The majority of car wash owners I speak to have some form of unlimited plan at their wash. No surprise there. They level out peaks and troughs associated with inclement weather and seasonal fluctuations in business.
However, when it comes to pricing unlimited plans, there seems to be lots of confusion over how to choose the “right multiplier” for each wash package. Part of the problem is that there are no rules set in stone guiding car wash owners toward an ideal multiplier that works for most car washes, most of the time.
Unlimited plans have lots of upside. But recently, I had a conversation with an owner who painted a picture that was far from rosy regarding how his unlimited program was going.
This owner operated multiple locations spread throughout his state. He claimed revenue from his unlimited plans was either flat or he noticed that members weren’t renewing after the first month. “I can’t seem to nail down a number that makes my customers happy enough to renew their memberships. Why can’t I find that elusive magic number?” he asked.
“Because there is no magic number,” I matter-of-factly replied.
If my response seems a little too direct, it’s because it’s based on the same results I hear other owners talking about when they discover that finding a good multiplier isn’t always easy to do.
What he told me shed a lot of light onto why his plan was underperforming. For one, this owner only had one unlimited plan for each location priced the same at each wash — not taking into account local demographics.
When I asked him what multiplier he was using to price his unlimited plans, he at first drew a blank but then told me that he didn’t base pricing on a multiplier but on what other owners in town were doing. I have never advocated playing “follow the leader” when it comes to running a car wash. In my experience, customer demographics and local markets are just too unique to take a cookie-cutter approach to pricing unlimited packages or any other service offering.
Here are a few approaches you can take toward finding the right multiplier for your car wash.
APPROACH ONE: PRICE AGGRESSIVELY
As I mentioned, there really is no one-size-fits-all multiplier and some methods are not so scientific, but they are worth looking at. For some time now, multipliers of 2.5 to 3.2 seemed to be the most common practice.
Lately, I’m seeing a growing number of menus pricing at 1.5 to 2.0 times the single wash price. However, even that number might need adjusting, as you’ll see by the following example:
Car Wash X uses the following pricing structure:
• $7.99-basic wash
• $9.99-mid-level package
• $12.99-top package
Their unlimited wash club started at $16.95 using a multiplier of 2.0.
Without the deluge of members they were hoping for, and realizing the price was too high, they reduced the price to $9.99 for the base wash unlimited plan, which was just around a 1.20 multiplier.
The result was they doubled the number of overall customers in eight months. They kept prices steady for a year while building up a loyal customer base. Then they moved the basic unlimited price up to $12.95, which was roughly a 1.50 multiplier. At this new pricing tier, they were able to sign up 2,000 new members in a few months.
They opened a third location a year later and they brought the basic unlimited price up to its original price of $16.95, a 2.0 multiplier. They claim 50 percent to 60 percent of vehicles coming in are unlimited customers of all tiers and represent about 40 percent of their customer base.
This is an example of car wash owners willing to experiment with choosing the right multiplier over time. They gained loyal customers then gradually adjusted multipliers upward based on customer demographics, quality service, and what their customers were willing to pay.
APPROACH TWO: PRICE HIGH
For the next example, I conducted my own informal survey of prices posted on car wash websites. The results were surprising. I found that unlimited wash club prices were set using very high multipliers, well above 2.5. Most of the car washes I looked at were using multipliers between 3.0 and 4.6 to price their top wash packages. One unlimited plan topped out at nearly $50 per month!
My experience made me want to do a deep dive into their wash demographics, location, and regular pricing structure and find out how many customers were dropping out after the first month or two.
Knowing the average member uses the wash 3.2 times per month, I wondered if these owners were losing revenue using those multipliers. Customers paying steep prices may feel that in order to get their money’s worth, they have to use your car wash more often than usual.
High multipliers can also cause lost business from regular-priced customers who may not be getting access to your wash when they want to.
APPROACH THREE: LIMITED INTRODUCTORY OFFERS
This plan is simple. Say your base wash club plans start at $19.95 and goes up to $49.95. You could offer an introductory price of $15.95 for 30 or 60 days for any wash plan. During this time, you’ll have the opportunity to get your customers excited about your service.
After the trial period ends, normal package prices apply going forward if the customer chooses to stay enrolled. By this time, you should have built up a large enough customer base loyal to your wash to make this approach worthwhile.
Unlimited plans are generally good for business for owners who are good at marketing them. But they require effective scrutiny to make sure the plans aren’t losing money. Managed properly and using the right multiplier, they provide reliable sources of income making up for slower days and inclement weather.
It’s akin to a double-edged sword. Price too cheap and you may encounter too many people at peak times and end up giving up revenue from unhappy customers waiting too long to wash their vehicles. Price too high and customers will sense sticker shock. If you are an owner fortunate enough to have your wash be near its maximum capacity, you may not want to offer a monthly plan at all.
But if you are good at juggling multipliers, look to minimize the labor with technology.
One low-tech tactic is to make pricing attractive enough that when customers check their credit card statements each month, the charge is not so glaring that they think about cancelling.
I also believe that when you switch to license plate recognition your redemptions will go down and cancelations will decrease. Why? Currently RFID stickers get placed in the front window in the drivers view. With the RFID in view, it reminds customers to wash their car or cancel the plan because they are not washing often enough.
When you run your unlimited plan using license plate technology, the plan tends to be out of sight and mind of your customer base. As technology evolves, I welcome data showing how they integrate with pay stations and what sort of analytics can be extracted relating to pricing multiples for unlimited packages.
Good luck, and good washing.
Anthony Analetto has over 35 years’ experience in the car wash business and is a partner at SONNY’S The Car Wash Factory. Before coming to SONNY’S, Anthony was the director of operations for a 74-location national car wash chain. Anthony can be reached at (800) 327-8723 x 104 or at AAnaletto@SonnysDirect.com.