Unlimited Monthly Wash Club

[Earl Weiss]

Interesting to see the comments and cant help but wonder how demographics factor vis a vis numbers of ride share customers and frequency. I know that before ride share decimated the Taxi industry or Taxi wash volume was extremely high due to our location versus many other Chicago locations and definitely versus the suburbs. I further expect that this may change the emphasis in some locals from "Unlimitted Monthly" to "Monthly" While there may be some challenges to doing it you would simply cap the usage. X times a month and figure that for 80% of the users say .. 8 times a month max would not be a deal breaker.

 

[Jerry]

capping the usage is capping your revenues which in turn caps your profits. Why on earth would anyone want to cap their profits?

cell phone companies don't charge per minute anymore, they charge unlimited usage per month.
Gym's don't charge X amount each time you work out, the charge unlimited usage per month.
I could give 15 more examples. The reason they do this, is bc it's MORE PROFITABLE for them to offer these plans.

It's really no different in the conveyorized tunnel portion of our industry. Variable costs(chemicals & water) are very low. Margins are great for us. That's why the unlimited works so well. To limit a group of people to x number of washes per month will only limit the number of members you ultimately have.

A professional driver on membership at $20/month is $240 per year in revenue. chemical and water cost way less than $1 per wash but lets say it's as high as $1 each time they wash(labor is fixed and so are every other costs, land, rent, insurance, etc).

the question is, do you really think the average driver/customer will wash 240 times a year where you'll make no money? the answer is of course they won't wash that many times. no one will wash that often.

unlimited industry average is just 3 washes a month. thats it. 36 times a year. And they are paying you $240, rain or shine.

When you realize the average single pay car washer only washes 4-6 times a year($10 ticket x 6 visits = $60 per year) you can see why membership works so well.

You literally should be trying to convert every single paying customer to membership, as the member is worth $180 more dollars per year than the single paying customer. The economics of membership have been proven over and over again for the last decade or so in just about every industry out there. Car washing is no different.

 

[Earl Weiss]

capping the usage is capping your revenues which in turn caps your profits. Why on earth would anyone want to cap their profits?

cell phone companies don't charge per minute anymore, they charge unlimited usage per month.
Gym's don't charge X amount each time you work out, the charge unlimited usage per month.
I could give 15 more examples. The reason they do this, is bc it's MORE PROFITABLE for them to offer these plans.

It's really no different in the conveyorized tunnel portion of our industry. Variable costs(chemicals & water) are very low. .

I guess we will agree to disagree. Capping usage does not cap revenues except to the extent that it will eliminate an certain small segment.

Using sample real numbers it my cost $1.00 to put an incremental basic car wash thru the tunnel for solutions, utilities, wear and tear on equipment etc. If it is a $3.00 base wash that is 33% and if it is a $20,00 membership and they wash 10 times that is 50% of revenue. Gyms and Cell phone network have no where near this type of incremental cost. Again, it may be unnecessary for certain demographics and necessary for others. You can certainly market the unlimited and stick with it if you have no issues, then refine it monthly if there is an issue.

 

[Jerry]

Earl, if you eliminate a small segment of your customer base for whatever reason, you are in fact capping or not maximizing revenues.

Your examples are totally off base. First off a $20 membership will not work with a base price of $3.00 per wash. There’s no value for the customer. They have to wash 7 times just to break even. The average customer washes 4 times a year not 7 times a month.

Again, the average unlimited customer washes 3x month not 10 in your example.

As a veteran car wash operator you should know that the incremental cost to wash cars goes way down the more cars you wash, not up. If you only wash 10 cars a day, you’ll prolly lose money on the day. If you wash 600, you make a crap load. Whatever your brake even number is for the day, once you hit it, you basically have 98% profit on the rest of the cars during that day. That’s why we all live for busy days.

Membership isn’t necessary is any demographic unless you want to make more money. You may disagree with the premise of membership, but until you actually sell memberships and see for yourself the economic impact it has on your wash, all you’re doing is guessing what will happen. I’ve lived thru membership now for 5 years. I’m just trying to explain all the benefits that membership brings. It’s really a life changing decision to add membership to your wash.

Nothing in the car wash industry will move the needle in terms of more cars washed and more revenues taken in then a successful well run membership program. It’s really not even close.

 

[Earl Weiss]

Earl, if you eliminate a small segment of your customer base for whatever reason, you are in fact capping or not maximizing revenues. <<<<

True enough, but you may be eliminating marginal or losing volume.

