[Adrian_Stiff]

Perhaps I am not understsnding this question. Golf courses should be priced on their fair value, if its a $70 course thats what it is, why would you sale it for $40. The upsale bit is relatively minimal, beers, sandwiches, golf balls all cost money to purchase so you might turn over more but your profit might only be 25%. So if its a 4@70 v 7@40 ie the same $280.... take the 4 every single day, you cant go pickling a business to keep a chef or a pro happy but their wants will be different and they want to see a numbers game. If you turn a $70 into a $40 course then it will always be a $40 course. At $70 sometimes you will fill everytime, you have to accept though that very often courses can be as little as 10% full, bad weather and bad times are hard to fill even at discount. Keep your prices UP is the key to survival not DISCOUNT TO THE BONE, thats the way to go bust. Ultimately you have to get the price right and be good value and the right price in your market place.

[Bill Seitz]

Carl,

Why are you guys assuming total revenue is the same? Doesn't more golfers possibly translate into more sales of other stuff?

I would have agreed with this statement pre-2008.  In this current climate there are those who are prepared to spend £40 on golf but don't have a great deal more to play with - especially if you start adding range balls, food and drink etc.

Neil.

Umm, maybe I'm misunderstanding your point, but don't range balls, food and drink count as other stuff?

One place that comes to mind when thinking about this is Rustic Canyon.  I don't know how many rounds they get, but almost everyone I know who has played it thinks they charge WAY less than they could get away with, especially in that market.  I paid about $40 to walk, and hit a bucket of ball, with Alex Miller and David Moriarty over the holidays.  I'd probably pay more than twice that to play it very often if I lived within 45 minutes of the place.  I'd be curious to know why they went the cheaper route.  Especially when you consider Angeles National is about a half hour away, not as good, and charges roughly twice as much, yet still seems to get a fair amount of play.  

[Carl Nichols]

Perhaps I am not understsnding this question. Golf courses should be priced on their fair value, if its a $70 course thats what it is, why would you sale it for $40. The upsale bit is relatively minimal, beers, sandwiches, golf balls all cost money to purchase so you might turn over more but your profit might only be 25%. So if its a 4@70 v 7@40 ie the same $280.... take the 4 every single day, you cant go pickling a business to keep a chef or a pro happy but their wants will be different and they want to see a numbers game. If you turn a $70 into a $40 course then it will always be a $40 course. At $70 sometimes you will fill everytime, you have to accept though that very often courses can be as little as 10% full, bad weather and bad times are hard to fill even at discount. Keep your prices UP is the key to survival not DISCOUNT TO THE BONE, thats the way to go bust. Ultimately you have to get the price right and be good value and the right price in your market place.

I think John's question is asking you to assume that for the exact same course, if you charge $40, you'll sell 7 rounds, and if you charge $70, you'll sell only 4 rounds (i.e., if you charge $70, you won't ever fill your tee sheet, or at least won't fill it as much as you would at $40).  You can certainly fight his hypothetical if you want, but I would be curious to know whether (a) the reduced maintenance costs (if any) of having fewer rounds offsets the (b) increased revenue from having more players on property. 

[Greg Clark]

It would seem to stand to reason that if the 4 are willing to pay a higher green fee than the 7 - then they would be willing (and able) to pay more for range balls, a beer, a sandwich, a shirt....

[George Pazin]

"All other things being equal..." has to be the second most abused phrase, just behind "No offense intended, but..."

Would that life were so simple.

[Adrian_Stiff]

I think John's question is asking you to assume that for the exact same course, if you charge $40, you'll sell 7 rounds, and if you charge $70, you'll sell only 4 rounds (i.e., if you charge $70, you won't ever fill your tee sheet, or at least won't fill it as much as you would at $40).  You can certainly fight his hypothetical if you want, but I would be curious to know whether (a) the reduced maintenance costs (if any) of having fewer rounds offsets the (b) increased revenue from having more players on property. 
[/quote]The people that opt to run at  7 at 40 will more likely go bust if they are working a numbers game, if the course is really only worth $40 for that locale then its a different situation. The question/situation therefore does not really exist, since no one in their right mind sells whats worth 70 for 40.

