By John Henderson | Apr 15, 2009
If you’re a Coin Laundry Association member, chances are you’ve visited the association’s Web site at coinlaundry.org. While there, you may have visited the bulletin board. This board is an online forum used by laundry owners, potential owners, distributors and others to make comments, share information and ask questions about issues affecting the self-service laundry industry.
One recurring topic of discussion at this forum has been a concept known as “full-cycle dryer pricing.” Traditionally, coin laundries have charged a quarter to start a dryer for a few minutes, and the customer then inserted enough additional quarters to dry their clothes. With full-cycle pricing, the start price of the dryer is set at, let’s say, $1.50 or $1.75 – and the customer then receives 30 or 35 minutes of drying time. Usually, coins may be added while the machine is running to extend that drying time.
Last spring, I switched to full-cycle dryer pricing and have become a strong proponent of it ever since. For those of you considering making the switch to this pricing structure, here’s another way to think of the full-cycle option:
Let's say you go to a restaurant to have a sandwich and a soda. You're not very thirsty, though, so you order two ounces of Pepsi to wash down the sandwich. But the waitress says, "I'm sorry. The smallest drink we have is a 12-ounce tumbler, and it's $1.50."
This doesn't sit very well, particularly given her insolent attitude, so you ask to speak to the manager. "What kind of dang deal is this?" you ask. "I only needed a couple of swallows to wash down this sandwich. I sure as heck didn't need to pay you a buck and a half for 12 ounces!"
The manager nods sympathetically and replies in a soft tone:
“I understand your problem. You only wanted a small amount of soda, but our smallest offering is 12 ounces. I can see how upset you are, but let me try to explain.
“When we first opened, we were eager to please everyone,” he continues. “Like you, we also believed that two ounces of Pepsi would be a reasonable amount to sell to our customers. So we began serving Pepsi in shot glasses with tiny little ice cubes, thinking that if customers wanted more they would simply order a larger sized glass, or they could order a lot of little shot glasses to see if their thirst was satisfied after each. But unforeseen problems came up.
“You see, a lot of our customers aren’t real good at numbers and weights,” the manager admits, “and they think two ounces will satisfy their thirst. Mostly, they’re wrong. Others think that if our smallest drink is two ounces, then surely four ounces will be enough. So they order two shot glasses. Guess what? They’re mostly wrong, too. And we started getting complaints, as well: ‘You guys sure are cheap with your drinks. I ordered three of these little glasses and I’m still thirsty. You guys are a rip off.’
“So, at the risk of offending a few customers such as yourself, we decided to make a bold move. We decided to stop offering Pepsi in shot glasses and instead offer it in a 12-ounce tumbler,” he explains. “Not to brag, but I’ve been in the restaurant business for many years, and I know the amount of Pepsi it takes for most of my customers to get satisfied. That amount is 12 ounces. Some of our customers won’t drink that much, and some of our customers will order even more, but the minimum order is 12 ounces.
“And do you know what?” he adds. “The complaints have all but stopped! Our customers order a Pepsi, and it does the trick. They don’t have to guess how many shot glasses it will take to satisfy their thirst. And I don’t know if I should tell you this or not, since you’re a customer, but here goes – our profits are up! We’re grossing 25 percent more on Pepsi sales since we went to full-tumbler pricing.”
• • •
The preceding story is exactly what happened to me – except for the fact that I don’t run a restaurant… I own and operate a self-service laundry. And I’m not selling Pepsi; I’m selling drying time.
Last year, gas prices at the pump were going wacky and natural gas prices were, inexplicably (to me, at least), following suit. It was time to raise the dryer prices or lower the drying times. But, when you’re already at six minutes per quarter on your 30-pound stacked tumblers, one has to wonder just how low you can take those minutes. It occurred to me that there might be some customer backlash when someone puts in a quarter and the time goes up by only four or five minutes. We had already received some complaints that our dryers “don’t work too good” because clothes wouldn’t get dry for a dollar (24 minutes).
But our dryers do work well. We have state-of-the-art equipment. We clean the lint traps every night. We have more than adequate makeup air. And we have a very simple and direct ducting system.
The fact of the matter is that it takes between 30 and 45 minutes for most loads to get dry in my store’s dryers. So the problem was not the dryers, but erroneous customer expectations.
Full-cycle dryer pricing has solved that problem. Most new customers don’t even question the $1.75 start price on the 30-pound stacks. They put the money in, their clothes go ’round for 35 minutes and come out dry, or nearly dry. Complaints about our dryers not working properly have vanished.
Additionally, we have more flexibility to adjust our dryer prices or our cycles. With quarters you really have only one main way to raise prices – and that’s by lowering the minutes. Some operators use a 50-cent start time, but you’re still basically in the same boat.
With full-cycle pricing, customers get used to paying for your dryers much like they pay for your washers – so a price increase could be by a quarter, or dryer times may be lowered by one or several minutes.
Full-cycle pricing might be more beneficial for coin-operated stores than it would be for card stores. The built-in penny-increment pricing of card stores, with the ability to charge 29 cents for five or six minutes is enviable.
But for owners of existing coin-operated stores who have been looking for a new paradigm for their dryer pricing, I believe full-cycle dryer pricing is the wave of the future.