There is More to Consider Than Price When Buying Replacement Equipment

There is considerably more skill to the art and process of selecting new laundry equipment than just getting the lowest price. In the short term, the price you pay may seem important. But that''s really true only for the short term. Too many laundry operators buy equipment thinking only of the price. Most keep their equipment for far longer than the -accepted depreciation period. In other words, they think short term in the spending process when they are making what is really a long-term investment decision. 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 an example case history that shows the effect and the -real dollar difference in long term costs that might be affected by the purchase of top load washers as opposed to buying new 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 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 a direction to consider going. If the owner in this example had only replaced 30 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 that these front loaders 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 of 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 and so they reduce the natural gas bill of the laundry they are installed in. There is some difficulty in calculating benefits of changing to the more efficient, newer equipment. That, in part is because coin laundry owners don''t have as much flexibility in pricing. Usually their price choice, when changing out and replacing old top loaders with the new energy efficient front load washers, is limited to some combination of quarters. They are also at least partially bound by how their business neighbors set their vend price on the same sized wash and drys. Card op owners have much more flexibility in how they set their prices. They are not tied to charging in fixed quarter amounts, but in some cases are able to set vend prices based on the time of day and day of the week that the load is being done. It has long been accepted in our industry that customers won''t go from one laundry to another unless there is more than a quarter differential. Card-ops can raise and still be under a quarter differential. This is a distinct competitive advantage. Laundry operators who continue to keep current and efficient are definitely winners in today''s laundry business. This is true because their updated equipment, which better owners use, is itself so much more simple, cost effective and profitable to operate.