from such an agreement, they are in violation of price fixing. Additionally, setting a price to be charged only within a certain area in order to get rid of competition or to create a monopoly is generally illegal under most state laws.

[mn5563]

Ok, let me restate since some here need everything micro-stated. First you left out the last sentence in the above definition, which related to selling a product or service at below cost in order to put a competitor out of business. Price fixing pertains to this issue in large measure. In the above definition it stated about price fixing in "a given market." I believe this pertains to something on a statewide basis, as an example. I do not think it would not pertain to two laundromats in a given neighborhood agreeing on a fair profitable price. The initial post gave me the impression that they were in some sort of price war, which serves no one. As far as my statement about where were they going to go, I meant if I raise my dryer price and the customers gets mad and go to my competitor and then they find out he has the same price, are they going to stay there or come back to me. We are not in business to go broke. Just relax.

[Howard]

Sorry mn5563 but you are 100% wrong - it applies to you! It has nothing to do with state-wide or any other mega region. If two people get together and decide to raise their prices together to the detriment of anyone than it represents price fixing and is a violation of antitrust laws. If you don't believe this then just report yourself to your state's attorny general and I'm sure they will be happy to teach you that it does apply.

[mn5563]

Hey Howard, you don't know what your talking about. Just for kicks I called some attorneys I know, including one that works for my state attorney generals office. I was told by all that you are wrong. It all relates to predatory pricing, done with the intention to drive a competitor out of business. For example, if two laundries get together to cut prices to the detriment of another laundry, or sell something below cost, then yes it is price fixing. What I talked about was not. Another example might be offering free dry, which is a below cost attempt to sell something to the detriment of a competitor.

Unless you are a lawyer then maybe you should not comment and you can stop being so sarcastic.

[Howard]

That is why we have so many lawyers, they all have opinions - and at least half of them are wrong (half loose every court case). If you conspire with another to raise prices you are doing so in restraint of trade, pure and simple.

[mn5563]

Face it, you are just wrong. Leave it at that and quit crying about it.

[Duane]

DanD,

Sorry about the stray from your question.

With gas prices on the rise it is difficult to keep price per minute the same on your dryers. As I stated earlier, when you make the decision to change your dryer times, let your local competition know (they are in the same boat you are) and then make the change.

Do what you need to run your store. Keeping at current minutes will lose money and lowering the minutes per quarter you may also lose some customers (money) so either way it may be a loss. So the only way to win is to lower your minutes and hope your competitors follow in which you won't lose customers.

Doing nothing is a negative.
Doing something can be a negative or a positive.

At least doing something can produce a positive, doing nothing can't.

Duane.

[Laundry_Mike]

DanD - Duane's reply hit the nail right on the head. His advice is the best answer to your question that you'll find anywhere. It's hard to take the leap to raise prices/lower dry times, but you need to do what you have to, in able make a dollar and keep your store running.

[CleanSpot]

1. Our dryers have been at 8min/Q for 2 years (since the last big energy crunch). We will probably go to 7 min/Q soon, esp at the mat with new wascodrys!!
2. It always been my understanding that if two businesses agreed to set prices that this was considered illegal. Of course, owners talk and therefore it would be hard to prove. But I would say, that your best approach is to charge what is fair (ie you should be making a profit). In many cases competitors will gladly follow suit. If you have one that wants to be the lowest in town, let him. He'll soon be out of business or his equipment will be worn out and he won't be able to replace them.

[Howard]

Face it MN, you are wrong and just cannot let go. I let it die here and took the issue to another board to get opinions, and you had to chime in there as well. I was willing to let you make a fool of yourself here with no comment. I posted an article there and offered to e-mail it to you. It is 100% illegal, whether you ever get caught or even prosecuted is a totally different story. No one will probably bother with two tiny mats in the scope of the real world - but that does not make it any more legal.

Its just like speeding or cheating on your taxes, most of the time you will never get caught - but they are still not legal. Now go get a life and let it die.

[mn5563]

Actually you lost the argument some ago. It's still the same, in that what I said involved no conspiring, no fraud, no attempt to drive another out of business, no selling below cost and thus no price fixing. Interesting how when someone states an opinion, they are just "chiming in", or they state something where they dare to disagree with you and they are just a "fool."

I never said I had two mats, where did you get that from? You are just playing the arrogant SO* that you usually are.

