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#1
08-10-2007, 03:51 AM
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$7.50 (tax not included) or $8.00/$8.25 (tax included)
My friend and I are opening a mini-golf course here in Vegas and have run into a disagreement about pricing. Do we include tax in the posted price? The desired pricing is $7.50 for kids, $8.50 for adults. Having it as such means that with Nevada's 7.75% sales tax, Kids are actually $8.08 and adults $9.16
Arguments for including tax: -Looks professional. -Don't have to keep, and deal with, large amounts of small change. -If we go with $8.25/$9.25 we'll make an extra $6900 per year. -Most entertainment options charge in whole dollar(whole quarter) amounts - Movies are $9.25 tax included, museums, baseball games, etc. -Charging tax on top and giving people .92c change would, in the words of a gambling friend, "cause massive tilt." Arguments for not including tax. -The perceived cost is $7.50, not $8.08. People remember the number the saw, $7.50, and not the number the paid, $8.08 -If we were to go with $8/$9 (instead of $8.25/$9.25) we'd make an extra $6500 per year by not including the tax in the price. -People now have change in their pockets for use in our video games and vending machines. (obv, if we were to charge 8.25, this would also be true) -The increase in perceived cost would cause a loss of business. -There is a theory of marketing that says that value is perceived in odd numbers, luxury in even numbers (observe car pricing). -People assume you're going to charge them tax anyway. summary of profits assuming change in price does not effect # of customers: $7.50/$8.50 (tax not included) = Base + $6500 $8/$9 (tax included) = Base $8.25/$.9.25 = Base + $13,400 The crux of the question is, How will adjustments in pricing effect our bottom line. Which pricing plan will create the most business and generate the most profit. I'm having quite a contentious argument with my business partner, so I'd really love some outside input. 
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#2
08-10-2007, 03:55 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
Most people don't drive by some miniputt place, look at the price and say "holy crap that's such a good value we can't pass that up." They plan out that they're gonna go to play miniputt. I don't think they would then care about the extra dollar. Go with tax included.
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#3
08-10-2007, 03:56 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
I can't think of any entertainment type stuff that charges sales tax on top of the listed price. I was actually unaware that sales taxes applied to stuff like movie theaters etc.
Edit: actually, now I can think of a lot. There is still no way you shouldn't just build it in to the price.
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#4
08-10-2007, 03:56 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
But once they come in, play a round, are they going to come back? Are they going to tell their friends, "but it was too expensive..."
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#6
08-10-2007, 03:57 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
Can you expound on why?
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#7
08-10-2007, 03:59 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
No mini-golf players give a crap between listed prices of $8.50 and $9.25 .
There's no real psychological issue here, because they won't be comparing it to anything. All they'll know is the mini-golf game costs $9.25. It's not like someone will see that and say "geez, if this was listed as $8.50 I'd play, but not when it's $9.25" Go with tax included
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#8
08-10-2007, 04:00 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
[ QUOTE ]
Can you expound on why? [/ QUOTE ] For one, most people that are going to your place have probably been to other ones. Unless those places do the same thing it will seem really odd. It would definitely throw me for a loop.
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#9
08-10-2007, 04:01 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
As an ex-concession carts owner who has experienced selling massive amounts of low priced items in volume, you've thought of most of the pros and cons.
Might I add one that might sway you. If you and your partner don't intend to run the register yourself, adding tax after the price makes it tougher for young would be thieves to pocket money without an inventory system in place. example: If the price is $7.50 per child, two children are $15, very easy to steal. Where as if two children is 16.16 a bit harder to scam the money. If your register person is determined to steal, they'll find a way, don't go out of your way to make it easier on them. Especially in a place like a mini-golf where there's no real inventory system in place. Good luck with your new venture. [img]/images/graemlins/smile.gif[/img]
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#10
08-10-2007, 04:10 AM
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Re: $7.50 (tax not included) or $8.00/$8.25 (tax included)
[ QUOTE ]
[ QUOTE ] Can you expound on why? [/ QUOTE ] For one, most people that are going to your place have probably been to other ones. Unless those places do the same thing it will seem really odd. It would definitely throw me for a loop. [/ QUOTE ] The only other Mini-golf place in vegas is at the Circus Circus. Not sure how they do their pricing. A brief check of random mini-golf places that have websites, none of them say whether or not tax is included.
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