>>Your examples are totally off base. First off a $20 membership will not work with a base price of $3.00 per wash. There’s no value for the customer. They have to wash 7 times just to break even. The average customer washes 4 times a year not 7 times a month. <<<
Again , true, but I am guessing you mean the monthly would be lower making the relative percentage cost higher.


As a veteran car wash operator you should know that the incremental cost to wash cars goes way down the more cars you wash, not up. <<<<
Not, true. The incremental (versus the fixed cost) stays the same. while you have a base rate for some utilities if you wash zero cars there is an incremental cost for each.

If you only wash 10 cars a day, you’ll prolly lose money on the day. If you wash 600, you make a crap load. Whatever your brake even number is for the day, once you hit it, you basically have 98% profit on the rest of the cars during that day. That’s why we all live for busy days. <<<
Again, not true vis a vis revenue and incremental cost. Losing money "on the day" has nothing to do with revenue and incremental cost.

.

More to follow

 

[Earl Weiss]

Whatever your brake even number is for the day, once you hit it, you basically have 98% profit on the rest of the cars during that day. That’s why we all live for busy days.

I don't know if you are taking poetic license but the 98% profit vis a vis basic wash revenue over incremental cost is way out of wack. While number can vary greatly a reasonable real world cost for Electricity, natural gas (Maybe) water, solutions, maintenance (Chain, rollers, cloth, bearings,motors -everything that has life span affected by use) is $1.00 / car. This can be lower or higher depending on various issues but 2% on a $3.00 wash would be 6 cents - not realistic.

 

[Jerry]

Earl, not sure why you are trying to disprove membership. But you are doing a disservice here. Maybe I exaggerated a little by saying 98% is profit after breakeven. Obviously I didn't take into account taxes, extra wear and tear, and the like. But most everybody reading this understands what I'm saying except you.

Membership will bring in more revenue then the way you are currently washing cars.
Membership will increase your car wash volume. It has to. The average member will wash their car 3 more times a month then the average paying customer who only washes 1 every 4 months. A wash that only has 500 members will wash an additional 1500 cars a month, 18000 cars a year!

if the cost of everything you stated above is an extra $18,000 ($1/car wash) a year, tell me how membership isn't worth it?

I'll even do the math for you with real world examples:

500 monthly members at $10/month: $5000 a month in additional revenues, $60,000/year
500 monthly members at $15/month: $7500 a month in additional revenues, $90,000/year
500 monthly members at $20/month: $10k a month in additional revenues. $120,000/year.

again, your cost to wash 18,000 more cars is still $1 per car washed = $18,000.

your car washes prices dictate your exact revenues, which in turn dictate your exact profits.

At worst in the above example, you'll profit $42,000 before taxes. At best, $102,000.

And best of all, this is guaranteed money each and every month and year, regardless of the biggest obstacle in our entire industry....weather.

Yea, your rollers and chain will wear out faster but who wouldn't take at least a $42000 check every year if they had to replace a chain?

I don't know of many businesses(restaurants, big box stores, car dealers, laywers etc) that can make a profit each and every day, 7 days a week, 365 days a year. A Car wash with a successfully run membership program will do exactly that for anyone who chooses to take membership seriously. Profit ever single day, rain, snow or shine, open or close.

And if you don't think 500 members is a realistic number of people willing to sign up for membership, use 100 members, 200 members, 300 members and doing the math will show that membership crushes any other type of loyalty or book of tickets type promo that exist in the car wash industry today.

 

[Earl Weiss]

Earl, not sure why you are trying to disprove membership. But you are doing a disservice here..

Therein lies the crux of our miscommunication. I am not trying to disprove membership. The point I am trying to make is that it may not be a one size fits all solution. I have had operators tell me they don't allow ride share people. I don't know how they can't. Seems they would just take the placard out of the window. I understand and accept their point. It seems you do not. i have heard other operators disallow commercial drivers or have a different price point. I understand and accept their point, it seems you do not. Other operators seem to have a small number who may abuse the unlimited factor and wish to curtail it. There may be ways to do this. i understand and accept their point. It seems you do not.
You say you exaggerated a little by saying 98% is profit for an incremental wash after break even. I don't accept that at all. I think it's a gross exaggeration. While expenses , particularly water can vary greatly I think your $1.00 per car is a good round number to use for incremental cost. So, if the $10.00 monthly member washes 5 times, it works out great. 10 times, not so much.

You say I am doing a disservice because while you seem to tell operators what to think, I am only telling them "To think " about the factors.

