If you recently acquired or built a car wash business over the last few years, you would agree that building the business plan for the initial upfront investment cost must have been a herculean effort. The cost to acquire the right location and wash equipment, the different funding options, and the hiring process for the right skilled team to operate the car wash can drive new car wash owners up a wall. Additionally, there is a constant struggle to keep the business reputation unscathed from rising crime and damage claims. 

In an industry like car washes with room for immense growth and competition, it is critical to building financial capacity over the long term for valuable investments like camera systems. Implemented effectively, a comprehensive camera system integrated throughout the car wash can help you improve long-term productivity, reduce operational costs, resolve claims expeditiously, and prevent crime. Not surprisingly, most tenured car wash operators and business owners tend to build in the cost of procuring and setting up a camera system as one of the upfront capital expenditure costs while building the business plan.

This article aims to provide a fresh perspective to think about camera systems uniquely as an operating expense instead of saving up for substantial upfront costs. Let's find out how that would pan out for your car wash and why a slight tweak around the traditional mindset around camera systems would significantly improve your car wash operations. 

The Status Quo: Camera Systems As Capex

Historically, camera systems have been considered equipment that would be procured along with the other car wash equipment that needs to be purchased to begin car wash operations. The cost of procuring camera hardware, installing and configuring the network, and the software to manage these camera systems were considered part of the initial upfront capital costs you needed to consider for setting up your first car wash bay. As you raised funds yourself or financed your car wash business, you might have also considered the following benefits of procuring your camera systems upfront.

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Predictable Cost of Ownership

As with every car wash equipment, the cost of procuring and installing the camera systems helped create a sense of predictability, allowing you to calculate the fixed cost of owning and maintaining the camera systems on your business plan budget. 

When you procure the hardware and software for your camera system upfront, you can also nail down the expenses beforehand, assuming there might not be any subsequent expenses over the next couple of years. This creates a perception of having been successfully able to forecast and execute a substantial part of your expenditure ahead in the year, when you have the budget to cover for it. 

Tax Benefits and Asset Depreciation

Since these camera equipment can be shown as depreciating assets, booking them as upfront, capital expenditure allows you, as a car wash business, to claim depreciation on this equipment over a more extended period, thus allowing you to offset your profit margins. 

When accounting and planning for your first car wash business, these benefits seem to initially make sense. However, traditional camera systems can be as prone to technological obsolescence as any other computing equipment. With camera hardware manufacturers locking in customers with proprietary software solutions to manage camera systems, the car wash owner's total ownership cost of keeping the hardware and software up to date increases over time. As your car wash location goes through the traditional wear and tear associated with an outdoor business, repairing and replacing your camera equipment and constantly updating proprietary software eventually increases the total cost of ownership in the long term.

But if this has been how car wash businesses have operated to date, is there a better approach in sight? Let's unpack how business models around camera systems have evolved.

How Financing Camera Systems Has Evolved

To understand how the business model around deploying a camera system in a brick-and-mortar business has evolved, we must remember how traditional business models have been disrupted with the advent of subscription-based models. The traditional model of procuring server equipment for running software applications gave way to a cloud-based paradigm, where you are just expected to pay for the computing resources you have used - the hardware running the computing power for your software applications does not involve any upfront costs. Similarly, using the traditional approach of procuring camera hardware and deploying proprietary software solutions has gradually given way to an integrated camera system approach, where you are paying essentially for the software capabilities over time on a recurring subscription model. The camera system hardware essentially comes bundled with the software.

As a car wash owner, such an integrated approach frees up your ability to save up on upfront costs while setting up your business. Setting up your car wash for business efficiency in the first couple of years would be paramount for your business to provide significant margins, so the ability to save substantially on equipment upfront can give you a great head start. 

But saving operating costs is one thing - reducing the total cost of long-term ownership is why most car wash owners opt for a capex-driven model for camera system solutions. What makes a subscription model more valuable in such scenarios? Let's find out.

Thinking Differently: Camera Systems As Opex

As we described before, camera systems, especially networked camera hardware, are prone 

to damage, wear, and tear, and long-term obsolescence like any on-premise computing equipment. As your car wash business experiences growth in customer usage, you will also observe equipment damage, abuse, and weather conditions play havoc on the upkeep of your camera system. In a traditional capex-driven approach, procuring new equipment and upgrading and scaling your camera system footprint would incur substantial costs to continue using the same hardware-software combination. To add to the mix, your proprietary software solution may not provide all the cutting-edge AI-enabled capabilities of newer camera systems, so you may be compelled to replace your entire camera system halfway through its intended usage cycles. 

Compare that with a subscription-driven camera system model, where the following benefits are realized:

Camera systems as Capex

• Substantial Upfront Investment
• Hardware and Software Vendor Lock-in, upgrades could require additional expenses 
• Camera system assets prone to long term depreciation and fatigue, only alternative is to purchase new hardware and new software licenses

Camera systems as Opex

• Minimal Upfront Investment, Recurring subscription fee
• No lock-in requirements, continuous access to cloud-based software updates, and flexibility to upgrade hardware 
• Appreciating asset with new AI capabilities and security updates available with cloud-based software

Low Investment Barrier to Implement and Scale

In a subscription-driven model, camera systems allow you to get started with a lower financial expense with camera systems. You also get access to automatic upgrades and a constantly upgraded software suite, as compared to proprietary licensing models. Additionally, as your car wash footprint expands into multiple car wash bays and with new locations, the incremental cost of adding new hardware, plus access to continuously scaling software makes scaling your business sustainable.

Prevent hardware lock-in with Upgrade Flexibility

Camera technology and AI-driven imaging capabilities have been improving at a furious pace. But the current investment in your car wash should not slow down your ability to deploy newer technologies within your current infrastructure. With subscription models, you continue to pay a recurring price to access the latest capabilities that the underlying camera system could unlock for your car wash by making continuous software upgrades available. Such frequent updates can increase the shelf life of your camera systems hardware, and when the time comes, including newer hardware support makes it feasible to continue investing in the same camera system.

Appreciating Long-Term Asset

Camera hardware and software solutions no longer need to be considered an depreciating asset whose value erodes over time. With total peace of mind over hardware replacements and newer AI-driven capabilities and security updates constantly deployed to your camera system, you can take advantage of an appreciating asset. This switch in mindset helps you consider a subscription-based camera system which exponentially improves in value, the longer you can deploy it in your car wash.

How To Procure Camera Systems in an Opex Approach

If you feel your options to deploy such cutting-edge AI-enabled camera systems are limited, you might be intrigued by what Spot AI offers. Spot AI is a comprehensive video intelligence platform with an AI-driven camera system that can significantly improve the safety and productivity of your car wash. Our bespoke car wash video intelligence system has helped several car wash businesses like Camel Express realize the benefits of a recurring opex driven model, which helps them take complete advantage of our rapid feature velocity and dedicated customer service for a recurring fee. 

If you have always wanted to understand how much a subscription-driven camera system like Spot AI would cost, we have created a helpful Return on Investment (ROI) calculator for your financial planning needs. 

Book a demo with Spot AI today to experience how your car wash operation could take advantage of AI capabilities within your camera system.