How to Price Unlimited Car Wash Subscriptions

Previously, we’ve covered how unlimited car wash subscriptions can be worth it for, not only the customers, but the car wash owners as well.

Of the reasons for starting a monthly car wash club, the steady revenue is the key advantage. You begin every month with a set amount of cash already guaranteed.

Ideally, the amount of cash that you’re pulling in from your unlimited car wash subscriptions should be enough to buoy your business against fluctuations in cash flow.

But how much should you charge for your monthly car wash clubs to keep them profitable?

Factors in Pricing Car Wash Clubs

Let’s get into what factors you need to keep in mind when pricing a car wash.

Covering Average Total Expenses Per Car Washed

To satisfy the basic definition of profitability, the revenue from your car wash clubs need to cover expenses. That’s why the total cost per wash for your car wash should be a number that you know by heart.

To get you on the same page, let’s go over some basics of calculating this figure. These numbers pick up from our article about car wash cash flow. You can brush up on how we got to these numbers in that post. (They’re not perfect but they kind of work).

There are two ways to calculate this:

1 – Calculate Cost of Goods Sold

2 – Calculate Total Expense divided by Total Cars Washed

We’ll go with the second option and calculate this based on your total expense for a full year divided by the amount of cars you washed in that same time period. This way, we are including costs like maintenance overhead, employee wages, cost of water, cost of detergents, etc. and avoiding the extra complications of compensating for RFID badges and other costs that you will pay as overhead on car wash membership plans. It’s less accurate but it is simpler.

(Psst! We have a online calendar at the end of this blog post.)

From the round figure Excel spreadsheet example above, we make $1.08 million in sales each year but nearly $767k goes into the cost of running the car wash. We wash about 72k cars in the year. The $767k in expenses divided by the 72k cars brings us to $10.65 of expenses per car washed.

We now know the number that each monthly car wash customer costs us each time they use their plan. We don’t want the cost of a club member washing their car each month to exceed the amount of revenue we receive from their monthly subscription fee.

If we update our Excel spreadsheet, we have two additional rows. One row is how much you plan to charge for your car wash membership plan and the second row is for the break-even number of car washes. If your members average less than these many car washes a month, your plan will be profitable.

Number of Times a Customer Uses Their Plan

For regular car washes, every time a customer comes in, you make a profit. For monthly users, every time they roll up, it eats into your profit. That’s why you need to know how often your average customer washes their car.

While it is generally recommended that you wash your car every two weeks, most car owners fail to do so.

According to Washos, only 28% of car owners wash their cars several times a month. About half of car wash visitors only wash their cars once every 6 months.

Source: https://www.washos.com/blog/statistics-car-wash-industry/

But this isn’t the full story. Your customers will only want to join the plan if they think that they could recoup on their investment. Car wash club members will probably be more likely to be heavy users already or may consider using your car wash more once they start paying a flat fee each month.

This means that you should plan around your club members washing their cars 1.5-3 times each month when they are on your car wash plan.

How Much You Charge for Single Use Washes

The prices on your main line of car wash options is going to factor in heavily to your decision on how to price your unlimited car wash plan.

If your monthly car wash plan offers the same wash for 4 times the price of washing without the plan, very few will want to sign up. It is hard for the customer to picture using the plan often enough for it to pay off for them.

Because of the every 2 weeks standard, the most attractive monthly club plan prices are the ones that make sense when you wash your car once every 2 weeks. Washing a car every two weeks comes out to an average of 2.17 times a month.

That’s why pricing your monthly wash club at 2 times your single use washes can be a generally good rule of thumb. In this article on Tommy Car Wash’s Blog, they recommend the 2x rule for precisely the same reason. “The value is undeniable, and any cost from the extra washes is more than off-set by the large customer base and recurring payments that come with it.”

At that ratio, the monthly car wash plan will look like a good enough deal for customers to sign up for it. Once they are on the monthly plan, however, they might not hold themselves to using their membership on a strictly bi-weekly basis. A similar phenomenon is what powers the profitability of gym subscriptions.

Optimizing Your Price for Car Wash Plans

We hope these tips have been helpful but they aren’t guaranteed results. To price your monthly car wash plans correctly, you need to try it out for yourself. Learn your local market. Ask the car wash owner across town what he does.

Putting these principles into action will allow you to get a gauge on what actually works for you. Start with what feels like a safe price to you and get more adventurous from there.

Sources:

https://tommycarwash.com/blog/5-tips-for-pricing-your-car-wash/

https://www.sonnysdirect.com/car_wash_membership_club_models_built_to_shrink

https://www.washos.com/blog/statistics-car-wash-industry/