Are customers getting MUCH MORE Price sesnsitive?

[Howard]

Over the course of the last month I have gotten at least a dozen calls from "potential" customers wanting to know the price of my smallest machines. Historically I would say I would get maybe two or three of these types of calls a year. So, are customers all of a sudden shopping based mostly on low price, or is this just a strange anomoly.

[chad]

The big question is why are you getting so many calls?

[Howard]

The big question is why are you getting so many calls?

Yes, I agree that is the big question. I can only assume that new people that have moved into the area are price shopping before picking a store or that customers from other stores are looking to see if they can find a cheaper store. BTW, with a confidence factor of 83.2% these are mostly white somewhat educated people - yes you can usually tell by the voice.

[epic02]

Howard, maybe one or more of your competitors just raised prices. Time to get out and compare prices again. I cant remember the last time I had a call like that.

[MrMachine]

Howard, maybe one or more of your competitors just raised prices. Time to get out and compare prices again. I cant remember the last time I had a call like that.

Howard,

Epic has a point. Maybe one or more of your competitors just increased their prices. This could be a good sign for you. It could also mean that your competitors are thinking of increasing, and are checking around.

[canon]

If someone calls me to find out if i am a quarter cheaper , i hope they stay where they are.

[Adamski]

Guys,

I get price-checker calls quite regularly - maybe once every few months. I think most of these calls are from competitors who don't want to identify themselves. If I call a competitor to check on prices, I like to identify myself. I find these calls come more frequently during times of rising utility costs. They appear to indicate that a competitor is becoming uncomfortable with his current vend prices and is thinking about raising some.

[mellofelow]

Not for machines but I get this frequently for Fluff&Fold (WDF).

Regardless of customer or competition, apparently it's sign of the times. In a recent discussion with a colleague, who's is a corporate financial economist regarding my plan to replace few machines and raise prices. He advised against it because the following.

1) Deflation - typically, standard cost of living inflation has been about 3% annually. But for the first time in decades, 2009 was the only year which inflation was down -0.34%... a deflation if you will. In fact, as an I/T professional for a multi-billion dollar company (my real job), we have ceased bonuses and pay raises for the last 2 yrs. And this is the catalyst for all the following.

2) Cost containment - Current businesses, corporations are operating by cost cutting. Sale volume and prices had met a resistance, therefore the only option is to cut staff and operating budget.

3) Price cutting - As in deflation, prices has actually decreased in several key common living consumptions. Home prices, fuel (gasoline), clothing and even grocery have fallen a bit.

4) Commercial Real Estate reduction - As more and more business fail, commercial RE suffer the consequences as well. As I mentioned above, the fix cost to operate must in line with reduction. Many business associates I spoke to have been successful in renegotiate new lease... as much as 20% less.

In the end, he's not totally against raising prices. He thinks people are still shopping for bargains... as Howard is experiencing in the original post.

[Jefflange]

So Howard how much are your smallest machines? Don't leave us hanging.

[Howard]

So Howard how much are your smallest machines? Don't leave us hanging.


Doubles are $3.29

[mellofelow]

Doubles are $3.29

Wow... rates are high in that part of the world. That's more than I charge for my 4 loaders... and I only get 1.5 turns a day average.

[Jefflange]

Congrats you are a price leader.

[MrMachine]

Wow... rates are high in that part of the world. That's more than I charge for my 4 loaders... and I only get 1.5 turns a day average.

Yes, that's great pricing. You must not have vicious competition Howard.
I charge $2.00 for my doubles, and my customers don't like it because my competitors are all cheaper. If I charged anymore, you'd find my body hanging from a noose, lol.
I have one competitor who just put in BRAND NEW Hubesch's at $1.75, and a Chinese store down the block from me that charges $1.50. I tried to tell them that they are too cheap, but they won't raise their prices which is self-defeating and hurts us all. How dumb is that?

[chad]

We need to teach thes others owners about math.

I think the industry needs to do something about this, its a on going issue with owners coming in and being a low price leader, here in los angeles many mats are for sale because of this same reason. Low price leader that doesnt invest back into the store, now for sale.

[Adamski]

Guys,

Just be careful. Don't get caught doing anything that approaches Price Fixing.

Some people are willing to work for almost nothing. They set their prices low and fail to account for their investment, risk or equipment replacement cost. It stupid, I know; but they do it all the time. Sometimes they even have one business supporting another business long-term and they see nothing wrong with that.

Generally, the best thing you can do is continue to follow your business plan. Offer good value for a fair price and refine your plan over time. My mommy always said, "If your buddy jumps off a bridge, are you going to jump off a bridge too?" Don't start walking out onto the bridge just because your competitors are doing it. Find another way to get your piece of the pie.

