Two weeks ago we received an excellent question:
“Where are the cost formula's or how do clubs/bars come up with a fee/price for charging customers for any of the following:
- VIP packages
- Booths (UK)
- Tables / Bottled services
- Advanced booking fees”
One of our readers shared his advice, as did one of our contributing authors, industry expert Whitney Johnson. The helpful reader, Erik Shellenberger, explained that he works for several venues that offer table and bottle service, including Maya Day+Nightclub located in Scottsdale, Arizona. For that venue, surrounded by competitors and situated in an entertainment district, Erik uses what he refers to as basic market value pricing.
“[A] table is ‘worth whatever a customer is willing to give you for it.’ If you offer a slightly better customer experience then adjust accordingly,” says Erik. “Our pricing starts low if planned in advance, say around $600 for 2 bottles and goes up as the place starts getting packed the night of. The last table could go for twice that amount or more.”
Whitney, the founder of BookBottles, works with nightclubs from around the world to better manage their venues by using integrated technology to their advantage. She supplemented Erik’s advice.
“It's all about understanding what your customers will pay in return. The three items to focus on to understand what they'll pay are market research, target market, and profitability,” she says. “Use trends and data to understand pricing structure in your geographic area, with your target market's demographic, and with your direct competitors.”
In terms of trends and data, operators need to remember to look at their own business and include that in their research.
“I also recommend collecting data on your own venue and understand your own personal trends, including when demand increases and what activities attract your best guests,” Whitney says. “That way, you'll understand how and when to increase your prices as demand increases to increase your margin and profit potential.”
A source that requested to remain anonymous broke bottle and table pricing down to its simplest terms. The most common practice for determining pricing is to do a study that involves looking at the competition’s prices for comparable services. Once the study is complete, an operator and/or management should determine where their venue fits within their market segment so that they can price bottles, tables, etc., accordingly.
However, it’s important to keep in mind that some brands employ reps that will be very active – and helpful – when a venue begins offering VIP services. Some brands will request specific pricing tiers for their products and offer more favorable pricing to get their way. As always, remember to speak with your distribution reps and brand ambassadors to see what they can do for you and vice versa (within the confines of the law, of course).
Menu pricing, development and design will be one of just the many operational topics discussed during the 2016 Nightclub & Bar Show in Las Vegas. We’re just a couple of weeks away so remember to register now and use discount code SAVE30BARNEWS to receive $30 off of your Conference Pass.