Open Water Course Pricing Options -

Open Water Course Pricing Options

Article by Mark Powell

The Initial Question on Pricing

During an instructor course I always ask my instructor candidates to do some research and find out what is the typical price of an Open Water diver course in their region. Take a minute now to answer the same question. How much is an open water course in your area?

The answer will vary depending on where you are in the world but around 400-500 Dollars, Pounds or Euros is typical. Some maybe a bit less and some may be a bit more.

Now consider another question, how much is a car in your area? This is a much more difficult question; it will depend on what type of car you mean. It could be anything from $3,000 to $300,000. Let’s try something simpler then, how much is a bottle of wine in your area, again this isn’t an easy answer it could be anything from $3 to $3,000.

Context Is Everything

Why is it that the question about the price of open water courses is relatively easy to answer but the questions about the price of a car or a bottle of wine are almost impossible to answer? The reason is that the question about the car or bottle of wine only makes sense if we know what type of car or what type of bottle of wine we mean. There are cars that are very basic with no additional facilities and made as cheaply as possible, there are mid-range family cars that have a few more features but still at an affordable price, there are high performance cars designed to be as fast as possible but at a higher price and then there are very high-end luxury cars with every possible addition and gadget at a price that is higher than the cost of some houses.

The fact that there is a wide range of levels of quality and features available means that there is a wide range of prices. The interesting thing is that there are people who will buy the basic, low-cost car, others who will buy the mid-range option and others who will be very happy to spend what is more than many people earn in a year on a high performance or luxury car.

Why Are Dive Courses Treated as One-Size-Fits-All?

Yet when it comes to scuba diving courses, we treat them all the same. We do not consider that some courses may have additional features and quality that might command a higher price. We do not consider that there are some customers who want a low-cost basic course and others that want a higher-end course.

If you are reading this article, I am going to assume that you want to provide good quality course and offer more than the bare minimum. At the same time, you have to compete with other dive centres in the area that are offering very low prices for their courses. I’m sure you have been in a situation where a client comes in and when you give him the price for the course they say “but the shop down the road is $30 cheaper”. So, what can you do?

Real Example: One Dive Center, Two Price Points

I mentioned earlier that I get my instructor candidates to research the price of an open water course in their area. On one course, an instructor candidate told me that the lowest price they had found for an open water course in the area was $350 while the highest was $800. This is quite a large spread but even more surprisingly the candidate told me that both of these prices had been from the same dive centres. This dive centre was offering two package prices for their open water course. A basic course with no frills at $350 and a VIP package with many more advantages at $800.

This is a very common business technique, not just with car manufacturers or winemakers. Most businesses offer a range of products to satisfy different consumer needs. In some cases, a single business will offer different products aimed at different segments of the market while in other cases, one company will focus on one segment of the market and another manufacturer focuses on a different segment of the market. They do this because it makes business sense. You can offer products that are tailored to specific segments of the market. There are customers who want the cheapest course possible and will put up with a lower level of service or a fixed schedule in order to get it. At the same time there are customers who want the very best of everything and a flexible schedule but are also prepared to pay a premium for it.

Offering Three Tiers: Budget, Premium, VIP

My suggestion to you is that instead of offering a single price for your open water course you offer three separate packages. You can call them whatever you like but I will refer to them as the budget, premium and VIP packages.

The budget package is intended to compete with the lowest price offering in your market and is aimed at those customers who want the cheapest price no matter what. This budget package has no flexibility in scheduling, may have large numbers in the class and does not include any extras such as equipment hire. The price for this will be at the lowest end of the range for local open water courses.

The premium package gives more benefits at a slightly increased price but one that is still within the range of most consumers. It features reduced ratios so you have more time with the instructor, there will be some flexibility in timing, it could include 2 additional divers over the minimum number required by the standards and could include a nitrox course as part of the package. The price for this should be at the top end of the range for local open water courses.

Finally, the VIP package has your most experienced instructor dedicated to the customer (and their family) for the duration of the course. The scheduling of the course will be all based around the customer availability. All equipment hire is included as well as 4 additional dives over and beyond the minimum required by the standards as well a nitrox course. The cost for this will be at least twice the cost of the most expensive open water course in your area.

Strategic Benefits of the Tiered Model

The idea of having 3 levels of product is a very well-established concept in the business world. There is no doubt that many customers will go for the cheapest option. When they tell you the low price of the dive shop down the street you can tell them you can match that because you, like the dive shop down the street, have a budget option. However, by explicitly structuring the budget package in this way you are restricting the cost to you of running that course. You are running it with a larger number of students and the expectation of the customer is lower. This means that it is still possible to make a margin on these courses.

You will not sell many of the VIP package but you will sell some. There are people who are money rich and time poor. They will value and be happy to pay for the flexibility of this package and the feeling that they are getting a superior product. For someone who is very well off, the cost of paying two or even three times the normal course price is not a problem. The other advantage of this customer is that they will not hesitate to buy top of the range equipment for them and possibly other family members. They will also recommend you to their friends who are in a similar position. The other advantage of the VIP option is that it makes the premium package look like great value.

In reality the majority of customers will go for the middle option. They will look at the cheapest option and decide that they want something a bit better than the bare minimum, they will look at the VIP option and decide that is too expensive then they will look at the regular option and think it looks much more affordable than the VIP option but at the same time a much better option than the budget package.

In this way, you have extracted the maximum income from your customer base. The cheapest customers who you would have lost to the low-cost dive centres can still be accommodated, the majority of your customers are paying more than they would if you had a single price and occasionally you get a big spender who will book the VIP package and pay much more than they would otherwise if you had a single course price.

You can play around with the pricing of each package and include more or less in each package. The dynamics of different regions are very different so you will have to find what works best for you, your region and your customers. By making this simple change to your product offerings you can achieve your goal of offering good quality instruction but still be able to compete with the low cost centres in your area.

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