Air fill cost/price
- Thread starter Rick Murchison
- Start date
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ScubaDad1968.
There is probably a niche for the business model you suggest as a storefront but the whole point of going to a bricks and mortar establishment is to feel and touch. I can stay home and view merchandise on a screen and have it delivered. Every online merchant I can think of is the LDS is someone's neighborhood so the dual role operation is nothing new. As mentioned, a stock commitment is required to get acess to most major brands.
I would say that you must sell tank fills and be competetive.
Done right there is good money in training. You need to do it well so people will value your services enough to make it profitable. Likewise for the service side of the business. Auto dealer shops figured this out a long time ago. There is a market for knowledgable excellence.
Pete
There is probably a niche for the business model you suggest as a storefront but the whole point of going to a bricks and mortar establishment is to feel and touch. I can stay home and view merchandise on a screen and have it delivered. Every online merchant I can think of is the LDS is someone's neighborhood so the dual role operation is nothing new. As mentioned, a stock commitment is required to get acess to most major brands.
I would say that you must sell tank fills and be competetive.
Done right there is good money in training. You need to do it well so people will value your services enough to make it profitable. Likewise for the service side of the business. Auto dealer shops figured this out a long time ago. There is a market for knowledgable excellence.
Pete
manni-yunk
Contributor
Agree in most instances, and most industries - but - I know NESS, which does most of its business online - stocks a TON of line items. AND - they are smart - they purchase in BULK, and always have a lot of stock- which is a firm commitment during the negotiation of per unit pricing.
I love going in there - they seem to have EVERYTHING, all the time. In a world where many dive shops seem to struggle - they stay busy - and BTW, they do very little to no training.
Let me see if I can lay this out properly... for what we spend during a year.
Two years ago, we replaced our 30 year old compressor. We spent 13k on a Coltri. We spend probably 50 dollars per year on fixing valves, seat, din fittings, on the whips. We spend a few about 500 per year on synthetic oil. We spend about that much on filter changes (We rebuild our own). We spend about $250 per year on gas analyzing. We send it off to texas. Shipping is another 25'ish dollars. Our electric bill is about 500/mo. 300'ish per month is from running the compressor. My mind just went blank, but I think we adjust the valves two times per year, that's about $600 (plus the transportation and man hours it takes to get the compressor to the mechanic).
Conservatively, that's $18000+ or about $6000 per year after the initial purchase of the compressor
Now, we charge 5 dollars per air fill. Interestingly enough, that's 3600 fills to break even. If we filled 5 tanks per day, every single day of the year (and we have weeks where we don't get a single gas fill) it would take us two years to break even. Considering that we're not open every single day, and a lot of times when it's cold or rainy we won't sell any air fills, and it realistically will be 5 years to break even. And guess what.... at about 5 years, you can expect a complete overhaul. Guess how many thousands of dollars that will cost?
We just raised our price from 4 to 5 dollars. We had been at 4 dollars for more than 20 years. People were upset over the extra dollar, but geesh. How much has the cost of business been inflated?
Two years ago, we replaced our 30 year old compressor. We spent 13k on a Coltri. We spend probably 50 dollars per year on fixing valves, seat, din fittings, on the whips. We spend a few about 500 per year on synthetic oil. We spend about that much on filter changes (We rebuild our own). We spend about $250 per year on gas analyzing. We send it off to texas. Shipping is another 25'ish dollars. Our electric bill is about 500/mo. 300'ish per month is from running the compressor. My mind just went blank, but I think we adjust the valves two times per year, that's about $600 (plus the transportation and man hours it takes to get the compressor to the mechanic).
Conservatively, that's $18000+ or about $6000 per year after the initial purchase of the compressor
Now, we charge 5 dollars per air fill. Interestingly enough, that's 3600 fills to break even. If we filled 5 tanks per day, every single day of the year (and we have weeks where we don't get a single gas fill) it would take us two years to break even. Considering that we're not open every single day, and a lot of times when it's cold or rainy we won't sell any air fills, and it realistically will be 5 years to break even. And guess what.... at about 5 years, you can expect a complete overhaul. Guess how many thousands of dollars that will cost?
We just raised our price from 4 to 5 dollars. We had been at 4 dollars for more than 20 years. People were upset over the extra dollar, but geesh. How much has the cost of business been inflated?
manni-yunk
Contributor
Not sure your math makes sense. Might be some exagerated assumptions in there.
First you say that you spend 300/month on electricicty for the compressor - and you use this itemized number throughout the year to substantiate a 6k/yr operating cost of air - then - state that you go weeks at a time without selling a fill?
300/month on elec would be a lot of motor time, which would only be necessary if you are selling a lot? Right? Higher operating costs on a compressor should be directly proporational to the actual use (sales of air). Otherwise your oil, filters, electricity, etc - would all be cheap since you are not using it.....
Im not saying that your 1 dollar increase isnt justified - as I believe 5 for an air fill is TO CHEAP - but - the math in your scenario seems suspect
I'm not saying there is any money in air fills but $300 worth of electricity at 12 1/2 cents a KWH would run a 7 1/2 hp compressor for about 360 hours which should fill close to 1500 empty 100cf cylinders. my filtration on my baby compressor costs about 50 cents a fill. In Playa del Carmen where electricity is 25 cents a KWH wholesale air fills are about $2.
Dr. Lecter
Contributor
What Manni said. If it costs you $6k/yr to run a compressor, you're running one hell of a compressor system an awful lot. Which is cool, but it means you're filling a lot, too, so don't expect me to give a 
about your overhead costs being high due to the volume of sales you're doing. Not to mention the fact that most shops have a compressor for filling their own rental/charter/class tanks, all of which also factor into the overhead and brings in profit above the $5/tank private fills.
Conversely, $6k/yr is a laughable figure for someone who might be looking at running their own compressor. Will they ever get fills for less than $5/tank running their own? No idea, though I'd factor the costs of gas, time, and aggravating shop monkeys into the $5/tank figure, which raises the cost of such a fill markedly. But what I'm sure of is that someone running a minimalist compressor system the little bit required to cover the fills used by a single diver/family of divers won't have nearly the overhead costs Superlyte is talking about. It's more like apples to elephants than apples to apples.
about your overhead costs being high due to the volume of sales you're doing. Not to mention the fact that most shops have a compressor for filling their own rental/charter/class tanks, all of which also factor into the overhead and brings in profit above the $5/tank private fills.Conversely, $6k/yr is a laughable figure for someone who might be looking at running their own compressor. Will they ever get fills for less than $5/tank running their own? No idea, though I'd factor the costs of gas, time, and aggravating shop monkeys into the $5/tank figure, which raises the cost of such a fill markedly. But what I'm sure of is that someone running a minimalist compressor system the little bit required to cover the fills used by a single diver/family of divers won't have nearly the overhead costs Superlyte is talking about. It's more like apples to elephants than apples to apples.
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