Major Industry Change re: Online Scuba Sales....

[cerich]

If we add nitrox we've changed the game. I don't know any LDS charging $5 for a nitrox fill, I see typically $10 to $15.

But while your Aussie examples are OK with just using air and the wait, consumers at a LDS are not, thus the shop needs to have a compressor that can be used with Nitrox and a cascade/bank system, that means a higher expense for air to be produced.

 

[cerich]

I still don't think so.

DS I deal with has 2 compressors. He pick them up from shops that went out of business. So $15K is probably not a bad figure for a smart shop. Amortizing it over 5 years may be OK for tax purposes but the life of a good compressor, with proper maintenance, is probably much better than that. Overall, your $5K annual cost for a smaller LDS fill operation does not seem unreasonable. But who is only doing 1000 fills per year. Even for a smaller shop, something on the order of 2000 to 3000 fills per year seems more reasonable. (Hell, just my buddy & I account for about 100 fills per year.) Now my fills estimate includes the fills on tanks provided for training and training support, rental tank fills, and fills of privately owned tanks. So it still looks to me like you would have a hard time working up a cost per fill much more than $2 to $3.


I just don't think you can get over $5 cost per fill unless you are only counting fills of private tanks and ignoring training and training support fills and maybe even rental tank fills. Or you are looking at a really inefficient operation, the kind that we might all be better off without. And if $10 per fill cost is right, the DEA should be raiding that shop.

Actually many shops don't do a100 fills a year, sad but true...

My $10 figure was what to charge at retail, not cost to fill, my point was air should be closer to $10 at retail than to $5 before it starts to makes sense from a retailer/business POV.

 

[ReefHound]

My comments in red, honestly and zero offense meant at all but please consider that most shops do NOT make money at fills, yet they are there to make a profit and charging $10 would allow that without it even approaching price gouging.

I can no longer remember what the point of this is about. The only thing I wish to contest is that I don't recall ever saying that air is cheap for a shop to produce. I won't even contest your estimate of $5 fill cost, it's the $20 fill cost that I have rejected. I posted an example to show energy cost was a small part of the fill cost, and even your numbers provided back that up.

Businesses are there to make a profit. But consider that maintaining a compressor is just about required in order to service classes, so if air fills to the public turns a potentially major expense center into a break even proposition, that itself is a success. For example, businesses pay for phone/internet service, if they could sell hotspot time to divers to cover expenses, would they then be happy to have covered a basic expense or instead ***** about not making money on their hotspot service?

In business, what you *need* is irrelevant. You have to make it on what you can *get*. If just raising prices were the fix to a broken model then Ford and GM could just raise the cost of their cars 25% and stop losing money. If the LDS started charging $10 for air fills I think they would bury themselves further as many individuals and esp. dive clubs decided to run their own compressors. Note that the 4 guys in my example were driven to their little operation for just that reason. As it is I see a trend of increased reliance on clubs for services and advice as the internet has enabled the dive community to organize across larger areas.

 

[WarmWaterDiver]

The economics here stagger me.

Consider Bonaire, one of the most competitive spots I can think of for gas fills. The cost of energy on Bonaire is on a different level than the cost of energy in the continental USA (where we have huge coal reserves and loads of electric power plants, and don't have to treat sea water to have ample public potable water supplies).

http://www.dive-friends-bonaire.com/rates.html
http://www.bonairediveandadventure.com/
http://www.wannadive.com/default.aspx?artikelid=25

Air fill, your own tank, is typically US$5 to US$10, but you can shop around easily.
Unilimited air fills for 6 days is just over US$100 (example - US$110 to US$114).
Several operators are offering 'free upgrade to Nitrox if Nitrox certified' currently. Some mention membrane systems, some are continuous blend, etc. so this shouldn't be radically different than the lower 48 LDS gas fill / blending operation mentioned in post #401. Ease of access to maintenance parts, shipping costs, shipping times, etc. would also be higher than in the lower 48.

