Free services, can companies still make money?

Can you offer your primary products/services at no cost to your clients and still make a profit? It seems like a highly improbable and quite likely a mission impossible. Agree? But if it’s achievable, it will be win-win for both the company and its customers.

In Germany, any individual and/or organization can own/run public toilets. The German government requires that there should be one public toilet every 500 metres in downtown and other high-density areas; one every 1,000 metres on all other roads. The toilet/people ratio of an entire city should be between 1: 500 people and 1:1,000 people depending on the size and population density of each city.

Can you make money running public toilets? It’s indeed a challenging project. First of all, toilets are scattered across a city; that alone increases the construction, operational and maintenance costs. In addition, although using a toilet is a basic need for everybody, most of the public toilets are free. Even if it’s a chargeable service, you can’t charge much for it. How then can you make money with this kind of a venture?

In 1990, it seemed impossible for most of the competitors to make this viable, however, Wall AG, a German company specializing in street furniture won the contract that they would build and maintain the required number of toilets in Berlin at their own costs and provide this service at no cost to the public. In return, the Berlin government would only charge minimal annual management fees. Let’s see how Wall AG made this venture possible and actually created a highly successful and profitable outcome.

1. Innovative usage of space - outdoor advertising and indoor wall decoration/advertising. Because the toilets were present in downtown shopping areas, train stations and airports, the advertising revenue was an opportunity. In fact, Wall AG has received tens of millions (euros) in 5 major cities alone, including Berlin, Frankfurt and Munich.
2. Strategic partnership and complimentary services offered added value to customers - Wall AG installed public phone booths in every toilet. They earned a portion of the profits from telecommunication companies. The company also worked with American Express, retailers and restaurants in the shopping malls providing discount coupons to customers using their American Express card in the toilets.
3. Increase brand awareness through high-end toilets - besides the free toilets, Wall AG also built some luxurious paid toilets that offer services including diaper changing, shoe cleaning, and massages .etc. Customers could listen to music and read books/magazines from its large content library. This not only satisfied the special needs, but also increased its brand awareness as a quality and trustworthy service provider.
4. Cost management through high technology - Wall AG created its own cleaning services. It sent patrol cars and maintenance staff to check all toilets 3 times a day. In Berlin, they have 20 cars and offer 7/24 hour patrols to ensure they can fix problems in time at every location. They also installed an automatic cleaning system in every toilet that cost less than deploying staff.

Is this the end of the story? No. Wall AG entered into the U.S. market by building toilets for disabled people in New York. In the late 1990s, they had built over 1,000 simplified men’s toilets for free in other European cities such as Paris, London and Rome and received substantial advertising revenues. In addition, they also hired top designers from Italy and Japan to create innovative toilet products and sold it globally. In 2009, Wall AG was purchased by JCDecaux Group, the world top outdoor advertising company.