“They Must Be Making a Killing Off This Place...”
When I hear that line, I know this about the speaker: They know little to nothing of business, economics, and supply & demand.
The particular time I’m thinking of was at a ‘bouncy house’ type of place — basically, the customer pays to jump on fields of trampolines. The speaker is thinking that all the company has to do is put in the trampolines, hire a guy to sell tickets, then sit back and rake in profits.
If it were that simple, we’d all be running bouncy houses.
I am not in the trampoline industry (or peripherals), but I can guess a few costs the company has that make them charge the prices they do.
First, there’s the starting capital. That is, the building or space if purchased, the computers, the trampolines, the pads, the pits, the couches, the cubbies, and so on. The business needs to make the money to pay for the costs it has already accrued.
Building: If purchased, it still incurs property taxes. If rented, there’s the rent.
Utilities: Lighting, washroom facilities, power, heating, cooling, etc.
Insurance: Location insurance, such as fire and theft, as well as liability. (Each bouncer signs a waiver, but what does that mean?)
Cleaning: With that many people, and that much space, it takes a lot to keep clean. The company must pay someone to do that cleaning.
Maintenance: The couches will need to be replaced after a few too many soda spills, but more importantly, I’d like to believe the trampolines are being well taken care of.
Employees: Not only the guys selling tickets and applying wristbands, but the ones taking care of all the rest of the aforementioned stuff and the paperwork for it. i.e. Accounting, marketing, purchasing, customer database managing, legal issues, and so forth.
I’m sure there are even more costs I can’t think of at the moment — such as the business license — oh, and taxes — but the bottom line is, to quote Bastiat, there is the seen and the unseen. In this time of high regulation and taxing of businesses, lack of responsibility of consumers, and wide variety of methods with which to occupy our time, it’s surprising when a company can make it at all. If I’m there bouncing, and I’m thinking how much I like this service, I WANT the company to make a profit. No profit = no business. And if it takes $8 an hour — or, er, $9 now — then I guess I’m willing to pay that. And you, speaker of that line, were there, which means you were willing to pay it too.
TANSTAFL