Are you measuring your chemicals using cost per gallon (CPG) or cost per car (CPC)? Which do you think is more effective?
CPG used to be the industry standard to calculate your chemical cost and make informed business decisions in the car wash industry. However, you can get a truly accurate understanding of your chemical cost for your business by using the CPC method.
Measuring Chemicals: Cost Per Gallon
Measuring cost per gallon is strictly a function of how much a drum costs. That’s it! Cost per gallon takes the chemical cost at face value. The products’ performance quality and longevity is not considered. When thinking of your wash this way, you miss the opportunity to make better financial decisions when purchasing chemicals.
Measuring Chemicals: Cost Per Car
Measuring cost per car is a much more effective approach. It factors in the performance of the product and the volume used for each car. By understanding the usage volume per car, operators can effectively calculate their chemistry costs.
For a more in-depth guide to the factors that go into measuring cost per car, click here.
Drum vs. Concentrate
When purchasing chemicals for your car wash, why is it best to use CPC over CPG when evaluating cost and value?
Let’s put this into action. If a 30-gallon drum costs $250 and a 5-gallon concentrated pail costs $200 how do you know which has the best value? The drum is bigger and clearly has more volume for a lower price per gallon, right?
Wrong. It turns out that a 5 gallon pail of concentrated chemical can wash the same volume of cars as the 30 gallon drum for 20% less cost. That’s because the technology that’s available today allows manufacturers to produce higher quality products with a smaller footprint.
While the pail is shipping concentrated chemicals, the drum is shipping water with the chemicals. When the manufacturer removes the water (as in the case of the concentrated products), you as the end user don’t have to worry about potential safety hazards associated with handling large drums. It’s easier to maximize storage and floorspace in the back room.
The bottom line is that if you measure your costs in CPG, you don’t realize you’re getting less value with the cheaper drum. Instead, it’s best to measure CPC. While concentrates appear more expensive on the shelf, they actually have a better value for the price when you consider they can wash more cars and take up less floor space.
Switching to measuring with a CPC analysis allows you to accurately understand and manage your chemical costs and bring more dollars to the bottom line.