Water Bills Doubled

[Howard]

I never met a utility price increase I did not like! As you correctly point out, you are in the utility resale business. So just put up a graph with the letter from the utility explaining how the prices have doubled. Then get a little creative and explain that water is say 60% of the cost of a wash (don't mention overhead costs) and then explain why the increase of 75 cents or whatever you do is going directly to the utility company.

I did this a number of years ago when Natural gas went above $12 for a short time. Never heard a complaint directed at me, only at the oil companies.

[BMWHD3060]

Your water rate increase didn't skip a set of washers?
If you don't Raise Wash Prices NOW on Every Washer You Never Will.

[BN82]

I think an across-the-board increase is warranted here. If you're making ergular price increases, simply because it's time to do so, then staggering your increases is the smart strategy. When you can print a newspaper article, and point to the utility company as the reason for the increase, then take FULL advantage.

[BCW]

Thanks for the great explanation idea, Howard. I'll use it.

BMWHD3060 and BN82

Larry would be correct under normal circumstances on pricing methods and how to implement them. I tend to lean with your all at once strategy on this one. Thanks again fellas, it will all work out.

Tom

[JohnH]

I seem to remember hearing about an "evaporation allowance" formula you can get from the CLA that you can use if you wish to go before your local municipality to try to get them to lower your bill a little bit. I think the idea is that about five percent of the water that you're buying does not go down the drain, it is in the clothing and evaporates in the dryer. I looked on the CLA's old website (before Planet Laundry) but couldn't find anything about it. Anybody remember what that's all about? That might be worth a try since every little bit helps!

John

[Adamski]

Originally Posted by BCW

... Larry would be correct under normal circumstances on pricing methods and how to implement them. I tend to lean with your all at once strategy on this one...

Tom,

Raising some washers and leaving some unchanged (for now) is a practical, conservative way to solve the immediate problem. When a customer complains that you raised her favorite Neptune by a whole 75 cents, all you have to do is point to the Unimac washers and tell her that these washers are still at the old price and they hold more clothes. Give these a try. You won't be converting all Neptune customers to the Unimac ... just those who complain about the new vend price. Even these may decide to just pay the Neptune price after they had the opportunity to vent to you for a minute.

You will be getting fully compensated for the entire water/sewer rate increase by the vend price on the washers you do raise. So no problem there.

Once your customers are used to the new prices (60 - 90 days), you can raise some of the washers that didn't see an increase in this first go-round. If a customer asks why you're raising her favorite washer at that time; your response is that you held off as long as possible but you're losing money on that washer every time it runs. You will also point out that you didn't raise many of the other washers or the dryers (which is true because you're only talking about the current price increase) and the customer may wish to try using some of the washers that did not get increaed.

[canon]

If you post a letter, your customers will know you got raised on all your washers. Raise all of them but be fair about it. You said your competition is crappy. Do what you have to do.

[Adamski]

Originally Posted by canon

If you post a letter, your customers will know you got raised on all your washers. Raise all of them but be fair about it. You said your competition is crappy. Do what you have to do.

Cannon,

Yes, his laundromat competition is crappy but his real competition is the local appliance dealer. He doesn't want his customers going out and buying their own washer/dryer. That's why a more conservative, cajoling approach is appropriate.

[dbrown2508]

Larry:

99 per cent of the time I agree with you. This is the 1 per cent though. I had a tax increase that impacted all (both washers and the dryers). Increased only the washers (and only by the impact of the tax increase on the washers). I posted the documentation blamimng the government.

4 months later, I did the dryers. Tried to blame it on the tax -wasn't well received. Came back as 2 separate price increases in a short period of time (and I really never recovered the other cost increases).

Do it once - and get yourself an extra few cents to a quarter in the process. You probably won't be able to go back to the customer for another increase for a while.

[Howard]

Originally Posted by Adamski

Cannon,

Yes, his laundromat competition is crappy but his real competition is the local appliance dealer. He doesn't want his customers going out and buying their own washer/dryer. That's why a more conservative, cajoling approach is appropriate.

I don't agree with that. The majority of customers that come to a laundromat (maybe not by the Great Lakes) live in apartment buildings where they are not permitted to install laundry equipment. Further, many that could don't have deep roots and move often and don't want to have the burden or moving or selling such equipment. Another segment does not have the capital or credit worthiness to purchase equipment. Thus, the total number of customers that actually have the buy option is quite small.