CHICAGO — There are myths that some dry cleaners cling to that prevent them from raising their prices, even when their profitability is at risk. In this American Drycleaner series, we’ve been examining some of these myths; we’re now looking at Myth No. 3: “Never Raise Prices in a Tough Market.”
In Part 1, we saw how tough times actually call for tough decisions. While raising prices isn’t a step to be taken lightly, it’s a tough call that can save a business. Today, we’ll see how cleaners can justify this decision by examining just what drycleaning services mean to clients.
More Than Cleaning
One mistake dry cleaners can make is not seeing their true contribution to their customers’ lives. Cleaners don’t just freshen their clients’ clothes and other textiles; they provide a convenience in a time when that service is most appreciated.
“We have two businesses, two young kids, and more commitments than hours in the day,” says Chheavy Lema who, with husband Chris, owns Martinizing Dry Cleaning in Elk Grove, California. “With that said, we place a higher value on service and convenience than we do on low prices.”
Service and dependability are the differentiating factors between businesses that can raise their prices and those that are stuck at a certain level, says Glen Gould, who, with his wife Tammy, owns the Atlanta-based Dry Cleaning Connection.
“There are going to be those customers who just shop prices,” he says. “We get a call every single day — ‘What do you charge for shirts? What do you charge for pants?’ We tell them, and they gasp and say, ‘I can do much better somewhere else.’ Those aren’t our customers, and they never will be.”
When a dry cleaner can go from a price-only basis in their customer’s eyes to a service basis, Gould says, profitably is much easier to maintain, no matter what happens.
“Our customer is the customer who values knowing what they’re going to get and when they’re going to get it,” he says. “They know they count on us to pull off a miracle when they need it. They know they can walk into their closet and feel confident that what they’re going to put on is going to look good, and it’s going to be there.”
While Joe Gagliostro, president of Muldoon Dry Cleaners in Auburn, New York, keeps an eye on the drycleaning market in his area, he’s more mindful of the service he provides his customers.
“Is it important to stay within your competitors? Of course. Is it important to be realistic? Of course,” he says. “But I’d say that 85% of my customers come to me because of convenience and service, and I’m sure that, nationwide, the majority of clients are not picking their cleaners because of prices.”
“If you are going to raise prices, it is important to raise the bar on service and cater to your best clients,” Lema says. “Our industry follows the 80/20 rule, meaning that your top 20% of clients make up 80% of your revenue. The top 20% did not become your best clients because you had the lowest price — they became that way because they valued a service that made their lives easier. Focus on the best clients and allow the extremely price sensitive ones to go.”
“I’m not listening to the bottom 10%,” says Kurt Lucero, owner of The Cleanery in Albuquerque, New Mexico. “That’s what this pandemic has taught me. We provide a service, and we need to be paid for it.”
Lucero believes that the drycleaning industry needs to pay more attention to how other sectors operate in tough times.
“It’s that same old comparison that I’ve heard for years about going to your local coffee shop,” he says. “It’s some hot water and some ground up beans, and you’re paying 5 bucks for a cup of coffee, but all the work we do on one shirt, and we can’t get 3 bucks for it? Starbucks does not apologize for their prices. Maybe educating our client as to what we do might be important for our industry.”
Come back Tuesday when we’ll conclude our series by exploring some final thoughts on the topic of raising prices to maintain profitability. For Part 1 of this series, click HERE.
Have a question or comment? E-mail our editor Dave Davis at [email protected].