[Carl Nichols]

I think John's question is asking you to assume that for the exact same course, if you charge $40, you'll sell 7 rounds, and if you charge $70, you'll sell only 4 rounds (i.e., if you charge $70, you won't ever fill your tee sheet, or at least won't fill it as much as you would at $40).  You can certainly fight his hypothetical if you want, but I would be curious to know whether (a) the reduced maintenance costs (if any) of having fewer rounds offsets the (b) increased revenue from having more players on property. 

The people that opt to run at  7 at 40 will more likely go bust if they are working a numbers game, if the course is really only worth $40 for that locale then its a different situation. The question/situation therefore does not really exist, since no one in their right mind sells whats worth 70 for 40.
[/quote]

Adrian:
Let me try it a different way.  Putting John's hypothetical to the side, what's your sense for how much more the maintenance costs are for the same course but with 75% more play?  I assume a lot of a course’s costs are fixed (or close to fixed), since the costs have to be incurred anyway to keep the course open and playable in order to support the lower number of rounds.  But to this layman, I would assume you would incur more wear-and-tear as a result of more rounds.  Any sense of how much that additional wear-and-tear would cost? 

[Bill Seitz]

The question/situation therefore does not really exist, since no one in their right mind sells whats worth 70 for 40.

Sure they would, if it meant selling a bunch of other stuff along with it at a higher margin.  I might make a hamburger worth $2.00.  But if my competitor across the street is selling a similar product for $2.00, I'm more likely to get you in the door if I sell it for $1.00.  Once you're in the door, I'm also going to sell you a coke and some french fries, where I make back all the money I'm losing on the burger, plus additional profit. 

In addition, golf courses sell something for $40 that's worth $70 all the time.  I may pay $40 Tuesday afternoon, but the same golf course costs me $70 on Saturday morning.  It's the same golf course.  It's not inherently worth any more or less (as long as there's enough daylight). 

[Adrian_Stiff]

Maintenance costs are reasonably fixed although 75% more play is considerable and there is a cost In the UK wear/foot traffic, divots, cup changing, markers moved, aertion are geared to numbers, more people on the course makes it tougher for the staff to complete their work because of more stopping for the golfers, with less play you have clear windows to do your work.

I can see the rationale of filling every space but if you are at that stage you are already in or close to death spiral. Having space allows the upward trend of more golfers using your course. If the buisness is geared to selling a few buckets of balls on the range and some extra burgers...its a pretty crap plan in all honesty. The money is in your UPR (unit per round) and the same ratonale behind fixed costs is the same in an upward trend...ie 1 extra 4 ball is wrth $280.

[Adrian_Stiff]

In addition, golf courses sell something for $40 that's worth $70 all the time.  I may pay $40 Tuesday afternoon, but the same golf course costs me $70 on Saturday morning.  It's the same golf course.  It's not inherently worth any more or less (as long as there's enough daylight). 
[/quote]Bill - I dont agree. Prime times are premium rate on the golf course, so you can have inferior times at a discount in the same way as a theatre seat is more expensive at the front and the centre than high up in a back corner.

Your point about selling an extra 60  Burgers and  60 Cokes should be viewed against my extra 4ball making $280. Its quite easy to see that just one extra 8 minute tee time has a strong profit value, wherby the same profit via a food and beverage operation is hard work. You have to have the F & B as a service, but theres no money in it. Clubs must keep their heads up high and work hard on getting numbers up, not dropping their price and trying to get more players.

[George Pazin]

The question/situation therefore does not really exist, since no one in their right mind sells whats worth 70 for 40.

Sure they would, if it meant selling a bunch of other stuff along with it at a higher margin.  I might make a hamburger worth $2.00.  But if my competitor across the street is selling a similar product for $2.00, I'm more likely to get you in the door if I sell it for $1.00.  Once you're in the door, I'm also going to sell you a coke and some french fries, where I make back all the money I'm losing on the burger, plus additional profit. 

In addition, golf courses sell something for $40 that's worth $70 all the time.  I may pay $40 Tuesday afternoon, but the same golf course costs me $70 on Saturday morning.  It's the same golf course.  It's not inherently worth any more or less (as long as there's enough daylight). 

Sure it is, if it's the difference between not playing and playing. It's just rarely as obvious as $70 versus $40.

As for the rest, I've never been a fan of the "loss leader" concept, but it does get owners to think more in a big picture sense. It's just one of the 1,001 reasons why running your own business is never as easy as it seems to non-owners.

