Loss Leader SCUBA

Great Dive Trips at Bargain Prices with the Sea Divers

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Posted by Bill Johnson on July 25, 2001 at 00:33:22:

In Reply to: A few things that I have been struggling with... posted by MHK on July 24, 2001 at 16:30:40:


The whole problem with the dive industry is the pay structure vs diving is a life support sport that requires skill. Lets explore how a diving professional gets paid:

1. Instruction
2. Gear Sales
3. Rental fees
4. Trip Sales / Guide fees

Since many shops use Instruction as a "loss leader", the profits here are minimal and can't be counted on to support rent, utilities, salaries, etc. Think about it, if a shop sells a class for $100, and the instructor gets $50 per student, PADI gets $15, then the shop gets $35. Lets say there are 6 students (easier to get this many during the summer, difficult to get in the winter), that's $300 to the instructor, $90 to PADI, and $210 to the shop, who supplies the classroom, pool, etc and still needs to supply the owner with a reasonable income. The instructor HAS to spend two days at the ocean (16 hours) plus any pool and classroom time. If the instructor does 3 three hour pool sessions (9 hours) and by selling a video course, is able to get away with spending only 5 hours teaching the student, that comes to 30 hours of instruction. $300/30 = $10 per hour for a professional who has to carry personal liability insurance. To spend any more time with the student means even lower wages. Even a plumber, or golf pro make at least 5 times that, and they aren't teaching life support!

So if instruction is a loss leader to get people into the shop to buy gear, lets see how well that works:

Sport Chalet turns a profit by volume sales made by low paid, mostly untrained employees. If you are lucky, the person serving you will be at least an Open Water Diver. Then there is TekDiver.com, aka Divers Discount Supply. At least their phone sales operators are PADI or NAUI instructors, who are "experts" selling last year's line of technical diving equipment. With discounters like this, everyone has to lower their prices, which results in the instruction loss leader selling DISCOUNT gear, so what's the point of the instructional loss leader then?

Rental fee income is nice, but who rents? Answer - people who got a lifetime certification that didn't want to become real divers, didn't want to dive regularly, and are having less than optimal experiences diving so they will probably quit diving altogether. Again, how much can a dive shop depend on this income to support all the shop expenses?

Trip sales and guide fees are usually a small part of a shops overall income. Sure, it might help the owner be more able to take a well-deserved vacation, but is it really a vacation? Hardly, he usually still has to be the dive leader, while leaving his shop in the hands of someone with less incentive to generate income than him.

These four factors that make up shop income are destroying the industry, the way they are currently structured. PADI (and others) make this pay structure possible by providing certifications for 30 hour diving wonders.

I think the only way to solve this problem is for PADI to increase standards by requiring more instructional time, especially pool time. Retailers would hopefully be forced to raise tuition, but they should do this anyway. Instructors would then have incentive to spend time teaching students. Shops should start discouraging rental gear, maybe by increasing rental fees or maybe by require ownership of a complete kit of gear for full certification. The current Open Water Diver cert could be a rental cert that requires that the rental diver dive with a Divemaster (I am brainstorming now). Air fill fees should increase. Now shops could more easily compete with internet and discount sellers in the gear sales area (rather than relying on an instructional loss leader in hopes that the student will buy gear there, to make up for the cheap class).

Who am I kidding? SDI / TDI will keep egging PADI on to lower standards (with others following) so loss leader classes can continue to be offered ... and the saga continues.


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