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National Clothesline
I have heard the same questions over and over and over again. In fact, I calculated that I've
spent at least six years out of the last 30 years answering the same question or listening to
others answer the same question and reinventing the same wheel.
A frightful discovery. Let me give you an example.
Should I raise my prices?
Of course not. How foolish would
that be?
Sorry for the sarcasm, but let’s
continue with the example. After all,
your costs have increased by over
five percent in the last year. You are
expecting a rent increase of three
percent and the minimum wage is
going up.
On the other hand, piece counts have fallen and your competition charges less than you do
and they've started sending out discount coupons.
How often have you struggled with this question? Every year? Every six months? Every two
years?
You ask your industry friends for advice. You ask your wife, husband or partner for advice.
Your bookkeeper might even give you advice.
At the end of the day, it's still your decision. You struggle. You cross your fingers and then
you finally raise prices just like you have every other time by 10 cents. Whoopee!
Let's look at what all of this time and energy got you.
First, you might have gotten some good ideas from your industry associates, your partners
and your employees but have discounted them as, perhaps, not being relevant to YOUR
situation. After a while, they may stop sharing their insights.
Second, and just as important, you made a decision based on history, with no logical basis.
A 10-cent increase on $3, which was the price for a pair of pants more than 10 years ago,
was, at that time, a three percent increase. Keeping the dollars constant while the price of pants
increases results in a 1.5 percent increase on a $6 pair of pants — not nearly enough to cover
your cost increases.
Third, as this decision comes less frequently than once a year, the annual increase is probably
less than one percent. You are clearly falling behind inflation and lower profitability follows.
Finally, and most sadly, you've spent all of this time and energy and the time and energy of
your friends and colleagues to only continue to reinvent the same wheel you've used over and
over again and with which you continue to fall behind as a competitive business.
Can you understand why I'm not happy with this scenario?
Getting out of your routine
Successful business owners have moved out of this historical routine in a variety of ways.
Some owners evaluate the business, the competition, and the environment once a year or twice
a year and increase prices by a fixed percentage for some of the key garments, for all of the
garments, or for all of the garments and the add-on charges in their price list. This procedure
still requires time and attention and the personal fear that such an increase will bring with it a
drop in piece count.
Another option is to deal with this question once and for all with a more automated approach.
Every month, the entire price list is increased by .25 percent; that’s .0025. Over 12 months
each increase is cumulative over the previous one and actually results in an annualized increase
slightly greater than 3 percent.
What have you achieved in this process? You have freed up oodles of time. You don't have to
fret over the same decision time and time again.
What have you risked? The threat still exists that your pricing is incorrect for your market,
your brand, your quality, and your individual service items, but that is really part of a much
larger question to be answered when the entire company strategy is being considered. It is not
a stand alone item.
Should I lower my prices?
A similar question to the one above, but not the exact opposite as you might think. If you
lower prices by 10 percent, what will that accomplish? We know all of the bad news. Profits will
immediately fall by 10 percent if nothing else changes, but the hope is that piece counts might
rise.
In tough times, this question is frequently considered in the hopes that piece counts will grow.
We have tracked several recessions with cleaners that make different decisions. One operator
decides to lower his prices. The other one, who operates a similar business in a similar
environment, raises his prices.
In every case we've examined, the piece count drop is identical. Who do you think is ahead at
the end of the day? This is not a wheel which needs to be reinvented.
In better times, the same result occurs. Your price-conscious customers who have less
expensive choices in the marketplace have already moved on. The rest are happy with you, your
service, and your quality. There is not a single case that I am aware of where raising prices
frequently, in small increments, has not been successful. This wheel has been invented. Let’s
move on.
How best to use your time
Consider what is the best and highest value return for your time. Your strategic decisions,
management of your human resources, and technical training all have a higher return to you
and your customers than reinventing the same wheel over and over again.
Are there other areas that we can stop reinventing and move forward with a better use of our
time and effort? Stay tuned.

Deborah Rechnitz has
been an independent
management consultant
to drycleaning industry
members since 1980. She
also held the position of
chief operating officer of
one of the largest USA
drycleaning operations in
2008. She holds a
Bachelor of Science
degree in Finance and
Personnel Administration;
a Bachelor of Arts degree
in Interpersonal Com-
munications; and an MBA
in Operations
Management from Case
Western Reserve
University. She can be
reached by e-mail at
drechnitz@gmail.com or
phone at (253) 405-7043.
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Stop reinventing the same old wheel