[Kalen Braley]

The question/situation therefore does not really exist, since no one in their right mind sells whats worth 70 for 40.

Sure they would, if it meant selling a bunch of other stuff along with it at a higher margin.  I might make a hamburger worth $2.00.  But if my competitor across the street is selling a similar product for $2.00, I'm more likely to get you in the door if I sell it for $1.00.  Once you're in the door, I'm also going to sell you a coke and some french fries, where I make back all the money I'm losing on the burger, plus additional profit.  

In addition, golf courses sell something for $40 that's worth $70 all the time.  I may pay $40 Tuesday afternoon, but the same golf course costs me $70 on Saturday morning.  It's the same golf course.  It's not inherently worth any more or less (as long as there's enough daylight).  

Sure it is, if it's the difference between not playing and playing. It's just rarely as obvious as $70 versus $40.

As for the rest, I've never been a fan of the "loss leader" concept, but it does get owners to think more in a big picture sense. It's just one of the 1,001 reasons why running your own business is never as easy as it seems to non-owners.

I think I do the 4 @70 and here's why:

1)  As Greg pointed out, the golfer willing to spend $70 per round is probably more likely to buy stuff in the pro shop and/or from F&B.
2)  The course will in fact incur less wear and tear, but more importantly less bunker visits.  I've read time and time again, that maintaining bunkers can be as much as 40% of your cost/hour, so by having almost half as many players on the course, I would guess your bunkers are visited nearly half as much and there would be a significant cost savings in not having to spend near as much time raking them out.
3)  Ditto for #2  when it comes to replacing divots, replacing worn out grassy areas that get lots of traffic, and fixing ball marks on the greens.
4)  Then if so inclined I can still open up certain non-busy tee times and sell those at $55 which will may attract more of the $40 per round crowd.
5)  With less golfers at the facility, my pro shop and F&B staff wouldn't be run ragged trying to service more golfers paying for tee times, answering phones, and buying a beer at the turn.

[Adrian_Stiff]

Kalen - I thought about bunker maintenance but I figured that animals damage them a bit and that more play would not have a significant affect on the basis that on most courses its hard to go 2-3 days without raking them anyway, so once they are being raked the amount of damage does not really matter since you rake the lot anyway.

[George Pazin]

I think I do the 4 @70 and here's why:

....

I like your reasoning, it sounds great on here, but here is my experience as a business owner for 18 years:

1) Not even close to being accurate - there are value shoppers who will appreciate your other items, there are wealthier guys who watch every penny. There's just no way to accurately guess who will buy the extras and who won't - and I say that as someone who has sat for hours on end, selling his wares at many different venues and experiencing many different results.

2) Can't argue with this, but I can tell you that while you sit there, waiting for the guy willing to pay $70, you are going to experience a tremendous amount of inner turmoil, wondering whether you should be charging $65, or $60, $55, or $50, and so on... until your sheet is full all of the time. You can't put a price on what that does to someone.

3) No arguments there - fewer marks, fewer fixes, period.

4) This is often the most difficult part of being self-employed. Every time you discount something, you worry that your regulars who are paying full freight will find out, and be pissed. It's the same reason I'm also ticked at Sports Illustrated for offering goodies for the new subscriber and nothing for the long time subscriber. This is contrary to all business experience and thinking. If anything, I'd rather throw my regulars an occasional freebie than try to lure in the newbie with first time or odd time discounts. But that doesn't always work either, sometimes you are cutting your own profits for no good reason.

5) Yep, they're not being run ragged - but who really is these days? More likely, every time you look at them during the down time, you will wonder why you even have them around. My business partner falls for this all the time, hoping to get rid of one of the guys who works for us at better-than-starting rates - but who comes through when we really need him, and steps up when we least expect it.

How many people are really giving it their all, ever? 20%? 5%? <1%? As a business owner, you have to hope - and cultivate - the people that will come through in the clutch, and hope they're understanding when you're struggling and can't give them hours when it's slow. It sucks, big time, but it's life as a business owner - every second of every day.

People who are employed in successful industries (read: money makers) will never ever understand what a small business owner goes through. It's analogous to Jones's famous statement, there's golf, and there's tournament golf, they are not at all the same. There's business, and there's competitive business, they are not at all the same. All the theories in the world aren't going to help you when you're trying to decide between making payroll and taking a chance on a new client.

And that's not even close to the rest of the story...

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