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How to set prices for auto detailing/ car wash business
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How to set prices for auto detailing/ car wash business

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ECT Europe provides several examples how to set prices for new car wash business. The principles are very similar for various industries so you might find something useful for you too, even if you are …

ECT Europe provides several examples how to set prices for new car wash business. The principles are very similar for various industries so you might find something useful for you too, even if you are not in car wash.
Useful for new business starters. www.ecotouch.eu

Published in Business , Automotive
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  • 1. How to setprices for auto detailing/ carwash business
  • 2. Detailing pricing strategies Setting prices for your detailing business can be a daunting task for a new business owner. It is vital that you take the time to conduct a thorough analysis of a pricing strategy before opening your doors.
  • 3. 1. Establish personal andbusiness goals The first step is to sit down and determine goals for yourself and the business. Is this a part-time business that you want to earn some extra cash on? Or, is this going to be a full-time job that will require bringing on extra employees? • Questions to consider: How many hours per week can I dedicate to my business? How much do I want to make on an hourly or yearly basis? Where do I want to be in 3 months? 1 year? 5 years? Where do I want my business to be in 3 months? 1 year? 5 years?
  • 4. 2. Conduct market researchStart with market-level research in your town or city.It is important to consider demographics,population, household income and other factors.• Market-level questions to consider:What is the population of my town?How many people have cars?How often do people wash their cars?Who are the competitors? Car detailers? Auto detail shops?How much is the competition charging and what are their services?Customer-level questions to consider:Who is my target market? Age? Demographics?What is their disposable income level?How much are they willing to spend? For example, conduct someinformal surveys amongst friends, family or acquaintances.What do they value most? Cleaning speed? Quality? Price?
  • 5. 3. Set your service levels Now when you have the foundation for your local market and the customers you plan on targeting, youll need to set your service levels. Some example of detailing service levels are as follows: Basic services: exterior wash, interior vacuum Premium services: exterior wash, exterior carnauba wax, interior vacuum seats and floors, glass cleaning, vinyl cleaning Additional services: tyre dressing, carpet shampoo, clay bar, scratch removal, pet hair removal, vinyl conditioning, odor removal
  • 6. 4. Determine your costs andmargins (1) This is your most important step in setting your detailing pricing strategy. First, youll need to examine your cost of goods for each service that you offer. We are going to use the following example: you are offering a waterless wash service. A customer brings in a mid-sized sedan. It takes you 15 minutes to wash the sedan. How much should you charge? First of all, break down your cost of goods on all the products you use in your detailing service. Youll want to determine your cost per car when using Waterless Car Wash. Heres the example (prices are used as the sample calculations only and might differ in various countries): 5 l of Eco Touch Waterless Car Wash concentrate costs 130 EUR. For the ready to use product you need to dilute it at 1:10 (1 part of concentrate, 10 parts of water, 11 parts altogether).This makes 55 l. In order to wash one car with Eco Touch Waterless Car Care you need ~150 ml of car wash product. This means that with 5 l of concentrate you can wash around 366 cars. Your cost of goods is 0.35 EUR per car.
  • 7. 4. Determine your costs andmargins (2)1) Determine your own hourly wageHow much is your time worth? How much do you want to earn perhour?Hourly wage / 60 (minutes per hour)For example, we want to make 25 EUR per hour. Therefore, everyminute of our time is worth 0.41 EUR.2) Determine how much of every product is used witheach service you offerWhen ordering the formula in concentrate, the cost per wash ispennies on the dollar. Dont forget that you also save a lot on waterbills!3) Determine how much time is spent on every servicethat you offer.That mid-sized sedan from the example above took us 15 minutes.Therefore we spent 6.15 EUR worth of time.
  • 8. 4. Determine your costs andmargins (3) 4) Calculate your total costs. Cost of Goods (5 l of concentrate) + Hourly Rate = Total Costs 0.35 + 6.15 EUR (0,41*15)= 6.5 EUR 5) Set your prices. Now when you have your total costs, its time to set your pricing for the service. Lets say you want to markup your services by 100% (double your costs). Then you should charge 13 EUR for the waterless wash service.
  • 9. This is just a starting point in order to helpyou set a detailing pricing strategy. As yourbusiness grows, there will be many morefactors to consider. Insurance, employees,gas and rent are a few of the other costsyoull need to incorporate in your pricingstrategy. Look for future articles that coverthese topics. Let us know, if you have anyother questions in the meantime.
  • 10. Find more ideas at www.ecotouch.eu