Running a dropzone…hhmmm… it takes a special kind of person, doesn’t it? The stress, oh the stress. The unpredictable variables of weather, unexpected aircraft maintenance, staffing challenges, serious injuries, fatalities, lawsuits, employee classification challenges, annual increases in gear prices all for: _______________? What word do you use to fill in this blank? The word you likely won’t use is money and it’s because we’ve been undervaluing the price of a tandem skydive and our instructors for far too long.
While money doesn’t bring happiness, it does bring comfort when it’s time to retire, but the business models for too many dropzones hardly make all the stress worth it. I would like to see DZO’s start getting paid by charging the correct price for a tandem skydive. Market conditions say it’s now time. We are finally in a period that extends beyond the shadow of Groupon. We’re in another crisis, but the new state of things allows us to pivot, and pivot we must. To see turbine and 182 operators selling tandems for less than US $200 is madness. If COVID has done anything for us, it’s given us an opportunity to make this pricing change now.
4 Reasons Why Now Is The Time To Raise Rates
1. Staff Shortages
Prior to COVID, finding enough staff was a major challenge. Now, it’s worse. TI’s from international countries can’t get into the US to work and many US-based TI’s were making more on unemployment than they were doing tandems – no one can blame them for not wanting to jump when offered to make less money and being exposed to the virus. Because of this shortage, booking availability (supply) has decreased. According to the laws of supply and demand, when supply is low and demand is high, prices increase… or prices should increase.
2. Staycations
As in 2009, people didn’t have the money to go on vacation and so our DZs were busy. Today, few people want to fly commercially and the cruise industry is figuratively sinking. Despite the global pandemic, people were looking for things to do which included skydiving; many DZs have been operating at full capacity all summer. For those who did have enough staff, US-based DZs experienced volumes not seen in over ten years.
3. Increasing Expenses
The price of a tandem skydive has not increased commensurate to the expenses involved with running a tandem operation. The cost of equipment grows every year (without fail), as does the cost of aircraft insurance and the expense to maintain all of our equipment (and I’m just scratching the surface). Furthermore, tandem instructor pay hasn’t been progressive through the years which isn’t right when considering what tandem instructors put their bodies through on a busy Saturday. It’s little wonder we are seeing such a shortage in TIs and such high burnout as TIs often give more than they receive both in appreciation and financially. This stings to read, and if it doesn’t sit right, start polling your TIs.
4. Employee Classification
It’s a slow-moving iceberg. We see it on the horizon and in the case of California and other states, it’s already here. Now more than ever, states are looking for ways to make up for lost revenue. California stands to gain massively (hundreds of millions of dollars) from Lyft and Uber pending the result of a court battle between the rideshare companies and the state. Don’t let an audit force you into changing employee classification as the penalties could be enormous.
Having employees instead of contractors is more expensive and your customers will have to pay for that added cost. Too many DZOs are not being aggressive enough to deal with this impending problem; get ahead of it before it’s too late.
If Not Now, When?
For DZOs in competitive marketplaces, you’re probably reading this with great frustration because you want to raise your rates, but are fearful of losing market share to your competitors. This is a legitimate concern, but the truth of the matter is you’re not making enough money as it is. In this game of price-chicken, someone has to make the first move and it’s time to boldly rip the Band-Aid and forge ahead recognizing that less volume with higher margins is far better than medium volume at low margin. None of this easy and it’s gut-wrenching, but it’s either die a slow death or make the change.
As a consultant to my clients, I have been working with various DZs around the country to encourage and push them to raise their rates. It was scary, but I can report back that all who have done it have no regrets.
