May 19, 2023

In-bay automatic car washes are a great way to earn passive income or boost the revenue of your C-Store. The drawback is the limited capacity; unlike the express exterior tunnels, in-bays can only wash one car at a time, limiting the number of vehicles you can wash per day. This makes it critical that you maximize your revenue per car.

If you haven’t reviewed your pricing in awhile (or ever) you likely are leaving money on the table. It’s more complicated, though, than simply raising prices by a dollar or two across the board. To maximize your wash’s revenue generation, a more strategic approach is necessary.

Passively Increase Your Passive Income

The beauty of the IBA business model is that you don’t have to spend a lot of time on it. IBAs typically run unattended and require little oversight. If you have a C-Store, your focus is likely on driving sales there rather than on the car wash. 

Pricing optimization can generate a big boost in revenue without a lot of effort. By simply adjusting your pricing and menus, you can increase the revenue per car that uses your wash. This means you are driving additional revenue without washing a single extra vehicle — an attractive proposition for a wash that has limited capacity. 

Menu design and pay station screens are critical if your wash is unattended because there is no one to guide the customer or explain the value of any of the wash packages. You must depend on your wash menu design to influence consumer behavior. You can increase revenue by simply finding the right combination of colors, fonts and layout for your menu. For instance, displaying packages by gradually increasing the font size so your highest-price package is the largest can help drive consumers to that package. 
 

When Should You Conduct a Pricing Analysis?

If you haven’t looked at your IBA pricing lately…or ever, that is the first sure sign that it’s time to conduct a pricing analysis. Here are some other signs that you should analyze your pricing sooner rather than later. 

• You have (or are planning to implement) a monthly wash membership program –
  Wash memberships are a great way to generate dependable, recurring revenue. Thanks to advanced technology, such as mobile apps, customers can sign up for these programs without the help of car wash staff. Therefore, more IBAs are establishing these types of programs. To get the most out of these programs, you want to be sure you optimize their pricing.
• You notice customers flocking to one package – If one of your wash packages is disproportionally popular, statistics tell us that a number of those people will be willing to pay more. It's more complex than just increasing prices across the board. All of your prices relate to one another, and it's the relationship between the prices that will impact behavior. 
• If you are considering increasing prices – It’s common to want to raise prices to keep up with the competition or make more money. But before you do, run a pricing analysis. There's often a lot more revenue to be made through optimizing prices rather than simply increasing them.

Suboptimal Ways to Adjust Pricing

In the absence of data, many car wash operators rely on guesswork and common beliefs such as the following when it comes to pricing.

• My Competitor Is Doing It, So Should I 

  The path of least resistance is to simply copy a competitor. The minute a competitor raises their prices, you do, too. But just because they raise their prices doesn’t mean they are going to make more money. They could end up losing business, negating the profitability they expected from their increase.

• My Costs Have Increased, So I Have to Raise My Prices

  The cost of everything related to running your business seems to be increasing, so you have to raise your prices to compensate, right? That depends on what your data is showing you. The last thing you want is for your expenses to go up and your demand to go down at the same time. Make a decision based on what your data says about your customers.

• You Should Never Lower Prices, Only Increase

  In general, you do want to raise prices. People are used to prices going up over time. But again, it depends. Look at the data first. Sometimes you do need to go down to capture more revenue.

• Maximizing Ticket Average is the Most Important

  Yes, you typically want to increase what customers are spending. But if your price is too high, your demand will be lower, so having the highest ticket average ends up being counterintuitive. Ticket average is just one piece in the larger puzzle.

Econ 101

So if these strategies are less than optimal, how should you approach pricing? For that, we’re taking it back to Econ 101 and the demand curve. 

The demand curve shows how many units of a product or service people are willing to buy at different prices. It is a graphical representation of the relationship between the price of a product and the quantity of that product that consumers are willing to purchase.

Generally, the demand curve slopes downwards, which means that as the price increases, fewer consumers will be willing to pay that price. Conversely, as the price decreases, more consumers are willing to buy the product or service. Here is how this may look for a car wash business.

The key is to determine the price and quantity combination that will result in the highest possible revenue. But once we determine that for a single offering, there is still revenue left on the table, represented below with triangles above the cube and to the right of it. Those represent the dollars that customers are willing to pay or the quantity that they're willing to buy. 

This is why most car washes offer multiple single-wash packages and corresponding monthly wash membership plans. Those who are willing to pay more will select the higher package that offers more. Alternatively, those people who want to pay less will select a lower package.

The reality is you would have to have an infinite number of prices to capture all the potential revenue. That's not going to happen, but you want to implement the pricing structure that allows you to capture as much as possible.
 

PrecisionPricing by SUDS

If this all seems a little complicated and overwhelming, we have an easier way. PrecisionPricing by SUDS is a proprietary analytical modeling tool that determines the optimal pricing and package strategy for your wash.

Our PrecisionPricing package includes:

• The PrecisionPricing analysis
• Strategic menu design 
• Optimized pay station screen design 

Don’t Leave Money on the Table

Optimizing your car wash pricing allows you to generate more revenue without doing anything to generate additional traffic to your site. And with PrecisionPricing, you can do so with confidence that the pricing adjustments you make will be as effective as possible. Learn more about PrecisionPricing and request a consultation today.