[MrMachine]

Guys,

Just be careful. Don't get caught doing anything that approaches Price Fixing.

Some people are willing to work for almost nothing. They set their prices low and fail to account for their investment, risk or equipment replacement cost. It stupid, I know; but they do it all the time. Sometimes they even have one business supporting another business long-term and they see nothing wrong with that.

Generally, the best thing you can do is continue to follow your business plan. Offer good value for a fair price and refine your plan over time. My mommy always said, "If your buddy jumps off a bridge, are you going to jump off a bridge too?" Don't start walking out onto the bridge just because your competitors are doing it. Find another way to get your piece of the pie.

Larry,

You are right of course. We shouldn't try to manipulate the prices, and that's not what I'm trying to do. However, I CAN express my dissatisfaction to them. I just wish they would wise up, but I guess that's what the free market is all about.

[Adamski]

... However, I CAN express my dissatisfaction to them. I just wish they would wise up, but I guess that's what the free market is all about.

Paul,

Actually, I don't think you can (legally) express your dissatisfaction to them directly. You can certainly write articles and posts that express your point of view if this is directed at operators in general. However, you are bordering on price-fixing if you even merely express why you charge what you charge to one of your competitors. This is especially true if you express your views with the intent of causing your competitor to reconsider his own price structure.

The law really doesn't leave much wiggle room for businessmen to discuss the subject of prices with each other. Of course, the intent is to preserve the Free Market and prevent even the appearance of Price Fixing.

[mellofelow]

Wooaahh.... hold on a minute. Maybe I'm new but this whole thing about price fixing at the micro, micro-esq level of laundry business is blown out of proportion. I'd certainly be interested in knowing a documented 'price fixing' legal case against laundromat(s). And if so, what were the penalties.

[STOUT]

Larry,

You are right of course. We shouldn't try to manipulate the prices, and that's not what I'm trying to do. However, I CAN express my dissatisfaction to them. I just wish they would wise up, but I guess that's what the free market is all about.

Guys;

Would it not be a better idea to have your neighbor laundry owners subscribe to this site? That way it would introduce their way of thinking and upbringing in the industry. They need to be retaught the best business processes. At one time Toyota was one of the less expensive vehicles in this country many years ago. They got out of the price game and went for value.
Most immigrants to this country that are in the laundry business will not raise their prices because of their acculturation process. Yes our standard of living is higher and so are our costs. I do not believe they have caught on to this.
Just my perspective.

[MrMachine]

Paul,

Actually, I don't think you can (legally) express your dissatisfaction to them directly. You can certainly write articles and posts that express your point of view if this is directed at operators in general. However, you are bordering on price-fixing if you even merely express why you charge what you charge to one of your competitors. This is especially true if you express your views with the intent of causing your competitor to reconsider his own price structure.

The law really doesn't leave much wiggle room for businessmen to discuss the subject of prices with each other. Of course, the intent is to preserve the Free Market and prevent even the appearance of Price Fixing.


Well, I guess I'll just have to keep my mouth shut and bear it until they crash from not being able to pay their water bill.

[Adamski]

Mellowfellow,

I once sent an email to that attorney who writes for one of the trade magazines - I forget which one. Anyway, I suggested that he write an article about price fixing. I didn't suggest how he approach the subject or anything else. Just write something about price fixing. He emailed me back saying it was too touchy a subject.

More recently, we had a rather long discussion about price fixing here on this BB. The law was even quoted in that thread. You might try a search and see if you can find it.

[Howard]

Congrats you are a price leader.


Actually I am not the price leader on that size machine. One of my competitors is up to $3.50. We are in a high cost area, so prices are higher than in most areas.

[mellofelow]

More recently, we had a rather long discussion about price fixing here on this BB. The law was even quoted in that thread. You might try a search and see if you can find it.

Adamski,

yes, I read that thread and probably didn't get past maybe 5 posts. Sure, that law sounds alarming in principle but I just can't believe it will happen. A case like this will be frivolous at best. As long as people will pay $4 for a cup of coffee at Starbucks, the claim will be bunch of smoke.

[epic02]

Guys;

Would it not be a better idea to have your neighbor laundry owners subscribe to this site? That way it would introduce their way of thinking and upbringing in the industry. They need to be retaught the best business processes. At one time Toyota was one of the less expensive vehicles in this country many years ago. They got out of the price game and went for value.
Most immigrants to this country that are in the laundry business will not raise their prices because of their acculturation process. Yes our standard of living is higher and so are our costs. I do not believe they have caught on to this.
Just my perspective.