 

[Jerry]

The disservice you are doing is speaking in hypotheticals. If a member washes 5x, if a member washes 10x. This just doesn’t happen on average. The key here is average.

Again, the AVERAGE usage for unlimited club membership in the car wash industry is 3 times a month. DRB, ICS, micrologoc, washify, Sonny’s and even Everwash can confirm this number. They have collectively sold over 7 million memberships. That’s the data. So you can guess what will happen when the average increase to 10 times a month, but this just doesn’t happen in real life. Some many wash 10 times, others may wash 0 times in a month. That’s why it’s an average. That’s why the math works bc of this average.

When experts in the industry tell me what will happen and I take that knowledge and apply it and it works for over 5 years, I can regurgitate the info to help others here.

Of course plans and pricing can be tweaked and modified but when this is done outside the optimal levels of membership, you stop maximizing your returns and profits. Why reinvent the wheel and guess the usage results when they’ve been well documented for more than a decade?

 

[Earl Weiss]

The disservice you are doing is speaking in hypotheticals. If a member washes 5x, if a member washes 10x. This just doesn’t happen on average. The key here is average. <<<<

Correct, the key is average, and averages are made by a wide spectrum of numbers. The disservice you are doing is not acknowledging that any specific location (i.e. the one who stated they are near an airport) can skew toward an extreme and advocating a one size fits all approach irrespective of experiences.



Of course plans and pricing can be tweaked and modified but when this is done outside the optimal levels of membership, you stop maximizing your returns and profits. Why reinvent the wheel and guess the usage results when they’ve been well documented for more than a decade?

<<<<

You are not reinventing the wheel. You are taking the wheel and depending on what your particular experience shows (Not some average) adapting it to your particular circumstances to maximize profit instead of accepting some "Expert" suggestion that one method is best.

 

[robert roman]

http://www.chicagobusiness.com/arti...all-those-new-car-washes-in-your-neighborhood

“When we started 34 years ago, labor was $3.35 an hour and we charged $6.00 a car,” says Doug Seniw, co-owner of Prairie State Express Car Wash, an exterior express wash in Chicago, IL.”

“Now labor is $9.00 an hour and we charge $3.00 a car. Due to the competition, we’ve had to cut our price and streamline our business anywhere we could without cutting quality.”

Who needs $19.95 unlimited when there are operators willing to price at only $3.00?

Buy one $3.00 wash and one $7.00 wash/wax a month. $10, that’s all most folks need.

This is what I see a lot more of.

https://www.bizbuysell.com/Business...r-Wash-Ideal-Conversion-to-3-00-Wash/1310954/

Tommy Express franchise is supposedly building 20 express along west coast of Florida placed two miles apart. If so, disruption to local markets will be devastating.

Operators are also crying in Arizona, Texas, and other states about $3.00 washes. CA’s next.

A lot of operators have been on the express gravy train for last five years or so. Now, there is going to be flood of new express for next 5 to 10 years.

$3.00 base price unlimited $9.95. Big chains can afford 50 percent take rate, mom and pop won’t be able to.

Next, digital carwash networks are emerging, quickly.

Digital provides consumers/members more value added and advantage goes to largest player in area because it has best chance to become most important node in network.

Digital will also be used to create small unmanned express washes that are open 24/7. This will be infill development aimed at serving fleets and network washes.

It’s a great time to be selling carwash equipment.

 

[Jerry]

Earl, re: post 30


I'm not sure why you are quoting me on stuff I never said, i.e airport or any locations. I've never once mentioned location. I don't even know how you've managed to insert words into my post and quote it but so be it. Thats a pretty nifty trick you just used to try and make some weird point. Since you mentioned it, please provide examples of an airport location(or any other location for that matter) that has membership, who's customers use their membership an average of 5-10 times a month and I'll be glad to apologize and tell you that you were in fact correct about usage. I'll bow out of this thread until that info is provided since all we are doing is annoying each other.

Anyone else need any real membership info, please PM as I'm always glad to help in any way I can.

 

[Earl Weiss]

Earl, re: post 30


I'm not sure why you are quoting me on stuff I never said, i.e airport or any locations. .

First, apologies - I tried to differentiate what you said from my response with ">>>>>>" There was no intent to deceive.

I suggest that you join the Facebook "Talk Car Wash group" and question specific operators who bring up the points vis a vis monthly that exclude certain users, charge other users different rates or have high usage from some users.
Second, I would like to move on and will post the next question about monthly membership in the following post.

