The Laundry Forum

[kennedg]

I have been working as Operations Manager for our health system Laundry since October 08 and have finished the CLLM training, but there are still many blanks I need filled in. The one I need some info on at this moment is pricing per pound. We have been processing linen for a customer with them purchasing their own linen. We are wanting to simplify the process by supplying the linen and the processing. How do you determine what to charge for each. We have been charging them .35 per pound for just processing and it costs us about .51 per pound to generate linen for our hospital. So how should I approach this?? Appreciate any ideas.

[laundryman]

How many pounds per year will the acct be?
Will need to charge replacement cost and still make a few cents per pound.

[kennedg]

We process between 14 and 15,000lbs per month for this customer and charge .35/lb to process, with them purchasing their own linen.

[Ira Ner]

I am trying to understand your question.

Are you going from COG processing to rental pricing?

If so, Is your rental pricing piece pricing?

If your rental pricing is by the pound then you will need to add in a "new linen purchasing pricing" and add it to your $.35.

Depending on what you are spending now you can easily determine this factor. If you are nervous about or unsure about your replacement charges per pound a safe number to use is anywhere between $.11 to $.13 per pound.

So you would be looking around $.48 per pound overall.

I hope this makes sense. Good luck.

If you need to add delivery carts to this equation it may change the rental pricing.

[laundryman]

That's where we stand, between 11 to 12 cents for replacement charge per pound. It appears your charging by the pound.
We make everyone pay it. We don't count in or weigh in, just everyone has accepted thats what they have to pay.

[kennedg]

THANKS TO YOUR RESPONSES TO MY QUESTION!
WE ARE ONLY DOING PROCESSING OF THEIR SITE OWNED LINEN NOW AT 0.35 PER POUND, BUT YES, WE AND THEY ARE WANTING TO GO RENTAL. I WAS UNSURE ABOUT THE LINEN REPLACEMENT CHARGES, BUT THE 0.11-0.13 SOUNDS LIKE A GOOD STANDARD TO USE. MY GOAL NOW IS TO DETERMINE WHAT THE TOTAL PER POUND CHARGE WILL BE WITH ME PURCHASING THEIR LINEN, AS WELL AS PRCESSING. IT COSTS US 0.51 TO PURCHASE, PROCESS AND DELIVER OUR OWN HOSPITAL LINENS, WHAT IS A STANDARD MARGIN FIGURE ABOVE COSTS?
THANKS FOR YOUR HELP!
GARY

[Ira Ner]

THANKS TO YOUR RESPONSES TO MY QUESTION!
WE ARE ONLY DOING PROCESSING OF THEIR SITE OWNED LINEN NOW AT 0.35 PER POUND, BUT YES, WE AND THEY ARE WANTING TO GO RENTAL. I WAS UNSURE ABOUT THE LINEN REPLACEMENT CHARGES, BUT THE 0.11-0.13 SOUNDS LIKE A GOOD STANDARD TO USE. MY GOAL NOW IS TO DETERMINE WHAT THE TOTAL PER POUND CHARGE WILL BE WITH ME PURCHASING THEIR LINEN, AS WELL AS PRCESSING. IT COSTS US 0.51 TO PURCHASE, PROCESS AND DELIVER OUR OWN HOSPITAL LINENS, WHAT IS A STANDARD MARGIN FIGURE ABOVE COSTS?
THANKS FOR YOUR HELP!
GARY

Hi Gary,

Again without looking at your operating statement you are asking a question that is kind of vague. You are saying that you are buying their linen at $.50 per pound. That is different. Usually you set an agreed upon pricing for each item.

What I would do is audit their inventory. Find out what they will need to fill a 7 day par. Subtract the difference. Amortize that figure over the life of the contract, 3 or 5 years. If for example you had spent $1,000.00 for the total purchase of new linen and the inventory linen, get the estimated pounds shipped for the length of the contract, for example 3 years at 10,000 pounds shipped per year. Divide $1,000 by the 10,000lbs equals $.10 per pound that needs to be added above your normal operating costs.

I hope that explains a little bit. I am not sure if it makes sense. I apologize if it does not. Good luck Gary. This is just my way of making sure that you are at least breaking even on the bottom line.

[The Laundry List.com]

Need to be careful when talking prices we charge customers.
The Federal Government has laws regulating this!

If your cost for simular goods is $0.51 a pound
Add to that:
Any differences in delivery cost
Any differences in linen cost
Facility depreciation
And most important PROVIT

[Bulldog]

I am I understanding this right? You do commercial laundry and charge .35 per pound? If so, what type of commercial laundry are you doing?

We charge $1.00 per pound/

[laundryman]

Bulldog..are u in the USA or Europe?