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Are your prices right?

Setting rates and conveying value is a science and a skill.

November 30, 2012
KEYWORDS prices / pricing / rates / value
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Owning a carwash business and setting prices for services offered can be compared to being a contestant on the popular American game show, “The Price is Right.” After you, “come on down” to Contestant’s Row, what type of player are you? When you set your prices compared to the local competition do you bid aggressively based on information and research? Do you wait until the competition set their prices and bid one dollar over? Or, perhaps, did you set the lowest price, also known as “Bob, I’ll bid one dollar,” in hopes that the competitors were too aggressive and beat themselves?          

Fortunately, unlike a game show contestant, you have had more than a few chances and an hour to win customers with the right price over the years. Additionally, an owner’s bottom line is influenced by more than just price per ticket averages. According to the experts that we interviewed for this article, setting prices and upselling services is considered a science and a skill.

Items up for bid  

Before discussing best practices and proven techniques in staying price competitive with local and not-so-local washes, it is important for owners and operators to look at their current service offering and see if customer needs are adequately being met and sales potential is maximized. Carwash owners must be aware of the seasonal and industry trends.

While carwashes are wise to excel at basic wash packages, upselling can include such popular services and seasonal offerings as:

  • Tire cleaning;
  • Bug removal;
  • Additional drying time;
  • Salt protection;
  • Engine cleaning;
  • Tar removal;
  • Headlight restoration;
  • And more.  

“Tire shine and wheel cleaner appear to be the most popular upsell features,” asserted Brian Bath, vice president of sales and marketing for Innovative Control Systems Inc. (ICS). “Whether online or off line services, the customers desire these extras.”

While making these additional services available to customers can go a long way in the relationship and in protecting their vehicle investment, how you make these services available is equally vital.

“I set three base wash packages and each one of the base packages have three options to what they can choose from. Customers can add on a wheel cleaner, a bug buster, a surface sealant, as examples, or they can buy a combination of all of it,” noted Bobby Willis, owner of Cool Wave Carwashes, adding that this strategy offers the customer a made to order experience.  

Moreover, the ability to do a “push button” upsell, either at the tunnel entrance or at an automated pay station has made it very easy to upsell customer wants, said Bath. “Many operators are becoming more and more creative in upsells as it is a great opportunity to get your customer to pay a bit more,” he explained.

Other popular upsell examples Bath provided are:

  • Triple or lava foam;
  • Vehicle protection rinses and waxes;
  • Express waxes and details;
  • Compressed air to get water out of hard to reach crevices; and
  • Interior cleaning of vehicle trunks.

Owners can use on-site advertising with banners and signs to help promote these extra services. “[Additionally,] operators are using QSR barcode readers to get emails from customers so they can contact them with weekly specials,” elaborated Bath.

Showcase showdown

If you have been in the industry long enough, you have probably been back and forth with different pricing structures to find the best for your location and its customers. And, you’ve probably wrestled with such questions as: Is it better to be the highest priced wash, the lowest priced or somewhere in the middle?

And, as most veterans in this marketplace know, this is a complex answer that is based on several factors. Start with a SWOT analysis — Strengths, Weaknesses, Opportunities and Threats. In addition to you and your management team identifying the variables that attribute to your wash’s SWOT, keep in touch with customers to see what changes they would like made at the wash. Successful owners and operators keep their pulse on customer feedback through handout questionnaires attached to an incentive, such as a free wash for completed surveys.   

“As far as pricing products and services, I have some formulations based on buying trends, customer habits, etc. where I set my prices not necessarily off of what the competition is doing, but rather what type of service we provide,” added Willis, noting that additional labor, the cleanliness of the lot and the level of customer service offered are key components in the formula. “I pay my workers a higher wage, my sites are cleaner and our equipment is always well maintained.”

While many customers continue to be budget conscious, value selling and dependability of the carwash still strike a chord. There are certain customers that will pay more if there is a perceived value in what you are offering. And, if your wash can consistently produce superior results, price in the long-term will become less of an issue to customers. Most importantly, getting new customers to visit your location is the first step in retaining their business.  

“The most important issue is putting out a consistently clean car at a fair value to the customer. If the carwash site has limited or no competition, you can basically set your own market price. Low price is good for bringing customers onto the premises with the hope to upsell them on added services,” said Bath.

For example, express exterior tunnels or in-bay automatics are good for low to medium pricing as there is not a lot of labor involved in the cleaning process. However, as labor is added into the cost of the wash for full service sites, low pricing is not recommended as it will not cover the labor cost. Therefore, middle or top pricing is best under these circumstances.

Grand prize: A new car

Once you have attracted new business, retention should continue to be a work in progress. Give the customer reasons to come back to your location. Communicate the value of what you offer over the competition through marketing literature, advertising and actual customer conversations. And, don’t turn customers off by fluctuating prices.

“Customers are still cost conscious and they do budget in for carwashing as they do for everything else,” noted Willis. “If you are constantly changing your prices, then in their eyes you are not a reliable vendor because they don’t know what to expect (in terms of pricing) the next time they come in.”

While the costs of utilities, maintenance and products will differ from year to year, customers are typically not concerned with what your operating costs are. In order to maintain price levels, savings can be realized with the use of innovation and technology, such as replacing wasteful bulbs with LED technology to control lighting costs. Also, another good example of operating cost savings is fixing leaks to save on water bills.

Carwash owners and operators must look at the big picture when setting prices, attracting customers and maintaining customer retention rates. In addition to the best practices outlined in this article, successful carwashers also attend trade shows and network with other successful owners to see what pricing and upselling strategies are most effective.