Laundromat Startup Costs: Why Leasing Laundry Equipment Could Be a Smart Move

In Garment Blog by Brittney Robinson

Starting a laundromat can be a profitable and rewarding venture, but it’s important to understand the various startup costs involved before diving in.

From leasing a location to purchasing or leasing laundry equipment, understanding these expenses upfront will help you plan your business better and set you on the path to success. In this article, we’ll break down typical laundromat startup costs and explore why leasing laundry equipment could be a smart decision for your business.

Initial Research and Business Planning

Before you start making purchases or securing a lease, you’ll need to invest time (and possibly money) in conducting market research and creating a detailed business plan. These preparatory steps are crucial for understanding the local demand, competition, and costs you’ll face.

  • Market research can cost anywhere from $500 to $5,000, depending on the level of detail you require. You might need to pay for data, hire a consultant, or perform studies to analyze local competition, customer needs, and pricing strategies.
  • A business plan typically requires you to invest time, though if you opt to hire a professional, this could cost around $500 to $2,500. This plan is essential for attracting investors or obtaining financing.

Securing a Laundromat Location

One of the largest startup costs is securing a physical location for your laundromat. Costs will vary based on your geographical area and whether you’re purchasing or leasing the property.

  • Leasing costs: Monthly rent for a laundromat location can range from $2,000 to $10,000 or more, depending on your city and the size of the space. A smaller neighborhood laundromat will generally have lower rent than a high-traffic urban location. Expect to pay first and last month’s rent, plus a security deposit upfront.
  • Purchasing a property: Buying a commercial space for a laundromat can cost hundreds of thousands, and you’ll also need to budget for property taxes and maintenance.
  • Renovation and setup: Depending on the condition of the space, you may need to invest in renovations such as plumbing, electrical work, or floor resurfacing. Renovation costs for a laundromat typically range from $10,000 to $50,000, depending on the scope of work.

Laundry Equipment: Buy or Lease?

The next major expense is your laundry equipment, but it’s important not to go cheap here. Commercial washers and dryers are essential to your business, and these can either be purchased outright or leased, depending on your budget or needs. Let’s explore both options:

  • Purchasing laundry equipment: Buying commercial washers and dryers can be one of the biggest startup expenses. A single commercial washer can cost between $1,000 and $7,000, and a commercial dryer typically costs between $900 and $5,000. For a basic startup with 20 washers and 20 dryers, you’re looking at a cost between $38,000 and $240,000.
  • Leasing laundry equipment: Leasing can be a much more affordable option for laundromat startups. Many companies offer equipment leasing programs that require little to no upfront cost. Here are some reasons why leasing may be a smart choice:

    • Lower upfront costs: Instead of paying a large sum to purchase washers and dryers, leasing allows you to spread out your payments over time. This can be beneficial when you’re just starting and may not have the capital to make a large initial investment.
    • Regular maintenance: If you lease your equipment from a reputable company like ours, you can also rely on us for maintenance as well. This can save you from unexpected repair costs, which can be expensive for commercial equipment.
    • Upgrades and flexibility: Leasing allows you to easily upgrade to newer equipment as technology improves. This is important because energy-efficient machines can lower utility costs and appeal to environmentally-conscious customers.
    • Tax benefits: Leasing payments can often be written off as business expenses, which may reduce your overall tax burden.
    • Conserve working capital: By leasing, you can preserve cash for other important expenses like marketing, employee wages, and renovations, giving your business more flexibility during the critical early months.

Utilities and Operational Costs

Utilities are one of the most significant ongoing operational costs for laundromats. This includes water, electricity, and gas usage for the machines. Utility expenses for laundromats can range from $4,000 to $8,000 per month, depending on the size of your facility, number of machines, and local utility rates.

  • Water: Commercial washers use a lot of water, and you’ll need to account for this in your business plan. Installing water-saving machines or implementing a graywater recycling system could help reduce costs.
  • Energy: Laundromats consume a substantial amount of electricity, especially for dryers. Using energy-efficient appliances and installing solar panels may reduce costs in the long term.
  • Gas: If your dryers run on gas, this will be another utility expense to factor into your monthly budget. Look for energy-efficient models to help reduce gas consumption.

Laundromat Insurance

A laundromat must carry several types of insurance, including general liability, property insurance, and workers’ compensation (if you have employees).

  • General liability insurance: This typically costs between $500 and $2,000 annually and protects you in case a customer is injured on the premises.
  • Property insurance: This covers damage to your machines and building in case of fire, theft, or other events. Annual premiums usually range from $1,000 to $3,000 depending on the size of the business and coverage limits.
  • Workers’ compensation insurance: If you have employees, this insurance is required and varies based on the number of employees and state regulations. Costs range from $1,500 to $5,000 annually.

Permits and Licensing

You’ll need to obtain several licenses and permits before opening your laundromat, including:

  • Business license: Cost varies depending on location but usually ranges from $50 to $200.
  • Building permits: If you’re renovating or installing equipment, you may need permits, which typically range from $500 to $2,000 depending on the scope of the work.
  • Health and safety inspection: Your laundromat will need to pass local health and safety inspections. Fees for inspections vary but typically range from $100 to $300.

Employee Costs

Even if you run a largely self-service laundromat, you may still need to hire staff for cleaning, maintenance, or customer service. Plan for payroll expenses, which include wages, payroll taxes, and benefits if applicable.

  • Hourly wages: For part-time attendants, the average wage is between $10 and $15 per hour, depending on your region.
  • Additional benefits: If you offer benefits such as health insurance or retirement plans, you’ll need to factor in these costs as well.

Marketing and Promotion

To attract customers, you’ll need to invest in marketing your laundromat. Depending on your strategy, marketing costs can vary widely.

  • Online advertising: Running digital ads on platforms like Google or social media can help you target your local community. Expect to budget $1,000 to $5,000 for an initial marketing push.
  • Signage and branding: You’ll also need clear signage to attract foot traffic. High-quality signs typically cost between $1,000 and $5,000, depending on size and materials.

Miscellaneous Costs

Other potential costs include:

  • Point of sale systems: To manage payments and track usage, you’ll need a POS system. Costs vary but expect to pay around $500 to $2,000 for installation, plus monthly fees.
  • Furniture and fixtures: Seating for customers, folding tables, and vending machines for detergents or snacks will add to your startup costs. Plan to spend around $1,000 to $5,000 for these items.

Is Leasing Laundry Equipment Right for You?

When starting a laundromat, your decision to buy or lease equipment will significantly impact your upfront and ongoing costs. Leasing laundry equipment is a smart move for many startups because it reduces initial expenses, provides flexibility in upgrading machines, and can include maintenance and repair services. This can be especially beneficial in the early stages when conserving cash flow is critical to growing your business.

By carefully budgeting for the various startup costs—from securing a location to buying or leasing equipment and managing utilities—you can set your laundromat up for long-term success.

If you feel overwhelmed, you can give us a call to help demystify things. If you are located in the New England area and are thinking about starting your own laundromat, our robust assortment of leasing options and commercial laundry repair services can assist you.