The Cost of Diver Training
The all-too-typical dive store owner thinks he or she is doing okay offering entry-level diver training if all the direct expenses are covered by the course fees. In other words, if instructor salaries, pool rental and the cost of teaching materials are paid for, you have to be making money — right? Guess again. That’s about a as naive as thinking that if you sell those fins for $5 more than what you paid the manufacturer, you’re making a profit. Consider:
- How much floor space does your classroom occupy? Is it 20 percent of your total floor space? If so, then 20 percent or your rent, utilities and other building-related overhead has to be charged against the income the classroom generates.
- How much employee time is spent explaining classes over the telephone, signing up students, getting out and putting away teaching equipment, etc.? This, too, is teaching-related expense — as is a percentage of your advertising and other overhead.
- How big is your electrical bill each month? What is the biggest consumer of electricity in your store? It’s the compressor, right? And how much of that compressor time is spent filling tanks for students and not for paying customers?
- Come to think of it, that compressor has to be maintained — as does all of your teaching and rental equipment. What percentage of those costs has to be charged against diver training?
- If yours is like many stores, the majority of your “rental” business isn’t rental at all, but rather supplying equipment for students in training. That equipment not only has to be maintained, it depreciates — another expense that has to be charged against diver training.
If you accurately account for what entry-level diver training really costs you, you may discover that those $350 scuba courses you’ve been selling actually cost you closer to $700 per student . And, because you offer entry-level diver training primarily as a means to sell equipment, that’s a $350 loss peer student you have to charge back against the profits from any equipment the students may buy.
Let’s do the math here. While actual net profit from equipment sales varies widely from store to store, a figure of seven percent is not unreasonable. If you are losing $350 on every entry-level student you teach, how much do you have to do in equipment sales (with a net profit of seven percent) to make up for this loss? Take a deep breath here. The answer is $7,000.
Are you selling $7,000 in equipment to every entry-level student you train? Well, if your store actually makes money at the end of the year, you must be selling $7,000 in something for every student who signs up for an entry-level course. However, the kid who only spends $200 on mask, snorkel and fins to take your course (net profit: $14) isn’t doing you any favors.
Sobering, isn’t it?
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