Soaring Club Prices too Much For Van Sickle

[StrokerAce]

12 hours ago, toehold57 said:

And just played out on YouTube. This guy has 3 videos over the past few days about his “beater” clubs. Interesting, plus he has a sense of humor.
 

 

 

 

Sent from my iPad using MyGolfSpy

 

 

 

 

Make sure you turn on closed captioning!!  

 

[Golfspy_CG2]

55 minutes ago, GolfSpy Barbajo said:

The dude misses one very important point about any business - margins. 

IF what he says about declining participation is accurate, and IF you know the market for drivers is declining (meaning fewer drivers overall are going to be sold year after year), and IF your goal is margin and not market share, your prices will be going up. If your goal is market share then sure, your can cut your prices, but how many more will you have to sell to get to the same profit in dollars than if you left the price alone?  

If you have a profit margin of 20 percent on your product when you sell it to a retailer, and you decide to cut your selling price 15% (ONLY!!!!), and guesses on how much your volume would have to increase in order to make the same profit dollars as you would have if you had just left well enough alone?

Try 300%.

You would have to sell THREE TIMES AS MANY DRIVERS just to get back to where you were before you made the market share grab. But even that number is a little shady, because everything you do is going to have to triple - you'll need more inventory, you'll need more warehouse space, more manufacturing capabilities, more order-entry, more sales people and more advertising to get people to reach for your product compared to someone else's - and we're talking only a15% percent price cut. If your retailer passes that price cut on to the consumer, a $399 driver would be selling it for $339.  Is THAT kind of a price cut going to get you 3 time the sales?

On the other hand, if you were working on a 20% margin and actually INCREASED pricing 15% - now selling that $399 driver for $459, you could LOSE 43% of your sales and still stay whole profit dollar-wise. 

And both scenarios assume your cost of goods sold doesn't change which, of course, it will.

Hmmmmm.....

Which would you do?

This may seem like a slight oversimplification - and in some ways it is - but ultimately the math is the math is the math...

 

You nailed in John!

In my previous life, hotel GM this was a constant discussion, and to me there was only one right side....ha suprise I know.

Question for the class.  You are a hotel manager, on one given night would you rather:

A) Sell 135 rooms at $125 a night

B) Sell 125 rooms at $135 a night

or

C) Sell 115 rooms at $150 a night 

Try and answer without doing the math.   This is a very simplified version of revenue optimization that hotels and the airlines before them...and now 30 years later golf courses are starting to get into.   

When I would give this sample to a new training class is was always shocking to see the answer and even after explaining the why's behind it that john laid out.  But it always without fail led to interesting discussions that I enjoyed leading/taking part in. 

[GolfSpy Barbajo]

13 minutes ago, Golfspy_CG2 said:

You nailed in John!

In my previous life, hotel GM this was a constant discussion, and to me there was only one right side....ha suprise I know.

Question for the class.  You are a hotel manager, on one given night would you rather:

A) Sell 135 rooms at $125 a night

B) Sell 125 rooms at $135 a night

or

C) Sell 115 rooms at $150 a night 

Try and answer without doing the math.   This is a very simplified version of revenue optimization that hotels and the airlines before them...and now 30 years later golf courses are starting to get into.   

When I would give this sample to a new training class is was always shocking to see the answer and even after explaining the why's behind it that john laid out.  But it always without fail led to interesting discussions that I enjoyed leading/taking part in. 

The best business speaker I've ever known - the late, great Larry Steinmetz - put it very simply: How many of you would be willing to work three times as hard as you're working right now and make the exact same amount of money you're making right now? Go ahead, raise your hand...

[Golfspy_CG2]

4 minutes ago, GolfSpy Barbajo said:

The best business speaker I've ever known - the late, great Larry Steinmetz - put it very simply: How many of you would be willing to work three times as hard as you're working right now and make the exact same amount of money you're making right now? Go ahead, raise your hand...

Perfect!