When to Charge a Cover
XS, Marquee and Hakkasan. What do these three notable nightclubs have in common? Yes, they're all based in Las Vegas and bring in some of the biggest dance music acts on planet Earth, but they're also the top grossing nightlife establishments in the nation, according to Nightclub & Bar's 2014 Top 100 list.
Lets use Marquee as an example. This venue is believed to have brought in anywhere between $85,000,000 and $90,000,000 in 2013. Those are heavy numbers, but anyone can tell you that all of that revenue isn't brought in just at the bar; a lot of it is attributed to entry costs.
However, not every club on the block can ask for the cover charge prices that these major players request, but there is a time and situation where you potentially could.
If you're looking to produce some revenue at the door, it's best to know when to implement a cover because even some of these high-rolling venues have some nights where there's no charge once you get past the velvet rope.
“A venue should be charging cover when they're hosting a special event or have a captive audience," says seasoned nightlife pro and CEO of iEvents.comDustin Mantell.
Although bottle service may be the bread and butter of your business, there's no way your going to limit yourself to that aspect. Instead, the "filler crowd" should be charged a cover, while those that opt for the table can skip that process altogether.
What's a "filler crowd" you ask? Well, there's no way your venue offers enough tables for everyone to opt for that service, and you surely don't want your venue to look empty, so that's where they come in, according to Mantell.
"Even though these nightclubs are selling out all of their tables, the space will look empty if there’s no filler," he says. "The filler crowd may not be sitting at the tables but they're bringing in revenue for you by purchasing drinks at the bar."
But remember, deciding to implement a cover charge isn't as easy as flipping a switch, some homework has to be done.
"Cover charges can be tricky because if you charge too much then you'll turn away customers," says Karla Ortiz, national accounts director at Wantickets, one of the nation's premiere online ticketing services that works with some of the top nightclubs in the country.
She believes that gauging the price at the door comes down to really knowing your audience. "An event that's intended to draw a hipster crowd wouldn't normally charge $60 at the door, even if it's a 'special' event. That's obviously a number that clubs in the upper echelon of nightlife can get away with."
There's also a risk of turning off some potential new visitors, as well as lower the bar spend, says Mantell. "It can also definitely skew the ration between men and women," he adds.
One thing’s for sure, if you have a special event coming up at your establishment, that's definitely green light to charge at the door.
"When you book a special DJ, or entertainment outside of the regular scheduled events, go for it," Ortiz says. "Holidays like New Year's Eve and Halloween are prime times as well."
There's nothing wrong with producing a little extra revenue at the door, but as always, gauging your audience is best, and unless you're booking the David Guettas and Steve Angellos of the world on a daily basis, it's best to put the charges into action when special events come around.
“Outside of that, it's really all about supply and demand,” Mantell says.