Feed on

Dry Cleaner Pricing

Have you ever been to a dry cleaner whose racks were not nearly full?

Those things are neat – imagine having a huge walk-in closet with all of your clothes hung on a conveyor system. Anyway, I don’t think that I have ever been into a dry cleaner where those racks were 1/2 full, or even 3/4 full. Virtually every time I go, the racks are overflowing with garments. They are sometimes so full that finding garments is difficult, despite the fact that they are hung according to ticket numbers.

This equilibrium must be efficient from the perspective of the dry cleaner, but for the life of me I cannot imagine why. Why do I say that? Because some people (for example, me) are notoriously delinquent about picking up their dry cleaning. When my shirts are done on a Monday, I might not be there until Wednesday, Saturday, or even weeks later. All the while my shirts take up space on the conveyor system. What is puzzling is that I am charged $1.75 per shirt regardless of whether I pick the shirts up on the appointed day, or whether I leave them there for a few weeks.

A second puzzle, given the cost structure of a dry cleaner (at least to my eye) is that the dry cleaner charges different prices for different types of garments (e.g. mens shirts and women’s shirts cost a different amount; pants cost more than shirts, etc) probably based on costs, but does not charge according to how long items need to be stored at the cleaner. The point being, the dry cleaner is not averse to charging customers different prices based on different services being rendered, but yet does not distinguish the time dimension of their costs.

I am sure they have very good reasons for this policy. And I am sure that the current policy is profit maximizing. How do I know? Because I don’t know of a dry cleaner that behaves otherwise, and that is putting other competitors at a disadvantage. If pricing items more for the time they are in inventory is a smart idea, then someone would have tried it and out-competed everyone else. But I don’t see it happening.

So, what’s a reasonable explanation for this policy? We’ll explore this a little deeper in the future, particularly as explanations come in to me.

3 Responses to “Dry Cleaner Pricing”

  1. daniel says:

    I think a lot has to be said as to the visibility of all of the clothes in a dry cleaner. When walking into a dry cleaner for the first time, how does one judge if it is a reputable business? A new customer may or may not have any indication of how well the dry cleaner cleans the clothes. Instead their only indication of the company’s viability is the amount of business that it does. One must figure that if they have a lot of clothes hanging around, they do a lot of business and people must be coming back to them for more business, therefore indicating that the dry-cleaner does at least a reasonable job at cleaning their clothes. I think that this may also help to explain why there is no wall separating the hanging clothes from the counter (at least in the ones i have been in). I think this ability to attract new customers outweighs whatever gains they may get for charging “rent” for the clothes hanging there.

  2. skh.pcola says:

    I’d assume competition–in the form of many optional dry cleaners and the low switching costs of patronizing them–is central in the business strategy formulation. The firm that you use has all of the storage capacity cost built into the model. That’s a guess, of course.

  3. anna says:

    my name is anna,ive worked in dry cleaners for about 15 years.i was recently working for a dry dleaner who charged customers different amounts depending on how rich the person looked!is that legal?

Leave a Reply