Car washes, like any other type of business, want to make money. Understanding how your car wash business can improve its profit margins is a must!
Let's look at profit margins and how to ensure your profit margins on car washing stay high!
Car Wash Profit Margins
Car washes can be very profitable businesses if they are run efficiently and effectively.
To be profitable, you will need to look at many factors. The equipment you use, the location of the car wash, the frequency of cars being washed, and more.
Cost Per Car: The Biggest Factor in a Car Wash Business
Every successful car wash will want to understand the cost-per-car metric.
It determines the profitability of a given product and can give owners an idea of how much they could potentially make at their car wash.
It explains how much it costs a car wash to wash each vehicle. A lower cost per car means you can make more from each wash job.
What is a Cost Per Car Analysis?
A cost-per-car analysis is calculated by taking the total cost of all the chemicals used to wash the car.
How to Calculate Cost Per Car?
The cost per car of a particular product is found by finding the price per mL of your product and multiplying that by the amount applied to a single vehicle. That total is the cost of that product per car.
For example, if Car Wash Chemical A costs $0.009 per mL, and you need to use 10 mL, you get $0.09 per car. Do this for every product in your wash and add them together for your total cost-per-car.
For the most accurate results, you'll need to create averages from different types of cars and different wash packages.
What is a good Cost Per Car?
The cost per car will vary with your wash business and what packages or products you offer.
Base-level packages that only include basic products might only use $0.20 worth of chemicals. High-end packages with multiple upsells could reach as high as $2.00 for the cost of chemicals.
What is a Blended Cost Per Car Analysis?
A blended cost-per-car analysis is the weighted average of all your car wash packages and their cost of chemicals. If package A costs $0.23, package B costs $1.07 and package C costs $1.50, your blended cost-per-car would be the sum of those values multiplied by the percentage of time customers choose that package type.
Let's assume customers choose package A 65% of the time, package B 12% and package C 23%.
- $0.23x0.65 +
- $1.07x0.12 +
- $1.50x0.23 =
- $0.62
This means your blended cost-per-car (or the true average price it costs you to wash a car), is 62 cents.
How to get a Lower Cost Per Car?
If you're after a lower cost per car, you will need to look at your product selection and the quantity you order.
Ordering a larger amount of chemicals at once may land you a better price per mL. A lower price per mL will allow you to achieve a lower cost for that product when used.
Your product selection will play an enormous role in your cost per car. Higher-quality car wash chemistry will need fewer chemicals used per application. Less product used in every wash means a lower cost per car.
Hyper Concentrates
When you buy a car wash product, it's essential to bear in mind hyper concentrates. How does this work? Instead of having the required amount of water already mixed into the concentrate, you will instead purchase only a very concentrated solution that needs diluting with additional water when it is applied to the vehicles.
Hyper concentrates bring yet another benefit to the table: lowered shipping and inventory costs due to their reduced weight and space requirements. As opposed to purchasing pre-diluted chemicals, your car wash will save big on both money spent while ordering as well as storage space.
Dialling in Chemistry
Turtle Wax Pro and our distributor network ensure you're using the right amount of chemicals for each car.
If you want to get the most out of your car wash chemicals, we recommend dialling in the chemistry. This process involves finding the optimal amount of product that needs to be applied during every car wash so that you can achieve a great result without overloading or underutilizing any products.
There are three important factors: cost, performance and show. You can usually only optimize for 2 of these at a time but we listen to the needs of your car wash business and help you get the most out of your chemistry.
Water Quality
Using hard water or high TDS water in a car wash will cause the chemistry to perform sub-optimally. Poor performance will often lead to an increase in the amount of product used, resulting in higher costs for your car wash.
You should always test and adjust your water quality when using a new chemistry provider or before switching to Turtle Wax Pro. Poor water quality can also cause issues such as streaking and spotting on vehicles which lead to unhappy customers.
Different Types of Car Wash Businesses and their Profit Margins
We will discuss some of the more popular types of car washes and their relative profit potential. Your experience may vary as particular situations can always be different.
Self Serve Car Wash
In a self-service car wash, car owners wash their vehicles with the provided equipment and chemicals.
The time needed for each wash to be completed will be higher in self-service car washes than in automatic wash methods, and applying the given products by hand can be less efficient than a machine.
These factors can impact the amount of profit you can make. However, self-serve car washes will need less equipment and staffing which can play into how much profit you can make.
In Bay Automatic Car Wash
In an in-bay automatic car wash, customers sit in their vehicles as they enter a wash bay.
Automatic car washes will clean vehicles quickly and efficiently. They typically are very precise in their product dispensing and application, these factors allow an automatic car wash to wash more vehicles and use less product at the same time.
Of course, the equipment, location and other types of costs will likely be higher in this car wash, even more so in tunnel car wash situations.
Full Service Car Wash
Full-service car washes do it all, exterior washing, interior cleaning, and specialty services, all at the customer's convenience as they leave the car with the staff.
This type of car wash charges more for their services as the employees do the bulk of the work, which in some cases means having a higher margin.
These washes have more costs and more employees to pay to get their washing done, which can lead to a lower profit margin than a machine quickly cleaning a vehicle.
What are Other Ways to Help your Profit Margin?
As important as the cost per car is, there are other factors car wash owners will want to look at when looking at your profit margin.
Car Wash Prices
It is important to price your services competitively but also high enough that your car wash can make a profit.
Charging too much can turn away customers but charging too little will find your business losing money.
Do some research for other car washes in your area, understand all the costs you have - chemical and others, and then find the sweet spot where you can offer your customers great value but also make your desired profit.
Operating Expenses and Fixed Costs
We discussed chemical-related costs, but all the other operating costs your car wash will face will impact your margin.
Leasing or building fees, property taxes, water usage, electricity, car wash equipment, and repairs are just a few examples of the many types of costs your car wash will have. No car wash owner would want to pay more for something if they did not have to.
So do your research on pricing options and decide what is the best choice to allow you to achieve your desired quality but also keep your costs low enough that you can achieve your desired average profit margin.
Additional Services
Add-on services are a great way to achieve a higher margin when a customer comes in to get their car washed.
Examples can include premium car wash packages, vacuuming, mat cleaning and air fresheners/deodorizing.
Customers that come in for a car wash may decide to also get another service done as they are already there, this is a great opportunity to add some additional income as these services typically have great profit margins.
Car Wash Subscriptions
Offering car wash subscription packages can be a great way to guarantee monthly revenue. Having customers pay in advance will help you achieve predictability and reliability when it comes to your revenue.
Customers that take advantage of the subscription packages typically are loyal, resulting in more reliable income and more revenue. Subscriptions are also cost-effective for car wash owners because most of the customer base won't wash their cars enough times to reach the break-even point.
Having a higher number of customers with fewer visits will result in more profit and reliability.
Want to Improve your Cost per Car? Contact Turtle Wax Pro and Transchem Group
Turtle Wax Pro prides itself on not only providing high-quality car wash chemistry but doing so at an affordable rate.
Backed by the Turtle Wax brand, with over 75 years in car care, our customers, clients, and partners within the car wash industry often see their cost per car going down and quality of results going up, while using our products.
If your car wash business is after achieving a lower cost per car for your existing car wash, or is simply looking for great car wash chemistry, contact us!
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