Water Bills Doubled

[BCW]

The City that I live in has implemented a 100% increase in the sewer portion and raised the water portion higher according to use. The more water you use the higher the rate. The hows and whys are incidental. The what in heck am I going to do now is the tough nut to crack.

Reselling utilities is what we are all in the business of. I have reduced my utility costs over the years through due dilligence quite effectively. A 100% increase in my water bill is quite possibly the end of me. I mean how can I raise my prices a full dollar on almost all washers, and .50 to .75 on the rest in this economy? That's what it will take to keep me in the game.

This is what I must do as far as pricing:

Maytag Neptunes are @ 2.25 now. Raise to 3.00.
Unimat 18lb. Unimac are @ 3.00 now. Raise to 3.25
25lb. Dexters @3.75 now. Raise to 4.25
40lb. Dexters @ 5.00 now. Raise to 6.00
55lb.Dexters @ 6.50 now. Raise to 7.75
75lb Dexter @ 9.00 now. Raise to 10.00

There is another very poorly run smaller laundromat in town that has no hot water, no soft water, no bathroom and is under 5-600 sq.ft. It's very dirty and unkept. I consider it to be the best advertisement to use my place instead. The next closest towns are all over 12+ miles away. I can't see people driving over 20-25 miles round trip to do laundry. What else can I do but execute this pricing scheme and just let it play out? It sounds nuts to me, but there it is.

Tom

[chad]

Tom that really really sucks, as you are right we are in the business to resale utilities. Our water has gone up 8% and will continue every qtr.

[rbh]

What are your new rates? I am paying 2.7 cents per gallon, which is incredibly high compared to just about any other I've seen here. But a neptune uses what, 16 gallons? So even at 3 cents, its 48 cents for the entire load. And that assumes you went from free water to 3 cents. I think your proposed increases are much too much to deal with the water increase. A 1 cent increase (which again would be HUGE) would still require generally a 25 cents increase across the board to cover.

[rbh]

Just did a little math based upon the published water rates for your locale.

My math comes out to about 1.1 cents per gallon for your new rate. If it makes you feel any better, my water bill this month was 3,700, using your new rates it would come to $1,558.

That said, you are talking about a half a cent gallon increase for both water and sewer. So a neptune costs you an extra 8 cents to run. A 75 lbers maybe 35/40 cents depending on model, baths, etc.

My advice would be to publish the article about the increase along with some 25 cent increases, maybe 50 on the largest machine. But I think you'd be shooting yourself in the foot if you went up 75 cents on a machine when you incur an increase in cost of 8 cents, because your competition isn't likely to do the same.

[BCW]

Originally Posted by rbh

Just did a little math based upon the published water rates for your locale.

My math comes out to about 1.1 cents per gallon for your new rate. If it makes you feel any better, my water bill this month was 3,700, using your new rates it would come to $1,558.

That said, you are talking about a half a cent gallon increase for both water and sewer. So a neptune costs you an extra 8 cents to run. A 75 lbers maybe 35/40 cents depending on model, baths, etc.

My advice would be to publish the article about the increase along with some 25 cent increases, maybe 50 on the largest machine. But I think you'd be shooting yourself in the foot if you went up 75 cents on a machine when you incur an increase in cost of 8 cents, because your competition isn't likely to do the same.

Ron, Yes you are correct on the new water/sewer rates. 0.01157 cents or 1.1 per gal. I guess when my water bill doubled, and it has now, I kinda lost it and just started tossing out prices. I'm just sick and tired of constantly recalculating my operating costs and expenses right now. Plus factoring in a little less due to the poor economy. I suppose I should just figure pricing without compassion and let it be so.

At the time w/s rates increased I lowered prices two times. Once last fall and again in Jan.(taboo in this industry) Some bad advice given out to me by a few that thought it might help to attract more customers but it in fact did not. The results were as I expected. Less gross revenue and a nice discount to my customers.

Tom

[Duane]

Good time to make the price increases as needed and push the blame on to the utility company.

At least a 50 cent raise on most machines, maybe another quarter to catch up where you reduced your prices earlier.

Why are the Neptunes and 18lb Unimac washers priced so differently with different proposed price increases?

Customers don't know the actual cost to run a washer, but if they know that the water and sewer rates have doubled, then they should be understanding on your increases.

[Adamski]

Originally Posted by BCW

This is what I must do as far as pricing:

Maytag Neptunes are @ 2.25 now. Raise to 3.00.
Unimat 18lb. Unimac are @ 3.00 now. Raise to 3.25
25lb. Dexters @3.75 now. Raise to 4.25
40lb. Dexters @ 5.00 now. Raise to 6.00
55lb.Dexters @ 6.50 now. Raise to 7.75
75lb Dexter @ 9.00 now. Raise to 10.00

Tom,

I think a reasonable price increase is in order.

Neptune 16 lb - $3.00
Unimat 18 lb - $3.00
Dexter 25 lb - $4.00
Dexter 40 lb - $5.00
Dexter 55 lb - $7.00
Dexter 75 lb - $9.00

You will notice that some washers increased and some didn't. That gives your customers an opportunity to avoid paying an increased price (until the next price increase).

I assume that your washers provide 1 Wash bath and 2 Rinse baths. If they provide more than 3 baths, consider ways to eliminate the excess.

[N BROWN]

You forgot to mention your dryer prices. People often under price dryers and try to make all of the profit on washing.

[BCW]

Why are the Neptunes and 18lb Unimac washers priced so differently with different proposed price increases?

Duane,
It was the Neptunes that I lowered from 2.75 to 2.50 and then to 2.25. (I knew better, but I'm always open to try something new) A .75 raise on the Neptunes is really where I was heading before I got derailed. Thanks.

Larry,
You do make a very good point in not raising everything at the same time. I normally follow your strategy too, when I implement price increases. However, this time I am inclined to raise all prices at the same time, due to the nature of the cause for raising prices in the first place. I'm still undecided on this point, which means you are probably right.

I have all of my washers progammed for 3 baths.

I was on the right path towards compensating for the water rate increases and then I made an error in pricing judgement. It's not too late to correct my mistake. Now I know first hand why an operator is never to go backwards in pricing. Thanks for all of the help fellas. I'll put my head down and plow through this.

Tom

[BCW]

Originally Posted by N BROWN

You forgot to mention your dryer prices. People often under price dryers and try to make all of the profit on washing.

A good point. I have all of my dryers priced at 5 min. @ .25.

Tom