Pete returns to address a pressing issue in the portable restroom industry: how to handle competition from operators offering restrooms at unsustainably low prices.
Prompted by a message from an industry veteran facing this challenge, Pete delves into the economic pressures pushing some operators to cut prices and the potential pitfalls of such strategies. He argues that slashing prices may attract customers in the short term but often leads to a decline in service quality, resulting in dissatisfied customers.
Pete emphasizes the importance of maintaining high standards and advises operators to focus on providing reliable service rather than engaging in a price war. By reinforcing the value of good sanitation and building strong relationships with clients, operators can ensure long-term business success even in challenging economic times.
Takeaways:
In challenging economic times, some restroom operators cut prices to attract more customers, but this can lead to compromised service quality.
Operators should avoid engaging in price wars and instead focus on maintaining high service standards to retain customers.
Lowball pricing strategies may attract customers initially, but often result in poor service and eventual loss of business.
It's essential for restroom providers to accurately calculate their costs to ensure sustainable pricing models.
Portable restroom operators provide essential services and should not undervalue their offerings to subsidize other industries.
Maintaining good relationships with customers through personalized service can be more effective than lowering prices.
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Transcripts
Pete:
Hello and welcome to Get Flushed. I'm Pete. I'm back today with an episode that was prompted by a message from a restroom operator who listens to the show.
He asked me not to share his name or location, so I'm just going to say he's been in the industry for a few years and I'd describe his company as a medium sized operation. His note said, hi Pete. Some of the operators in my region are offering restrooms for as little as $22 a week, including a clean.
I've already lost a few customers and others have asked me to match those prices. How should I respond? I'll start by saying this news really doesn't surprise me. Economic conditions are tougher than we've seen for many years.
Inflation has been high, interest rates have climbed, energy prices are through the roof, business has slowed down, and a lot of people are really struggling to make ends meet. Here in New Zealand, the market has really cooled down. Home builds have slowed.
There don't seem to be as many large scale civil projects on the go, and even our local amp show, our country fair, has been cancelled this year. The organizers of that event said that challenging financial conditions were the main reason behind their decision not to go ahead.
I've often said that there are very few barriers to entry for anyone who wants to set up as a portable restroom operator.
We saw a boom in the number of operators in the market in the immediate period after the COVID lockdowns, demand for restrooms was at an all time high, and for a while, restroom manufacturers around the world really struggled to meet demand.
In my city alone, I can think of five or six new companies that came into the market or added portable restrooms to their existing portfolios in the past two years. Now that things have slowed down, I'd hazard a guess that some of those new operators are probably among those that are offering low prices.
I've seen it before. You see operators cut their prices because they think that's the best way to attract more customers.
And of course, many customers, especially those in construction, are price led because they're working to fix budgets or trying to maximize their profits. In those conditions, offering lower prices can be an effective way to attract more business and offered a cheaper price.
I can understand why customers would jump ship and move to a cheaper provider, but I'm also a great believer in the old adage, you get what you pay for. I know from past experience moving to a bargain basement provider will usually be okay for the first month or two.
The toilet will be delivered the first few cleans will probably be done, and the customer will believe that they're getting a good deal after that.
Experience tells me that their service intervals will start to slip, the standard of the clean itself will start to fall, and instead of a weekly clean, the driver will start to turn up up every other week, or perhaps not at all. They'll stop washing and wiping down each unit, and instead they'll rush for a quick suck and go.
They might not even empty the waste tank on each visit, preferring instead to add an extra bucket of water and another sachet of blue.
They might not restock the paper or sanitizer every time, and they certainly won't leave extras like your rhino blocks and deodorizing discs because they won't have the margin to cover those extra costs to begin with.
Most customers won't notice this because there's usually a disconnect between the staff on site who use those restrooms and the project manager, procurement officer or purchasing clerk who manages the restroom contract.
There's a high probability that that person will never use the portable restrooms, so they'll only notice things when staff on site start to complain. And complain they will.
The restroom will soon start to show signs of neglect, it will start to smell, and visiting the restroom will become a really demeaning experience for users. When enough staff on site get upset, they'll complain to the site manager and the site manager will complain to the provider.
If nothing improves, they'll probably tell them to collect their restrooms and they'll take their business elsewhere, often back to the original provider they left. So what can you do if you come up against a low baller? My advice is to hold your line and don't get sucked into a price war.
Of course, that's easy to say when you're sitting in a recording studio and you're not collecting dozens of toilets from customers that have jumped ship. But I'll explain my thinking.
Covid gave everyone a sharp reminder of the value of good hygiene, and high demand should have been the catalyst for a rethink and a reset on sanitation pricing. Indeed, that high demand saw any number of new entrants come into the market, perhaps thinking they were going to make a quick buck.
But the reality is that operating as a portable sanitation provider means you have a constant, ongoing commitment to maintain standards that the customer expects. My experience also tells me that it's not economically possible to maintain those standards at a very low price.
In most jurisdictions, there is a legal requirement for employers and event organisers to provide adequate sanitation facilities on their sites or at their events.
Restrooms are an unavoidable obligation, but for many years, portable restrooms have been seen as low hanging fruit by project managers looking to rein in their costs.
And at the same time, restroom operators have been their own worst enemies by offering low prices that really don't reflect the importance of clean and sanitary bathrooms that are well serviced on a regular basis. If you're currently pitching for business by offering stupidly low prices, I'll tell you to have a word with yourself.
Take a few moments to work out your absolute costs, the repayments on the money you may have borrowed to buy your restrooms and service truck, the salary or wages for your staff, the cost of consumables like toilet rolls and blue, your dump fees, the cost of your yard and those hidden costs like registration and insurance. If you do all of that and you still think lowballing is the way forward, good luck. Go for gold.
But I'll be surprised if you're still in business in two years time.
If my late friend Dave Andres was here to comment on this situation, he'd say that portable restroom operators should not act as a bankroll for other industries like construction and events. As a restroom provider, you are an essential provider to companies that simply cannot operate without adequate sanitation on work sites.
Without restroom facilities, portable toilets are a must have, not a nice to have. Dave would say "Do everything you can to help your customers if they're struggling to pay your bill, offer to reduce their cost by reducing the frequency of service". Okay, that's not ideal, but it shows you're willing to help. Consider small discounts for prompt payment of their account.
Stop by with coffee and donuts once in a while to say thanks. But whatever you do, don't ignore your customers and hope they'll stay loyal. Do everything you can to make sure they know that you and your staff are the most valuable players on their team.
Okay, that's all for this episode. But if you've got a question you'd like me to discuss, or you'd like to appear on the show, please get in touch.
You'll find me as Pete Get Flushed on social media, or you can email Pete at getflushed dot online. Thanks for listening. I've been Pete and this has been Get Flushed.
