LDS profit on tanks & air fills?

[awap]

Originally Posted by CompuDude

Run the numbers yourself. It's a loss leader, considered an advertising expense and part of the cost of doing business.

This has been discussed many, many times in great detail on other sites. The numbers aren't that difficult to figure out. How many fills do you think it takes to make a profit on a $60,000 compressor setup at $5 per fill? Add in maintenance costs (oil changes, filter changes, inspections, belts, installation costs, FILL OPERATOR TIME, etc.) and it's not hard to see that there's no profit there. Even with a $10k setup (pretty small for an LDS) the costs add up, especially because smaller setups need MORE upkeep.

The smart LDS payed about 20k for a compressor in order to qualify as a sucba equipment and training retailer. So any of that cost that is offset by the charge for an airfill is gravy. If a shop is selling fills for $5 and the O&M costs for that fill are higher than that, then he is either just plain stupid or he is getting his ass kicked by a competitor. There is absolutely no reason for a shop to lose money by filling a customer's tank for a reasonable price. How much of that "profit" the shop chooses to count towards capital expenses (the compressor and bank system), rent, or other overhead (heat, lights, help) is up to him. But anyone who believes that each fill is incurring a loss would probably pay full MSRP for a complete set of scuba gear.

I go into my shop often to get fills. Like so many gas customers, it is rare I buy anything else.

[in_cavediver]

Originally Posted by awap

The smart LDS payed about 20k for a compressor in order to qualify as a sucba equipment and training retailer. So any of that cost that is offset by the charge for an airfill is gravy. If a shop is selling fills for $5 and the O&M costs for that fill are higher than that, then he is either just plain stupid or he is getting his ass kicked by a competitor. There is absolutely no reason for a shop to lose money by filling a customer's tank for a reasonable price. How much of that "profit" the shop chooses to count towards capital expenses (the compressor and bank system), rent, or other overhead (heat, lights, help) is up to him. But anyone who believes that each fill is incurring a loss would probably pay full MSRP for a complete set of scuba gear.

I go into my shop often to get fills. Like so many gas customers, it is rare I buy anything else.

The question for most shops is volume. If you can fill lots of tanks, you can get the more economical filters and larger compressor. If you fill low numbers of tanks, you have to go to the smaller system with smaller filters that cost more per fill. I've seen the numbers for a small shop who does mostly training fills. Air is a loss leader. They have to have it to be a dive shop, they have to have it to teach and around where I am at, local divers don't need it since there isn't a 'resort' trade. Dive sites generally have tanks/fill stations. The capital expense and upkeep is huge per fill. The shop I recall did around 50 fills per month. (training and customers). Hard to make money with that.

[rawalker]

It's a loss leader!
Simply it's a small loss to generate traffic and other sales.
How many visual inspections does it generate for the shop? Those are great profits! How many people walk through the door and see a display of a new piece of gear and decide to make a purchase they didn't intend to make on the other side of the door?

[marchand]

According to the manager at one of the local LDS he's making 90% profit on nitrox at $0.09 a cf.

[CompuDude]

Originally Posted by marchand

According to the manager at one of the local LDS he's making 90% profit on nitrox at $0.09 a cf.

I believe that's looking at his cost for gas vs. his price for gas. Does not take compressor costs into account.

[brandon]

No shop out here, but have made do with a personal compressor or two and a commercial dive op that will fill for $15 a tank.

We figure it's about $10 a tank to fill off the little MaxAir 3.5 (but our electric rates are INSANE - .55/kwh), and it takes a half hour.

Much of the time it's worth it to me to just pay $15 for a fill and not have to worry about making time to stand around watching the compressor. Plus, the commercial guy will come pick up your tanks and drop them off when done!

-B

[cajunfla]

Originally Posted by crgjpg

Ok, so air fills do not generate a profit. Would it be worth me asking for a free fill deal if I purchase a tank from the LDS?

Heck yeah it's worth it!! If they say NO, what have you lost??

[mike_s]

Originally Posted by crgjpg

Ok, so air fills do not generate a profit. Would it be worth me asking for a free fill deal if I purchase a tank from the LDS?

I'd be surprised if you didn't get a free fill from a local shop if you bought a tank.

New tanks typically come with a VIS, which requires some air afterwards. Usually it's a full fill as it's kinda pointless just to fill it to a few hundred psi.

Originally Posted by marchand

According to the manager at one of the local LDS he's making 90% profit on nitrox at $0.09 a cf.

yeah... and like no one in the dive business has ever lied before to their customers.

.09/cf * 77cf for a AL80 fill = $6.93.

at $6.93 per tank and a 90% profit, he's saying his cost to fill an AL80 is way under $1 buck.

He's either lying and knows it, or he really sucks at his math and doesn't know he's lying.

[ReefHound]

By "free fill deal" I think he means a fill card or free fills for a year or for life as mentioned earlier, not a single free fill.

[brandon]

Originally Posted by mike_s

You'd be hard pressed to fill an AL80 with air for under a buck!

-B