When making any purchase, whether small or a large, you want to make the most informed financial decision. Factors to consider include, service, selection, quality, and cost. If you can guarantee your expectations of these factors are consistently met, you should feel confident in your purchase. When these factors drastically change over time, buyer’s remorse can set in.
Unexpected – and Unwelcome – Surprises
Annual price increases – frequently standard in uniform rental programs – and the additional ‘off-schedule’ price increases incurred during the contract term is our topic today.
Rental company contracts typically have clauses specifying an “Automatic Price Increase” which occurs on the anniversary of the initial installation date every year for the duration of that contract.
Let’s explore this annual price increase in more detail.
Most uniform rental contracts impose an annual price increase on the anniversary of the initial installation date. These increases are often written into the contract as automatic increases, and do not require prior notification to the customer. Instead of a formal notice, price increases show up on the invoicing statement with no advanced warning. What’s worse, these price increases can affect the rental charges, and ancillary charges, including:
Contracts typically include price increase language stating, “5% or CPI.” CPI stands for Consumer Price Index, and historically has averaged 2-3% annually. Calculating year one to year five (of a five year contract), you would be paying upwards of a 20% increase in total cost over the course of the contract. That is a huge number, which can be underestimated during the initial program launch.
As you can see, these charges can add up fast, which comes as a complete surprise to many rental customers. Watch as Tyndale’s VP of Technical, Scott Margolin, and Regional Sales Director, Chad Barker walk through uniform rental price increases and how these unforeseen charges add up to staggering amounts over the life of the contract.
The Bonus You Don’t Want – Even More Increases!
In addition to the annual price increases, uniform rental customers can encounter what is known as “off-schedule price increases.” These increases are a little bit different and typically require notice. But don’t be mistaken, this isn’t a formal call or meeting with your main contact to discuss the increases. These “notices” tend to be small one or two sentence blurbs which are added onto the bottom of an invoice.
Unlike annual increases, uniform rental companies typically do consider negotiation on off-schedule price increases, but the work involved in disputing said charges is an uphill battle the entire way. Customers can expect a short window to dispute the charges of typically 10 days or less. Disputes must be sent as certified mail, and it is up to the rental company to either review the disputed charges, or simply cancel the contract if the customer won’t accept the price increase.
Rental companies know that the short timeframe for dispute coupled with the amounts of laborious work required will overwhelm the customer and the charges typically go through uncontested. Most customers don’t notice the off schedule increase at all or soon enough to act within the 10 day window.
What might seem like a reasonable and cost-effective pricing structure in year one, can be a completely different pricing structure in year two, three, four, or five – an unwelcome surprise over the life of the rental contract.
Better Options are Out There
If you are in a uniform rental with industrial laundry program and looking for an alternative when your contract is up, reach out to Tyndale’s National Account Executive in your area. They are available to answer questions and explain the facts about uniform rental with industrial laundry vs a managed program with home laundry. We are confident you will be pleasantly surprised to hear why a managed home laundry program is superior – happier wearers, more cost effective, and often safer – than a uniform rental program.