 

[Earl Weiss]

Obviously the #1 priority for monthly programs is to sign people up. #2 - Other than giving them value is to keep them on the program. Toward that end has anyone followed some other membership type programs where instead of monthly people are encourage to pay for longer periods by offering a discount. For example. instead of 12 X for a year, 10X?

 

[Jerry]

For membership to work, it needs to be priced so the infrequent pay as you go customer finds tremendous value and joins the club in mass. The frequent car washer( aka your best customers) will find value at almost any price.

Charging 10x up front for 12 months sounds like a great deal for most people, except that the infrequent average customers don't have $150-$250 to shell out at one time for a membership that they might not use too often. So when you try to sell 6 months or yearly memberships, you only really sell to your best customers who wash quite often and can compute that value on the spot. A lot of membership clubs get stuck at 150-250 members for just this reason that they only market their club to their best customers instead of the masses. This is the same reason that car wash book sales were so popular with your best customers bc they were the ones who had enough disposable income to find value giving up $100 on the spot. Yearly customers will also refer less people to your wash as it's much easier to tell someone to pay $20/month for an unbelievable deal then $200 per year for the same unlimited services.

Monthly sales vs yearly sales are way more affordable to the infrequent customer as $20 is almost a throwaway in todays market so it makes it a much easier sale for your employees, even with the discount of saving 1 or 2 months.

 

[Earl Weiss]

For the record, I was not suggesting that 6 month or yearly be the only choice. Simply that it be a choice.

 

[Earl Weiss]

From Facebook.
Mike Heidenreich
May 12 at 4:38pm
We have a location near the Nashville airport that has a high number of fleet (Uber, Lyft and Taxis) vehicles signed up on our Unlimited plans. Average fleet customer is washing 10x per month. The economics just isn’t working for me. Does anybody not allow commercial vehicles to join the Unlimited program or have a surcharge? If so, what is the additional charge.

 

[Jerry]

Average fleet usage is quite different than average overall usage.
Average Saturday usage is quite different than the average Wednesday usage. Should we charge more for membership on a busier day of the week to compensate for a tick down in revenue on certain days?

This post above says nothing about the AVERAGE OVERALL USAGE which will be right around 3 times a month.

Does mike make any other claims about his membership which would be pertinent to the discussion? Maybe mike is priced higher than normal ? Maybe mike only has X number of members? When you have incomplete information, you can’t really get an accurate assessment of exactly why the economics aren’t working for him. Is he stopping his club completely bc of the economics or is he just trying to shut down his abusers?

There’s a lot of factors that go into membership and cherry picking 1 assumed negative doesn’t nearly tell the entire story. It also doesn’t tell his overall average.

 

[robert roman]

I agree with Earl. Each situation is potentially different (excludes chain).

Also, I don’t see real world examples from you Jerry. Except for industry generalizations most examples seem made up.

Over last several years, most of the live data I’ve seen for express is unit variable cost of between $1.75 and $2.00.

I have one client that washes over 125K a year and has over 1,500 unlimited members and another that washes over 125K a year and has less than 400.

Why the difference. One reason is they are located in different parts of the country.

I live in an area that has over 3,000 people per square mile.

There is not one unlimited program within reasonable driving distance. Conveyors are full-service. Many in-bays at gas sites have been removed. Nearest express base price is $6.00, no dry cycle, it’s not very busy.

In cold country, carwash is more expensive to build and operate and wears out faster.

Here, dirt is expensive and they build cheap. Building has no sidewall, no entrance or exit doors, no bay lights, few signs, no vacuum canopies, etc.

$3.00 wash/$9.95 unlimited or $100 per year unlimited members-only carwash.

Pick your poison. This is going to become lowest common denominator.

If you operate 10 to 20 stores in a region, you can sell this all day long. If you own one or two, it will become difficult to make normal profit.

 

[Jerry]

Also, I don’t see real world examples from you Jerry. Except for industry generalizations most examples seem made up.

Every example I've given is a real world example. I've been living membership now for 5 years at my non express exterior wash with an off the beaten path location. I prep. I dry cars. I wash more cars then both of you example clients and have more than double the active members. I try to give real world advice from examples I've actually partaken in and seen.

There are a myriad of reasons why a wash doing 125k cars a year that only has 400 members is failing at membership and location is way down that list. I'm sure I could find 10 things stopping that wash from increasing membership just by looking at their website.

you can scrub data all you want to but if the answer you come up with is they only have 400 members bc they live in X part of the country, then thats a really bad diagnosis.