Part 2: Make More Money
By Alexa Pritchard
In part one of this two-part series, the focus was on revenue builders and how to be less dependent on the general fund. Here, in part two, I will discuss and highlight a variety of revenue-generating strategies and tactics that can be used to complement the revenue builders.
Revenue-generating strategies and tactics can be used in several ways:
1. To enhance programs that you are already offering
2. To create new program ideas.
However you choose to use them, the focus is on increasing revenue. To achieve this, consider differential pricing.
Primetime Vs. Non-Primetime Pricing
This tactic assists in allocating high-demand primetime usage and optimizing non-primetime usage. For example, an agency is successful in renting every lap swim lane during the hours of 4 and 7 p.m. However, this agency can’t rent the lanes during the morning hours of 5 and 7 a.m. Pricing of the lanes is at a flat rate of $5 per lane—regardless of the time of day. Using primetime and non-primetime pricing, the lane rental fee should be at a premium price in the evening—$20 per lane—with the regular price of $5 per lane in the morning. Don’t give high-demand primetime usage away cheaply.
Exclusive Use And Shared Use
Premium pricing should also be considered when there is private, exclusive use of a facility or amenity. An example is a birthday party at the pool. If the party is held during recreational swim, the price should be lower than if the party is held when no one else is at the facility. Another example is during the months of December and January, when the year-round swim team is the only user group in the water. The team should pay 100 percent of the costs to operate the pool versus the 40 percent of costs in July when the team is sharing the space with other programs/users.
If summer-evening swim lessons are so popular that there are large wait lists for classes, this is considered high demand. Therefore, an agency should charge more for these classes than for summer-morning swim lessons. If the price point is right, you may even entice some customers to move to morning classes. This strategy can also be utilized to move demand from one facility to another.
Using non-resident fees is a fairly common practice, and most agencies use a flat-rate percentage above the resident charge. However, this doesn’t provide agencies the ability to fluctuate fees to meet market demands. As a result, our non-resident rate is anywhere between 0 and 50 percent of the resident charge, based on market demand. So for a program that is in high demand by residents and costs $50, the non-resident fee could be as much as 50 percent higher ($75) than the resident charge. Utilizing this tactic ideally provides more opportunities for residents to participate in a high-demand program. On the other hand, if you are introducing a new program and aren’t sure if it will be viable without non-resident participation, you might charge the same fee to both residents and non-residents, giving the program a chance to become established.
Here are some other revenue-generating ideas and tactics to consider:
Create programs that coincide with popular, established programs that might grab the interest of other family members. An example is creating a 20-minute, blast-fitness class that coincides with 30-minute swimming lessons so parents can squeeze in a quick workout while their children are taking lessons. Another example is offering kids art classes during an adult-coed volleyball league. The list is endless—especially if there is space.
Remember the 80/20 Rule? Twenty percent of customers generate 80 percent of your revenue. What are you doing to keep those 20 percent loyal to your programs and services? In our department, we have no way of tracking the 20 percent, so we encourage repeat customers. Seasonal swim-pass holders are provided a discount price if they purchase passes before the end of April. We also provide a coupon booklet with other discounts for programs and services once the holders purchase their passes. In the adult sports program, we provide league winners with a championship coupon good for a reduction in cost for their next league registration in order to encourage repeat business.
Cross-marketing campaigns create awareness among current customers about other programs or services. Give summer day-camp participants coupons to attend recreational swimming free with their family. Or, add benefits onto current membership programs. Fitness members might get free entry into a museum or senior program, while service members might get a discount on a fitness membership. Identify programs or services that need a “boost” and look for those cross-marketing ideas.
Using these revenue-generating strategies and tactics will not only increase revenues collected, but will assist in moving program demand, better position programs in the market, and allow residents valuable access. Combining these strategies and tactics with revenue builders will assist in decreasing general-fund subsidies.
Alexa Pritchard is the Recreation Superintendent for the Parks, Recreation & Libraries Department for the city of Roseville, Calif. Reach her at APritchard@roseville.ca.us.