Revenue Throttles

One of the keys to long term success and sustainability is the use of Revenue Throttles. Revenue Throttles put pricing control in the field to maximize revenues while managing your communities’ expectations. There are three main areas I look at for developing revenue throttles, they include:

  • Use Resident and Non-resident pricing
  • Discounts
  • Wait Lists

Resident and Non-Resident Pricing

The use of various pricing points can help balance facility capacity levels and customer satisfaction. Many communities will charge a higher rate for non-residents users as opposed to resident users. There are a couple reasons for this. The main reason communities consider this structure is due to the fact that the local resident tax dollars paid to build the facility. The throttling opportunity comes with how much more you charge for the non-residents. When a community is growing, they will likely need to build a larger facility to meet future needs. But without the population required to fill the facility to capacity, non-resident users are needed to increase operational sustainability. In this scenario, non-resident pricing may only be slightly higher than the resident rate. As the local resident population grows, managers can increase the non-resident rate to deter them from coming and increase the resident satisfaction.

 

Discounts

Everyone loves a discount. While most communities try to keep the facility price affordable, I prefer pricing the facility at its appropriate value and providing discounts to make sure everyone has a chance to use the facility. The also gives throttling opportunities by discontinuing discounts as higher revenues are needed. This way a facility doesn’t actually have to raise pricing each year, but can increase revenues.

 

Wait Lists

Keeping programs full is always a challenge. The use of a wait list will provide a “backlog” of users. I’ve seen this be very useful with swim lesson programs. One benefit of using a wait list is to give preferential treatment to residents. Some facilities will allow residents to sign up immediately, but non-residents must join the wait list. This allows them to give residents preferential treatment, but still fill all classes to achieve revenue goals.

 

In summary, creating an economic engine to support your vision will provide a fiscally sustainable enterprise including water, features, and programs in concert with the community for many years to come. Using Revenue Throttles in your business model will help create a sustainable facility that meets the customers’ expectations and provides a tremendous value to your community.

 

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