Cost of a round to the club

[inc0gnito]

There’s a couple of threads about the price of a round of golf and it got me thinking about how golf clubs decide on prices.

Why are the green fees the price they are? if you own a golf course, how do you decide what to charge for a round? Maybe it’s an odd question given there will be lots of variables but what does it cost to run a course and what would be the minimum cost of a round to pay the bills.

 

[Fabia999]

quality of the course and prices compared to local courses. supply and demand, loads of visitors usually increases the price the following summer.

 

[Jimaroid]

A club should charge the highest their market will take.

It’s just good business sense. The problem is many clubs don’t seem to know what market they’re in.

 

[fundy]

Huge amount of factors go into it; what type of club members or proprietary, how many members, demand for visitor tee times, how many tee times are spare (and at what time), what impact does having green fees have on the members, membership cost, what are competitors charging, how much do visitors spend in the shop/bar, how many visitors return regularly, how many visitors can be converted to members and so on. The price elasticity of demand is crucial for clubs to understand but very few seem to look at this it seems to me

 

[IanM]

Lots of good stuff above, and I would add the following about "what part of the operation green fees are."

Old members clubs might cover their fixed costs with subscriptions and green fees are the icing on the cake. They can manage demand by managing price up and down.

A large resort like Celtic Manor sees it the other way round. Revenue per visit is miles higher for hotel guests and day visitors. Some aspects of life would be better for them if they had no members. Fees can be varied online to meet targets and manage demand. If booking are low, they email out some very cheap green fees, much to the annoyance of members who have paid their annual sub!

Other clubs are at different places along the continuum of the two examples above.

 

[sweaty sock]

Is it not as simple as, fixed and variable costs, so wages, fertiliser, projects, machine repair, depreciation, utility bills. Divided by number of tee times in a year. Then identify the likely number of tee times taken by members, and the number of memberships that cover those. The difference needs to then be covered by the green fees related to how many of the remaining times are likely to be sold.

Once youve made those call, its time to investigate local, comparable, prices and see wether you have a viable business.

 

[sunshine]

Is it not as simple as, fixed and variable costs, so wages, fertiliser, projects, machine repair, depreciation, utility bills. Divided by number of tee times in a year. Then identify the likely number of tee times taken by members, and the number of memberships that cover those. The difference needs to then be covered by the green fees related to how many of the remaining times are likely to be sold.

Once youve made those call, its time to investigate local, comparable, prices and see wether you have a viable business.

I think this is a good start, but there are a load to things you need to overlay depending on the type of club:

- Proprietary club is being run for profit, so there needs to be enough margin to make an acceptable return on capital employed: think of the loans / funding going into buying the club and whether this could earn more invested elsewhere.
- A resort course is probably using golf as a loss leader to bring guests into the hotel, and making all its money from food and drink. Low pricing to suck people in.
- A struggling private members club is topping up its membership with green fees so needs to work out how to plug the hole. Pricing to attract visitors.
- A popular private members club is probably in a position where green fees are a bonus to go towards improvement projects. Pricing is probably more based on perception and aspiration rather than value.

 

[jim8flog]

I am sure our club in the past (donkeys years ago) has just plucked a figure out of the air and tis has just increased year on to allow for inflation.

However our tee times are in high demand from the members so I guess it is a supply and demand issue.

 

[Grizzly]

Something interesting I was told by one of the bigwigs at our place - the cost of a full price/Golfnow type green fee is largely influenced by the need to have a sustainable half price rate available to offer to members guests and county card holders - so if the figure the club needs per round were, say, £20, then that would be the rate of those cadres (who bring a benefit to members and therefore motivate sign ups and remainers) then the "full" version needs to be twice that to make the value clear.

 

[inc0gnito]

Thanks for the replies. I do feel guilty at times of using things like GolfNow to get a vastly cheaper round of golf. If I knew, even at the low cost, it would “cover the cost” rather than playing at a loss, I’d feel better about it. At the same time, I’ve always felt golf was overpriced but had nothing to base that on other than comparing the price of a round to the price of other leisure activities which are almost always cheaper.

 

[sunshine]

Thanks for the replies. I do feel guilty at times of using things like GolfNow to get a vastly cheaper round of golf. If I knew, even at the low cost, it would “cover the cost” rather than playing at a loss, I’d feel better about it. At the same time, I’ve always felt golf was overpriced but had nothing to base that on other than comparing the price of a round to the price of other leisure activities which are almost always cheaper.

You shouldn't feel guilty. The clubs set the price on golfnow - it is 100% their decision. These tee time companies aren't vast businesses crushing the poor little clubs.

 

[Smiffy]

Thanks for the replies. I do feel guilty at times of using things like GolfNow to get a vastly cheaper round of golf. If I knew, even at the low cost, it would “cover the cost” rather than playing at a loss, I’d feel better about it. At the same time, I’ve always felt golf was overpriced but had nothing to base that on other than comparing the price of a round to the price of other leisure activities which are almost always cheaper.

4 players on the tee paying £25.00 a head is a lot more beneficial to a club than 4 players not on the tee paying £100.00 a head.

 

[NearHull]

I believe the Golf Now business arrangement is that to use the Golf Now resources ie ClubV1, BRS, the club has to give Golf Now one tee time a day ( or similar). The club doesn’t receive any monies from that tee time.

 

[Crazyface]

I believe the Golf Now business arrangement is that to use the Golf Now resources ie ClubV1, BRS, the club has to give Golf Now one tee time a day ( or similar). The club doesn’t receive any monies from that tee time.

I think you maybe correct. My place NEVER had t times on golf now. They've introduced BRS and I've just checked. There are T times on Golf Now...now.

 

[sunshine]

I believe the Golf Now business arrangement is that to use the Golf Now resources ie ClubV1, BRS, the club has to give Golf Now one tee time a day ( or similar). The club doesn’t receive any monies from that tee time.

Interesting.

Surely they are offering the club a discount in the price of BRS or ClubV1 in exchange for the tee time.

I'm sure there are plenty of private clubs who use BRS etc but don't offer tee times on Golf Now.

 

[sweaty sock]

Pretty sure the deal is as described, part of the cost of BRS is a tee time everyday to be sold on golf now at their discretion.

Maybe theres a way you can buy out of that clause?