Interesting business models at play here

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Posted by wet one on June 22, 2009 at 12:32:14:

In Reply to: Are all of us on the this board just stupid or just brain dead? posted by Diverdan on June 21, 2009 at 20:30:23:

It used to be in the "old days" when the dive shops chartered boat trips and only made enough margin on dive chartes to get a few free spaces. That was about it. They did it to provide a venue for their new students, and the experienced divers, so they could dive each weekend. Those dive shopes made their income on the sales of the dive gear, the rentals, etc.. that went along with it. Not the boat trip. They priced the boats to essentially "break even" over a year.

Now a days, there are some "shops" or "clubs" that are essentially "travel agents" or whatever you want to call in that they do not have the same business model of a brick and morter dive shop. They likely do not teach any classes, nor do they sell or rent gear.. so they have to depend more on a higher gross markup of the trip's costs to make more bottom line profit. These shops typically pay say.. hypothetically for a single day Catalina trip.. the shop pays $100 per diver from the boat.. but they in turn charge the diver $140 retail. Thats a 40% gross markup on cost. Out of that, comes their business costs and expenses, and bottom line profit. Just like any other business.

From the "shop's" perpective there are two different business models are at play here in term of setting retail boat ticket price. Two different income streams. I'm not sure one pricing model fits all.

Now.. whats interesting is to throw into the mix is the dive boats themselves that run "open boats". They are selling the trips direct to the diver without a shop involved.

So.. the dive boats are competing with the very shops that may charter with them.

Man.. thats a tough situation to be in. Competing with the hand that feeds you.

I guess it depends on if they continue to feed you, support you, or not.

Do divers dive "with a shop" because of the social aspects.. hang with a certain group, or do they pick out a boat due to boat amenities, crew, capabilities and range?

I suppose its a mix of both.

Some divers go with the "group" and thats what is important and follow a group to any boat.

Some "like the boat" and dive on boats they like.

If I were a dive boat owner (heck no way, thats too much work).. and if I already had in place all the overhead of running open boats (ie. a web site, taking reservations, taking deposits, being paid via charge card... having the very same overhead a travel agent or club has) then I'd be very tempted to consider going to an all "open boat" business model.

Sell the trips to the divers direct.. at the same price they sell to the shop.. or near the same.

I wonder how the market of divers would react when trips now cost $100 vs $140 (per day, avg. Catalina trip)

But I guess it depends on the risk they are willing to take. And if they have the customer base and exposure to make it work.

A boat dealing direct, has the potential.. the potential to better control the "quality" or the experience of the trip.

For example, some "clubs" or "shop's" divemasters are .... control freaks. They think that a long and ardous speech or briefing will make you less likely to do something stuid when you are on your own underwater. (a false sense of security in my view.) Some shops customers and rep's also frown on your legal right to take game withing the laws and create an environment that frowns opon those that do so.

Some shops representatives or DMs are lame... the DMs are asleep when customers are in need. And some some shops customers tend to rape and kill anything that moves in the ocean. And the shop reps take a "dont care" attitude. This puts the boat at risk from potential fines from F&G.

A boat captain could very closely buypass all this shop induced variability in terms of "quality of experience" and the boat themselves set the desired tone and trip experience, and be consistent... If they do it right, that might be a good business model.

Heck.. the dive boat should just charge open boats "cheap" and see sell direct.. see what happens then. The "shops" that have a hard core "following" of divers will follow them to wherever.. they hope. Or.. will they? Will they deal direct with the boat?

Another alternative model.... could be.. that the dive boat charges more to the dive "shop" that charges more to their customers. I.e. If say a dive shop were in say.. in Hollywood they have a client base that is willing to pay more.. thats great for that shop owner. Good for them supporting and couraging the capitalist way. Along that same thought, then perhaps the boat owner using that same line of thinking should charge more for a charter to that very same dive shop. Heck if the market will bare it.. why not.. The shop owner "charges what they can".. the boat owner should try to do the same with the chartering shop.

Actually, I hope all of them "survive" and are prosperous.

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