Owning a car wash sounds like an easy gig, but is it a profitable one? That’s a tough question to answer. Let’s start with an easier one. Can a car wash be profitable? Yes, very much so! Car washing is a $9 billion industry.
But how profitable is a car wash? Like any profit calculation, we need to calculate the revenue and subtract the costs. That reveals how much profit your car wash is making. Let’s look at these two factors and how they affect profitability.
Car Wash Revenues
The revenue of a car wash starts with the car wash you have. Self-service and in-bay automatic units have a certain number of bays. Each bay will generate a certain amount of profit. Naturally, automatic units can command a higher price point.
Tunnel units are the most profitable kind of car wash, around $18 per wash on average. This can grow even more if you have special service options like detailing, waxing, vacuums, etc. The more services you can offer, the higher you can charge.
Revenue can also grow by offering car wash membership programs. These could be fleet memberships to businesses with an ongoing contract, or yearly memberships with the public. You could even offer both if there is a demand in your local area.
Each market is different, but some estimates we’ve seen for the average income for a car wash are:
- Self-service: ~$18,000/year for each bay
- In-bay: ~$140,000/year
- Tunnel: ~$687,000/year
Location Matters for a Car Wash Business
Sometimes, you’re stuck with building where your current business is. But if you have a choice, you can really make your profit soar by choosing an excellent location from the start. When people see your car wash regularly, they’re far more likely to stop in for a wash.
Location also involves your climate. If you live in an area with a heavy pollen season, you can expect a big burst of business during that time. Long winters also mean more profit since people won’t want to wash by hand during the colder months (though this could be a big problem for self-service businesses!)
We also can’t forget other car washes around you as well. Competition can be fierce on a busy road and you may need to invest in signage and other marketing tools like a car wash consumer app to keep attention on your business and away from the competition.
Understanding Car Wash Costs
Alas, we can’t take all that income as pure profit! Car washes have significant costs, both fixed and variable. You’ll have to subtract costs from your business, like:
- Employee expenses, if you have them
- Supplies for running the wash
- Taxes
- Loan repayments
- Insurance
- Advertising
- Utility costs
- Repair and maintenance costs
- Permit fees
If you are building your car wash from scratch, you might need to wait several years before you become profitable. You’ll need enough capital reserves to keep your business afloat until your business is self-sustaining.
The fixed costs are easy to calculate, but variable costs will have to be estimated until you have some experience under your belt. Water can be one of the trickiest to measure if you have huge seasonal shifts in demand.
Calculating Profit for Car Washes
Calculating how profitable your car wash is simple if you have your revenues and your costs. Just subtract costs from revenue. If the number is positive, you’re making a profit. If not, you’re still in the red.
With luck, exemplary services, and perhaps the help of a modern car wash POS system, your profits will grow. The demand for car washes is huge and growing, so as long as you can control costs long enough for revenue to catch up, your car wash will become profitable.
Car Washes Can Be Profitable Businesses
To summarize:
- Most car washes are profitable
- How profitable it is depends on your revenue and costs
- Each car wash will be different – you’ll need some experience before you can judge how well you’re doing
- As long as you can control your costs, your car wash will see profitability one day
The greater our population grows, the more demand there will be for cars and washes. Seasons may come and go, but the demand will never go away completely so long as people continue to drive! This is likely why so many car washes are earning profits for small business owners like you!
