price point increments

[Reds]

I am looking at raising my IBA prices. I have not raised my prices since 2005, but I did eliminate a $5 wash and rinse and add $1 to my top wash for a newly installed wheel scrub option in 2008. Right now I am at $6(12%) - $7(17%) - $8(37%) - $9(33%). I would like to raise them all by $1 but I choke on the $10 for my top wash. I think that $10 changes customers perception of the cost of a wash. It's kinda like a 99 cent whopper rather than a $1 whopper. It's a price point that I am trying to avoid. I know from my fast food days that there were certain price points that we stayed just below, and when we exceeded those price points the customers perception of value changed and they would trade down to lower priced products. Does anyone price their IBA packages in 50 cent increments? I was considering adding 50 cents to each wash but then I need to dispense more quarters and every cash customer ends up with loose change. Also is a lot more wear and tear on my coin dispensing mechanism. Expenses are pecking away at my margins - it's like getting nibbled to death by a thousand ducks.

 

[I.B. Washincars]

I hit the $10 price point two years ago and want to kick my own butt for not doing it sooner. I added a Rain-x type product and jumped from 8 to 10 and rasied the other selections $1, so I went from 5-6-7-8 to 6-7-8-10. Do it, you won't regret it.

 

[ToFarGone]

Id rather throw in a ten dollar bill than a five and four ones...or if I am using my card I will pick the top daddy. For me 10 is more conveinient than 9. You will do just fine!

 

[robert roman]

“I have not raised my prices since 2005” “Expenses are pecking away at my margins….”

Seven years without a price increase is practically unheard of in other retail sectors.

“I know from my fast food days…. when we exceeded those price points the customers perception of value changed and they would trade down to lower priced products.”

From my fast-food days, I would say it was not change in customer’s perception of value that caused them to trade down but rather their normal reaction to price. Those folks are shopping price not quality.

For instance, I shop quality as well as price. Today, I go to McDonald’s for double quarter pounder, fries and drink and it is like over $7.00. It fills me up and occasionally has the added benefit of a laxative. Across the street is Jimmy John’s.

There I can get a giant gourmet club sandwich and drink for $7.00 that tastes far better and fills me up just as well as the grease does.

What is the difference? JJ’s has fresh-baked bread and ingredients are farm fresh and high quality with far less fat, more healthy. The place is impeccably clean. The employees are articulate, welcoming, thanking and friendly. There is no drive through but the eat-in and take-out service is fast.

What do you get at McDonalds? Usually, an absentee owner who fills the building up with a harried manager who is trying to cover two or three stores and low quality employees that provide a 200 percent or greater turnover.

I haven’t been to McDonald’s in a long time.

“Right now I am at $6(12%) - $7(17%) - $8(37%) - $9(33%).”

$7.84 is better than average and that is a good foundation to start from - more than 50 percent of customers are in the top half of the price range. This implies the majority of your customers shop quality rather than price.

Consider targeting these folks. The why is there is a practical limit to the number of cars you can wash in a day with an in-bay because of the low number of cars you can produce in one hour.

Consequently, you would find more benefit from strategies that can raise average ticket rather than increase volume.

Most of the owners I know who model their in-bay like a JJ’s instead of McDonalds are averaging over $10.00. This means they have prices higher than $10.00.

Wouldn’t you like to make $2.00 more a car?

 

[briteauto]

I hit the $10 price point two years ago and want to kick my own butt for not doing it sooner. I added a Rain-x type product and jumped from 8 to 10 and rasied the other selections $1, so I went from 5-6-7-8 to 6-7-8-10. Do it, you won't regret it.

I agree 100%.

I know a guy who charges $9, $10, $11 and $12 - it is a tunnel, not an IBA.

$9 is the basic and $10 includes an under spray. In salt-heavy upstate NY, he easily gets at least the $10 for 5 months out of the year - nobody even looks at the $9.

He's then structured his pricing so that it makes no sense to get the $11, as it includes wax, but no under spray or wheel brite. The $12 is the whole deal, so naturally, it only makes senses to get that rather than the $11.

He basically uses the $9 and $11 packages to show you how much better a value you get going either to the $10 or $12, and those two packages account for over 80% of his washes.

My point is, the structure of your extra services can go a long way towards directing the customer to the higher packages, and $10 is a nice-even round number to get everything you can offer.

Good luck.

 

[Waxman]

No need to fret over price increases. You need to remember another simple concept; your worries/concerns/cares are not necessarily the same as your customers'!

I raised my IBA prices by $2 and I see some customers getting the lower packages but the majority are still my top package.

I wanted to improve cash flow and all expenses creep up, some dramatically over time. You have to charge what the market will bear and cover your costs while providing extra income for yourself and a cushion. What's wrong with that? We are in business to make money, so unless your competition dictates otherwise, never worry about making a price increase when the health and longevity of your business depends on an increase in revenues.