Thursday, April 12, 2012

More Business Models for Skateparks

Some skateparks try to work like Golds Gym but they often don't go all the way.  Patrons pay a monthly fee, a membership, and skate when they want.  Unfortunately this model is not very successful for skateparks because of the high cost often asked for up front.  With a 12$ session fee versus a $50 monthly fee (I've seen more), kids, teens, adults and their parents are wary about how much they will use this service.  Unlike Golds Gym where anyone with a pulse can sign up, skateparks are in a smaller market to attract people to their service.  Because Golds Gym can get so many people in, and the industry has accepted their 25$ or so cost, they are able to make money with lower monthly premiums.  But in many ways, skateparks can operate like this too, it just takes someone to start.  First a park would have to eliminate sessions, and thus also eliminate $12 fees.  The only way you can get in the gym is pay the monthly fee, with a credit card.  If the market can support this idea, then the skatepark can run like a gym.  But since no parks are doing this now, an owner would take some risk to pull it off. Why?  Basically gym style pricing schemes would offer the skatepark more financial security because it collects money on a monthly recurring basis.  These memberships are tied to credit cards that are automatically charged each month.  So say that 500 members all pay $50 a month to skate for as much as they want, the skatepark is looking at a $25,000 revenue stream per month.  This revenue can be taxed differently too as it is not "entrance" fees which often are taxed like concert tickets.  Within this scenerio, planning becomes easier because revenues are relatively constant.  Added emphasis and efforts are given to keeping the membership going and happy.  I am sure a few parks out there would like to know that this sort of money was coming in monthly.  Even without food or other sales, revenue of $300k per year would be welcome in many parks.  So Golds Gym is not the worst way of looking at your business structure, but you should see what your market can take before you change your current park's finances.