Beating High Energy Costs, One Owners Story

Because of the rapidly rising cost for natural gas and other fuels, laundry operators are facing a crisis in their pricing structure. They must make their vend pricing such that they are not losing money, and that goes against a natural feeling that their customers will resent price increases and may go elsewhere to do their wash. Our purpose is to offer some reasonable ways to allow for laundry operators to raise the vend prices and reduce energy costs. When the monthly gas bill suddenly doubled for one California owner, he was shocked and at first thought the gas company had made a mistake. When he was told that his bill was correct, and this was the real bill, he began to realize he would have to do something to stay in business. He reacted by raising his washer costs by a quarter for each top loader and fifty cents for front loaders. He also adjusted the settings at the water heaters lower, and that all helped. But, it wasn''t enough to return to the same profit standards he had achieved the previous year. After raising his washer vend prices he figured that his monthly gas bill was now mostly for dryer gas consumption. He gathered a crew made up of family members and cleaned out the entire circulating duct system for the dryers. Each dryer exhaust vent was cleaned down to the metal, and each dryer lint box too. They sealed off any noticeable air leaks and fine-tuned the dryer burners. Only after he did all that was he confident that his dryers would offer the fastest dry his dryer pockets could produce. He was thinking of dryer efficiency, not of lowering dryer burn. Like all of us, he wondered and worried over what his competitors would do when he raised his vend prices. Would they raise prices too? If they kept their prices down, they''d keep losing money, but they would keep their customers. It was at that point that the owner worried that people using his laundry would decide to go elsewhere to find lower prices? He began by going to see his competitors and telling them what he was doing. He shared the information he had gathered on utility costs and the need to decrease dryer vend times. There was a general agreement that either prices needed to be increased or dryer burn time shortened. Too many of his competitors seemed very nervous about raising their vend prices and appeared to want to wait to see what customer reaction was to his increases. This owner made the decision to go up by shortening dryer times and began to let his clientele in on expected increases. He placed signs in several places in the laundry retelling of the high energy price increases. His clientele seemed accepting because they were seeing the same thing at home. After three weeks of giving customers notice he reduced dryer times from eight minutes of burn to six minutes. It generally raised the cost to users by a quarter, if they properly loaded the dryer and did not cram it full. If they did that, it would cost them about two quarters more. Only two regular customers complained and told him they would go elsewhere. One of them actually came back a week later saying the other laundry was too dirty, The rest of the regulars seemed to accept dryer time reduction as being necessary for the laundry''s survival. The owner and his laundry are in a suburban town, and there are not a huge number of nearby competitors. Eventually, they all did some things to adjust their washer and dryer vend prices. But, somebody needed to lead the way, and this owner did it. His cash flow is better than it would have been had he not raised prices. He has survived the huge spike in both electrical and natural gas prices and retained the great bulk of customers and in fact has gained an appreciable amount of new ones. The advice to laundry operators that he offers is: "Don''t panic when you get those big increases. Think it out and then do what is best for your laundry business.