Inventory Sales for Multi-Purpose Facilities

My name is Bob Quigley and I appreciate you taking the time to read my second blog here at the COVERMASTER® Tips from The Pros blog. If you read my last installment, we discussed the valuable tool of using a percentage allocation analysis in determining the true cost of each revenue center in a multi-purpose facility. Using this analysis, a fairly accurate determination can be made of break-even price points on each of the products you sell. We discussed examples of breaking a swimming pool down to the cost of each lane per hour and ice rentals broken down to the true cost of an ice sheet per hour. This creates a base line to figure out a break-even price point to determine your net return per sale; commonly called your profit margin.

What you are selling is your inventory. The type of inventory sold in facilities is what I like to call: real time inventory. This can be compared to airplane seats or hotel rooms, if the inventory is not sold. The opportunity has been lost forever because it is time sensitive, as opposed to T- shirts on a store rack that can be sold tomorrow if it is not sold today. Real-time inventory is here today, gone tomorrow!!!!

Inventory can be offered by a multi-purpose facility in several ways, but the most common are through programming such as: lessons, public offerings (like public swims or skates), and rentals of part or all of a particular venue. Again, you are selling real-time inventory that has a definite past due date.

When selling real-time inventory, it is vitally important that you get your money upfront via credit card whenever possible, like for swimming lessons, birthday parties or ice rentals. No refunds are issued if a lesson is missed, and dropouts can only be accepted with a doctor’s note. No invoicing, no checks, no pay at the desk to avoid no-shows. Public offerings, such as, public swims or public skates are usually pay-as-you-go, but pre-sold inventory sales incentives can still be achieved through discounted punch passes that have an expiry date and are non-refundable.

So, you get the idea that in selling real-time inventory, the customer is on the hook if they are a no-show. I realize this may seem harsh, but over the period of a year, this can add up to a significant amount of lost revenue and add to your staff costs chasing no-shows and NSF’s (non-sufficient funds).

Inventory sales incentives can be used at the end of a lesson program. In the case of swimming lessons, if a child does not pass a level, then a four-pass private lesson card can be sold to get them through to the next level. Another common inventory sales practice is to bridge regular program sessions by lowering the weeks of lessons, thus, a lower overall price while increasing the unit cost and your net return.

Prime vs non-prime timeslots can also be used to increase inventory during slow times, but be very careful not to have too many non-prime inventory slots, as this will lower your overall net revenue. The same can be said for lowering your prices to attract new customers when sales are low. Just do the math on this one and you will quickly realize that it takes a lot of new customers to make up for a price reduction that will be attractive. You could take a real loss and face unhappy customers when you try and reinstate the old prices.

This concludes Part 2 of Inventory Sales for multi-purpose facilities. My next Blog will continue the theme of revenue generation and center around product merchandizing, where a facility and its staff can really make a real difference in net revenue sales.

Have a profitable 2022!

Posted January 13, 2022