[Mack]

Two or more businesses getting together to set a price is illegal. I am a Real Estate Broker and it applys to real estate commissions and to every type of business including laundries. This is a Federal law and applies to big and small businesses.

[Danlaundry]

To bad it law only applies to businesses in the United States and not those doing business with the United States like OPEC! They conspire every day to raise the price of oil or keep it high. Sorry for the deviation just venting much of the economy woes on @#$%ing OPEC!

[Michael@ CLA]

The CLA felt it would be helpful to ask Myles Mattenson, Attorney at Law, to offer his thoughts on the subject. Miles has spoke at numerous CLA seminars, is a regular columnist in The Journal and has considerable experience in the self service laundry industry.
If you would like to contact Myles directly, send email to: mmm@mattensonlaw.com
To read other articles visit www.mattensonlaw.com (http://www.mattensonlaw.com) or www.coinlaundrylaw.com (http://www.coinlaundrylaw.com)



A coin laundry owner who meets a competitor in a coffee shop and enters into an agreement to the effect that a vend price shall be fixed or pegged at a certain sum proceeds at his peril. In entering into this agreement, would it be entirely acceptable to speak of the transaction in a loud voice by the cash register, or would you prefer to speak of it in hushed tones in a quiet booth in the back of the restaurant? If you prefer the booth, you are presented with your first clue that you are treading in dangerous waters.

On the federal level, when interstate commerce is involved in restraint of trade activity, the Sherman Act governs. On the state level, when local commerce only is involved, you will nonetheless find similar legislation. In addition, state courts frequently look to federal decisions regarding such matters as precedent.

Some agreements have been "conclusively presumed" to be illegal and are thus violations "per se" of the Sherman Act. Other situations are governed by what has become known as the "rule of reason."

It may be helpful to cite a few illustrations of situations in which the courts have held price fixing agreements to be illegal per se:

1. An exchange of price information among competitors, especially with respect to future prices, was found unlawful by the U.S. Supreme Court in U.S. v United States Gypsum Co.
2. Agreements establishing maximum prices was found illegal per se in another U.S. Supreme Court case of Albrecht v. Herald Co.
3. Fee schedules among lawyers have also been found to constitute price fixing in Goldfarb v. Virginia State Bar.

I see little difference from a legal standpoint from distributors of coin laundry equipment entering into a price fixing arrangement limited to Santa Monica or Miami, and coin laundry owners fixing vend prices limited to their their portion of Los Angeles or Chicago.

[PeterH]

I don't really care what my competition is doing with their pricing. I know what I need to do to pay the bill and have some left over. I'd rather be high priced than low. If your projections say that you need to lower your dryer time, then do so. You will loose some, but you will gain revenue with the customers who like your store.

Besides, maybe you have whiz-bang Wasco dryers that are computer controlled, and your competition has old mechanical timer dryers that need new timer cams (got to purchase and install, a pain in the neck) and he is too lazy and cheap to change them...

[Niko]

Hey DanD, did you think by asking a simple question that you were going
to start a gang war? You know, the "Rumble in the Tumble". I bet you had no idea that this was a rough business!

[Brent2]

MN,
What you refer to as price fixing is Walmart's business model. Price fixing is usually construed as a practice to the detriment of the consumer, ie a high price. A low price is not a crime, unless a foreign company is dumping. Below cost promotions are common business practice.

[StoneColdKiller]

This is my kind of thread. Clearly what is suggested within this thread is illegal. I think that in practical application you could attend a meeting with all of the other laundry owners within your town or area at city hall and suggest just that in an open forum and never worry about legal consequences. I am so certain that it is exactly what I did.

I met with 6 other owners at city hall with certain city officials to discuss general matters pertaining to safety, expansion, etc. During this meeting I proposed that all other owners closely review their profit margins as my laundry has the highest priced vends in the area. I urged the other owners to raise their prices at least a little so that I would be able to raise mine even further creating a win/win situation.

Is this price fixing? I can assure you there is no legal agency that has the time nor energy to pursue.

By the way, the two closest laundries have since not raised prices in 3 years and the third closest went to FREE dry 6 months ago. His business is booming!!!. My overall vends are about 15-30% higher than any competitor and also have not been raised in more than 2 years. Why won't these people pull their heads out of the sand?

StoneCold