Whether the # of fills per year would be significantly different from a LDS on the US West Coast or Florida for example I'll let the LDS folks weigh in on.

How does this work economically on Bonaire but not here is what I have trouble understanding.

 

[cool_hardware52]

How does this work economically on Bonaire but not here is what I have trouble understanding.

The Costs of labor (for all aspects, fills, maintainance etc.)

The difference in the legal system (liability and insurance)


Tobin

 

[ReefHound]

The Costs of labor (for all aspects, fills, maintainance etc.)

The difference in the legal system (liability and insurance)


Tobin

Yeah, I don't think you can compare the economics of tank fills in USA with places like Bonaire. Those resort areas see a huge volume (I wouldn't be surprised at 1000 fills per week) plus they have lots of other revenue. A place like Buddy's can operate air at a loss. In high volume areas like Florida you can find air fills for $3.

I don't think anyone here has denied that air fill cost drops significantly if you have enough volume, the question has been about the typical LDS who fills from 1000 to 2000-3000 fills per year.

 

[WarmWaterDiver]

Is the cost of labor so low there, relative to the general cost of living where most everything consumable is imported - compared to the lower 48?

How much labor cost is there in tank fills anyway? Enough to offset the energy cost differential? I don't see how the energy cost per fill goes down with a larger volume of tank fills.

I can understand differences in litiginous vs. non-litiginous societies, but how much of that is for just tank fills vs. dive instruction and dive services (like guided dives) I would think the tank fill portion of the insurance low relative to these other factors. I don't doubt this factors in heavily to the overall LDS costs, but just for the tank fills this is a major factor?

I mean - look at St. Croix, part of the USA. Utility costs there aren't chump change - and neither are labor costs. The industrial gas provider on the island does the hydros for scuba tanks there according to the shops I chatted with while visiting there, and the US minimum wage rules still apply. This is also a spot where most consumables are imported.

I still don't get it - but that's just me I suppose.

 

[cool_hardware52]

Is the cost of labor so low there, relative to the general cost of living where most everything consumable is imported - compared to the lower 48?

How much labor cost is there in tank fills anyway? Enough to offset the energy cost differential? I don't see how the energy cost per fill goes down with a larger volume of tank fills.

I can understand differences in litiginous vs. non-litiginous societies, but how much of that is for just tank fills vs. dive instruction and dive services (like guided dives) I would think the tank fill portion of the insurance low relative to these other factors. I don't doubt this factors in heavily to the overall LDS costs, but just for the tank fills this is a major factor?

I mean - look at St. Croix, part of the USA. Utility costs there aren't chump change - and neither are labor costs. The industrial gas provider on the island does the hydros for scuba tanks there according to the shops I chatted with while visiting there, and the US minimum wage rules still apply. This is also a spot where most consumables are imported.

I still don't get it - but that's just me I suppose.

Would you be content to earn what the typical Bonaire tank monkey or compressor mechanic is paid?

Tobin

 

[WarmWaterDiver]

Not with my credentials, which is why I'm employed where I am. But I can find similar employment on St. Croix - chatted with contacts there during the visit.

Cost of comparable housing (ft2) is about 3X what we have now. Cost of homeowners insurance is about 10X what we pay now. Cost of energy was easily 2X what we pay now. Cost of potable water was significantly higher - most homes have a cistern and water is trucked from the reverse osmosis plant when needed during dry spells - and isn't cheap. Would I still move there for comparable pay? Certainly.

My discussion was centered on the economics of tank fills, but I received a question in response. I have provided data. Time for me to exit the thread I suppose - I don't mind discourse, but this isn't occurring.

 

[The Chairman]

It has come to my attention that ~you~ is responsible for the entire decline in the diving industry. This is an appeal for ~you~ to come clean and rectify the damage you have caused over the years. Special operators are standing by hoping ~you~ will call them and pledge us your support!