Buying New Equipment: Consider More Than the Initial Price

Courtesy of Coin Laundry News

Especially in these tough economic times, there needs to be considerably more skill and thought to the art and process of selecting new laundry equipment than just choosing based on getting the lowest price alone. Negotiating to have the lowest price may seem important. But that’s really true only for the short term.

Too many laundry operators simply buy their equipment needs thinking only of the purchase price. Since most operators keep their equipment for far longer than the accepted depreciation period, the initial price shouldn’t be really that vital a consideration.

In other words, buyers should not be thinking only short term in the equipment buying process because they are making what are really long-term investment decisions.

With the skyrocketing costs for utilities, and other increases, the smart laundry operator considers price to be a secondary issue. The first issue is whether or not the new equipment will save them money in long-term operation.

Equipment purchasers should always ask: What will a combination of price, cost for operation and maintenance be in the life of the washers and/or dryers that I buy? Will it really save me money?

The following is a hypothetical example case history showing the effect and the real dollar differences in long term costs affected by the purchase of top load washers as opposed to buying newer style front load, single-loaders instead.

An operator of a suburban laundry had 30 top load washers and 6 large capacity front load washers. In January, he decided to replace the top load washers with 20 new tops and 10 single load front loaders of the same brand. He paid $750 each more for the fronts than for the top loads. The price paid included installation.

Unlike other front load washers, the new style units didn’t require bases, pads or bolting down when installed. They are designed to fit in the same space and to attach to the same basic electrical, sewer and water inlet fittings as for a typical top load washer.

In this laundry’s business area, top load washers vend for $1 per wash, so the owner felt that he had to keep that vend price for his 20 new tops.

Also in that laundry’s area, the competitors charge more for front load washers than for tops. This owner had been charging $2 for double loaders, so he felt free to set $1.50 per wash as a vend price for his new front loads.

With his old washers, the owner was averaging 40 wash loads per week per machine. After the change, it settled out the same per washer.

The machine manufacturer provided information that set the per load costs for these front loaders at approximately 10¢ per wash less than the costs of top load washers. With the energy savings and his higher price, the owner was able to net 60¢ more per load from his new front load washers than he received from the new top loaders.

Doing 40 loads per week, he netted $240 more per week than he would have if he had simply replaced his 30 old top load washers with other tops.

Thus, by buying 10 front loaders, he will be able to, in one year, take in, or save an extra $12,480. This more than paid for the difference in initial cost for those washers.

If price difference for the new style units is recovered in less than a year, over the life of the washer it means $100,000+ more income just for making an extra investment of $7,500. Talk about a good return on investment.

Of course, this example won’t hold true for all laundries, but it surely points in a direction to consider going.

If the owner in this example had only replaced 30 old top loaders with 30 new ones, his income may have risen marginally just from having new washers. But not by nearly as much as it did putting in a new style of machines.

The additional cash flow also makes the laundry far more valuable at time of resale. The laundry could now be worth many thousands more at the time it sells.

So, which style of washer was the better buy after all? The lowest price alone should not be the sole reason when making your buying decision.

How about getting even larger washers?

The investment in larger capacity front loading washers is much greater. That is due to unit prices and installation costs. Most will not fit exactly into a space vacated by a top loader, so there’s possible remodeling costs to consider when you buy.

However, vend prices one can charge for each wash are so much higher than these front loaders and provide more income per foot of space. They need fewer utilities per pound of clothes washed, and that makes them much more profitable than a typical top loading washer.

What about changing to newer dryers?

The increased profit potential that accrues from changing out dryers is much more difficult to calculate. We know that there is a savings on gas consumption when older dryers are changed out for new ones. The dryer designs of today are more efficient than older dryers of the past were. There are those who say that the savings in natural gas alone will pay off any new dryers.

Stacked dryer units are, it seems to us, the only way to go. Greater dryer capacity in approximately the same space means more income per square foot. You are paying the same rent, one way or the other, but you’ll get more bang for your buck in rental costs with two dryers in the space of one.

Stacked dryers, per dryer opening, are less expensive to install because they usually have the same footprint and often can use the same electrical, gas and vent connections. On top of that, they have a reputation of being far more efficient to operate.