“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?