CHICAGO — For the past few weeks, American Drycleaner has been examining some of the myths that many dry cleaners use to avoid raising prices. While it’s never enjoyable to potentially anger some customers when rates go up, the cleaners and experts we’ve spoken with have found that the alternative is decreasing profitability and increasing the risk to their business.
Today, we’re looking at Myth No. 3: “Never Raise Prices in a Tough Market.” In Part 1 of this series, we examined how tough times actually call for tough decisions, and in Part 2, we discussed the value a dry cleaner adds to his or her customers’ lives. We’ll close out this series today by exploring how increased profitability can ease the pressure on a business owner, and some final thoughts on the subject.
Rising Tides
By raising prices, cleaners can turn away from depending on volume to make ends meet while better serving their customers.
“We undervalue our product without a doubt,” says Glen Gould, who, with his wife Tammy, owns the Atlanta-based Dry Cleaning Connection. “I’m a firm believer that every dry cleaner could raise their prices by 20% and not miss a beat. We’ve had two price increases since COVID. Labor price increases have gone crazy, and then your supply prices — if you can even get them — have gone crazy. So, we’ve had to increase our rates.”
These increases have kept his business stable, he says, even though piece counts have dropped. “We are financially about 10% short of what we were in 2019, but units were down 60%,” he says, “so you’ve got to figure we’ve had some pretty stiff price increases.”
“I think I’m a price leader in my market, or at least one of them,” says Kurt Lucero, owner of The Cleanery in Albuquerque, New Mexico. “In April, I raised my prices by 8% in one shot, and I will most likely do another 3% before the end of the year.”
“I’m all for raising prices,” says Joe Gagliostro, president of Muldoon Dry Cleaners in Auburn, New York. “I’ve never been afraid to do so. Everyone I’ve talked to hates to do it, but I don’t care. My mindset is, I would rather press 750 shirts a week at $4 a shirt than press 1,000 shirts a week for $3 a shirt.”
Chheavy Lema who, with husband Chris, owns Martinizing Dry Cleaning in Elk Grove, California, agrees with this “less is more” assessment.
“The worst-case scenario is that revenue remains the same but your overhead decreases,” she says. “This allows you to preserve your margins with fewer people to serve.”
Final Thoughts
Kermit Engh, managing partner of the drycleaning consulting group Methods for Management and the owner of Fashion Cleaners in Omaha, Nebraska, believes that the benefits of putting proper pricing structures into place outweigh the initial discomfort many cleaners fear in taking such actions.
“It allows for being able to pay employees better,” he says. “It allows you to acquire new equipment that makes your business more efficient. And it provides you, personally, with a return on your time and investment. If you don’t increase your pricing, how in the world are you going to have a better bottom line that allows you to do those things? That allows your business to grow and thrive?”
David Dawson, a longtime industry veteran and principal of the Clean Expertise consulting group, points out that once budget items like labor, energy and other items rise, it’s rare for them to go back down.
“The increases will get baked in and are not going away,” he says. “Employers won’t be able to take back the higher wages they need to pay, for instance. So, prices are going to have to go up for most people.”
Lucero knows firsthand that raising prices is a point of discomfort for many cleaners. Because price is not the overriding concern for their best clients, however, he’s found that the downside might not be as bad as many cleaners fear — or exist at all.
“I know there’s definitely a psychological barrier raising prices,” he says. “I’ve experienced it. It was really difficult for me to get to that $4 shirt price, but I did it, and I’m glad I did it.”
For Part 1 of this series, click HERE. For Part 2, click HERE.
Have a question or comment? E-mail our editor Dave Davis at [email protected].