Stout, Time and time again I have told many owners and competitors about this site. Sometime I think IM just waisting my breath. They dont have to be CLA members to read the Forum, and they have yet to visit it. They just dont seem to get what a valuable tool this is to there business. Because of this site IM a more smarter laundry owner today. There has been times when it motivated me to raise prices just after reading certain post and be more price conscience. Most of my competitors are all foreign maybe they dont read English to well. They keep there prices to low in fear of loosing customers. I know A lot of Laundry owners read the Journal It would be nice if they did an article on this site to spread the word about how it can help them as a owner.

[Adamski]

Mellow,

Maybe a prosecution is unlikely but the attorneys appear to be taking it seriously. I perceive the risk like this: You go and talk to your competitor about operating costs, business risk and eventually the conversation turns to vend pricing. The two of you have an open and frank discussion about return on investment, current prices and the profit motive. You part thinking that maybe your competitor will consider his current prices in relation to the issues you brought up. Instead, your competitor calls 911 and claims that you attempted to get him to raise his prices. True or not ... it's his word against your's and he's the one who called the cops.

[mellofelow]

Maybe a prosecution is unlikely but the attorneys appear to be taking it seriously.

Well, there lies the problem. If he/she willing to risk the standard $20k fine for frivolous lawsuit, then bring it on.

http://query.nytimes.com/gst/fullpage.html?res=9B07EFDD133EF934A2575BC0A9639C8B 63&scp=7&sq=First+Amendment+Project&st=nyt

In my neck of the woods, mat owners and I don't even speak the same language. If we do, on the contrary, they fix prices by going lower.

[Adamski]

Mellow,

I think you're confusing Criminal prosecution with a Civil lawsuit. The Federal price fixing laws make price fixing a criminal offense. Criminal charges are filed by Federal prosecutors, not law firms.

While attempts at price fixing probably happen more often than we think; successful price fixing itself is probably pretty rare in this industry. Laundromat operators are not likely to agree with others to adopt a price structure extraneous to their own business plan. They will stick with their own vend pricing even as complete failure loomes on the horizon.

[Howard]

Larry, Larry, Larry, I don't know what the cops in The Great State of Detroit (yes I am kidding) do, but if you called 911 in NJ to report an antitrust violation they would either hang up on you or on a slow day come arrest you for using an emergency number for a non-emergency.

[mellofelow]

Unless you're Bill Gates of Laundromats, this is the last of our worries.

Seriously though, our main competition is not the mat owner near or far from our operation. Instead, it's the silent killer of nearest apartment(s) landlord or their facility management company. If they decide to upgrade their complex laundry room with comparable equipment.... and charge a fair value, REGARDLESS whatever fixing scheme you/me and the next mat is doing, we're all screwed!!!

Secondly, as I mentioned in my earlier post, deflation is showing up at the price of residential washing machines. Laundromats can only charge so much until consumers say, "SCREW the mat". If I save a few months, might as well buy our own.

In addition to my analysis with local mats, I frequently ask my apt renting customers about their facility and what they charge. In he end, consumers dictate the price they're willing to spend in our machines. I give them more credit than I see most of the posters on this forum.

I'll bet Howard's caller just moved in to an apt near by and comparing prices not against other mat... but rather against his/her complex facility.

[Adamski]

Mellow,

Apartment laundry rooms:
1. Convenient to those living in the apartment
2. Limited equipment selection
3. No attendant
4. Lower vend prices
5. May be unsafe and unmonitored
6. Often dirty and messy

Laundromats:
1. Convenient to the general neighborhood
2. Wide selection of equipment
3. May have an attendant on duty at all times
4. Higher vend prices
5. Safer environment
6. Clean and organized
7. Lots of amenities like A/C, large screen TV, nice folding tables, etc.

[thinkclean]

Actually I am not the price leader on that size machine. One of my competitors is up to $3.50. We are in a high cost area, so prices are higher than in most areas.

It may be a high business operating cost area but it's the same Home Depot/Lowes/Sears environment. So while a home washer and dryer can be had sub $1k, it's very encouraging to see a fellow owner get $3.29-$3.50 for a double. I mean at what vend px does it make more sense for an apartment/rental dweller to illegally install a stack washer dryer in the kitchen?

I'm getting mentally ready to partially raise price. Many of you remember I rehabbed a mat in Northern NJ in July 2009 with Dexter Express equipment. The equipment allows me to discount for warm and cold water usage and I'm lapping 1 year on October 1st. My doubles are $2.25/$2.00/$1.75 for hot/warm/cold usage. I've built quite a bit of customer goodwill and many are pleased with how clean we keep it, how much nicer the layout and equipment are and how friendly my staff is. I'm going to remove the promotion and see how that goes. One can argue a "promotion" can't last forever and if you guys are right, they will accept the increase in stride!

[Adamski]

Ben,

So you're going to charge $2.25 for all cycles on your doubles? I wouldn't think you'd have any problem with that small move.