Auto Laundry News - September 2011

Car Wash Pricing — Making Green more Profitable

By Robert Roman

In 2008, Yankelvich, a market research firm, found that concerns over green issues had risen by 4 percent as compared to 2007, but buyers were less likely to pay more for green products than they were a year previously. People more concerned about the environment included consumers ranging in age from 16 to 29 and 30 to 43 (Gen-X).

However, findings in Cotton Incorporated’s 2009 Consumer Environmental Study suggest there are limits to activism in retail. When asked about green issues, rising retail prices were of concern to the largest percentage of consumers (89 percent), leading other issues such as water and air quality.

When consumers were asked if they would pay more for green clothing or textile items, 38 percent said no, 33 percent said yes, and 27 percent weren’t sure. If consumers later discovered that a product was not green, 59 percent said they would be bothered but would do nothing about it; 26 percent would not be bothered; and 14 percent would be extremely bothered and take some action.

The Cotton study also found that people have mixed motives for green practices. When asked about limiting detergent by washing only large loads of clothes, 45 percent of consumers did so to save money, only 24 percent to conserve energy, and 11 percent to conserve water. Saving money was the top reason regardless of economic status.

More recently, TNS Retail Forward reported that price was the top factor driving consumers to particular retail stores: 54 percent of consumers. Only 4 percent said social responsibility and resource sustainability determined where they shopped.

On the other hand, ICOM, a targeted consumer response firm, found that 60 percent of households use green cleaning products and people over 55 years old are the most prolific users. Over half of the respondents that didn’t buy or use green products cited cost as the reason.

Based on these findings, we could argue that maybe 50 percent of consumers would consider foregoing “green” to save money on a pair of jeans whereas slightly more than that would be willing to pay higher prices for green cleaning products.

So, can we make a case for charging motorists higher prices to have their vehicles cleaned at a green car wash?
For example, it is commonplace for car-care service providers to charge their customers environmental fees to cover the cost of proper disposal of hazardous materials.

Shopkeepers today charge eco-fees for tires (rubber), A/C service (refrigerant), batteries (lead), and lubrication (waste oil and filters) as well as other car-care products and services. These fees can stretch the price for a set of
tires by $20 and a basic oil change service from $19.95 to $25, a 25 percent increase.

In the course of production, car wash operators incur expenses to dispose of sewage, garbage, and pit slurry. If the state has pretreatment regulations, the car wash owner may need a reclaim system to meet discharge standards and there would be the expense to install, operate, and maintain the system.

Consequently, a car wash producing 65,000 washes a year may have eco-related operating expenses of $30,000 or more annually to dispose waste — roughly $0.50 a wash.

Required investment can also be justification for a car wash eco-fee. To comply with federal regulations, for example, developers must now control surface water on properties, which has added as much as $50,000 to the cost of building a new wash.

The International Carwash Association has invested in WaterSavers™ to help owners promote environmentally responsible practices and educate consumers about the environmental benefits of professional car washing. To participate in the program, a wash must reclaim or recycle its water for future wash cycles or meet certain potable/fresh water per wash standards.

Moreover, many car wash operators have experienced, or are facing, rising rates for fresh water and sewage disposal for the foreseeable future.

So, would motorists pay a small eco-fee to have their vehicles cleaned at a green car wash?

I suspect many would, and perhaps more would if their market had fewer alternatives.

Quite frankly, it has become more difficult and expensive to wash my car at home as compared to 10 years ago. A 50-cent eco-fee would seem like a small price to pay to have my car cleaned when I want to.

Bob Roman is president of RJR Enterprises — Consulting Services (www.carwashplan.com). You can reach Bob via e-mail at bob@carwashplan.com.

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