Fix your course price as it may be broken

In 2003 I wrote the following article and again pulidshed it in 2010. I have again updated it slightly but it is still just as relevant today. Dive centre owners and independent instructors often comment to me about the problem of course price cutting.

Many centre owners say that they have to set their price at a particular amount, as their competition have set a lower price for the same course, therefore if potential customers are shopping around they go for the cheapest option. When pricing your courses there are 3 basic questions you need to ask yourself – do you know why your course needs to be more expensive, what are you offering that your competitor is not and in the eyes of your customer are they are receiving the same service/certification?

It may be that your gear is state of the art, new and regularly maintained. Perhaps you pay your staff to go for their annual medical examinations? Your dive centre may be warm and inviting with a good selection of diving equipment, books and accessories. Your classroom may have comfortable seating with tables and all of the appropriate training aids and videos, with professional presentation equipment. You would therefore need a higher return on your courses than a competitor who does not invest as much in their image.

By allowing your competitor to set the course price, you may be losing money without realising it. I would recommend that you do a full pricing workshop before deciding how much to charge for any course. I can send you an excel spreadsheet on how to cost your courses, please email [email protected] if you would like a copy of this.

Now, many will argue that if you charge a higher price, your competition will gain your business. People like to compare prices before parting with their hard earned money and you have probably called around yourself for the best price when purchasing new items. However, to make your clients’ experience memorable and enjoyable, you do need to charge an appropriate fee, and this could mean setting a higher course price than your competitor.

Am I going to lose business if I do this? My answer is that you are going to lose money if you don’t! How can you possibly make a profit if you are undercharging for the services you are providing? I am often amazed to hear dive centres say they have to charge what their competition is selling courses for, as there are many centres that charge more money for greater returns.

This is a rough guide only. According to a survey conducted in April 2008, the average course price in Johannesburg, South Africa was around R2,279.

I have interviewed several dive centres in preparation for this article. They have told me that since increasing their course prices, or by always having higher course prices, they tend to sell more soft gear (masks, fins, snorkels, wetsuits and weight belts) on their entry level courses and hard gear (BCD, regulator, alternative air source, gauges, tanks and dive computers) on their continuing education courses. Many of their patrons also sign up for continuing education and dive travel! Our top ten centres have a average conversion rate of 99.98% on continuing education (The top centre having 411%!).

Bear in mind that some divers do more than one course. Please also bear in mind that history has proven that divers who shop around do not usually progress on to continuing education courses. They rarely purchase gear or join your dive trips, so by offering these cheaper courses you probably end up losing more money.

One great example of the benefit of increasing course price is a centre I visited in the south of England. They used to charge £199.00 for the open water course but now charge £325.00. They report far higher returns on profit, equipment sales and continuing education per client since the change, and are currently considering increasing their price even further. This is not an isolated example!

The top ten certifying dive centres across the countries I service have several things in common. They charge the most in their area for their courses, they have a professional looking shop (probably because they are making a profit) they are friendly and professional in their manner and image and they have decent stock levels in their facilities. Their students get a personalised service when taking courses and feel part of a community with the dive centre.

In contrast, the bottom ten certifying dive centres have the cheapest course prices in town.

Many centres need to increase their stock and improve the visual image of their facility. In my opinion, the argument for having to charge less for courses to match the competition must be inaccurate – if this were the case, why would the top ten dive centres continue to stay at the pinnacle?

Let’s compare scuba diving with other activities. I will use South Africa (SA) for my pricing comparison. I have called three operators around the country for each of the other activities, to get an average price. Please note that I am using the average scuba course price from 2008. (I am aware that many dive centres are now charging a lot less than this.)

Activity Time per person/course Price in SA
Scuba Diving 4 days R2,279.00
Sky Diving, one lesson, one jump 3 hours R1,850.00
Bungee Jump 1 jump/30 mins R650.00
Computer Course (MS Excel for beginners) 1 day (6hrs) R1000.00
Professional Aromatherapy Massage 1 hour R500.00
Golf lesson 1 hour R500.00
Gym session with personal trainer 1 hour R280.00

Let’s make the table more interesting by dividing the total number of hours taken to provide the activity, assuming that each working day is 8 hours, into the course price. I will then rank the activities according to price.

Example: Activity; scuba diving, 4 days x 8 hours = 32 hours. R2,279 ÷ 32 hours = R71.22 per hour.

Please note that the figures listed below do not include any expenses or overheads, so the figures listed below are not net profit!

Activity Price per hour in SA
Bungee Jump R1300.00
Sky Diving, one lesson, one jump R617.00
Golf lesson R500.00
Professional Aromatherapy Massage R500.00
Gym session with personal trainer R280.00
Computer Course (MS Excel for beginners) R166.66
Scuba Diving R71.22

This proves that when comparing average course price over a variety of activities, scuba diving is the cheapest to learn!

I thoroughly recommend that you re-assess your pricing policy, and in some cases fix it! Yes, it is broken if you are charging less than your costs – how can you afford to pay your instructors reasonable wages let alone stay in business, if you do not charge appropriate prices for your courses! You may say that you use the courses as a loss leader, in order to sell your potential customer diving equipment. In reality, if customers are shopping around for the cheapest course price, they will do the same for their equipment, so they may well purchase that from your competitor too!

The sad thing I found whilst re-writing this article was that for many dive centres, course prices have not changed very much in the last 7 years. I would recommend every centre runs a pricing workshop to assess if you are losing money by offering courses way below your required break-even budget.

So how do you deal with the customer who is calling around for the best price? My advice would be to educate yourself on your current business outlook. One way to do this is by ordering the business and marketing guides: Advanced Strategies for Recruiting Divers has a section dedicated to a customer calling around for best prices and how to handle this situation. Positive Approach Selling will assist you with closing the sale when a customer has come to visit you, or indeed even called you.

Many of our dive centres are already using these ideas. So how do we know they are working? They have fixed their prices and business ideas and they are in the top ten dive centres in your country!

Please email me at [email protected]  if you would like a copy of the pricing workshop spreadsheet.

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