(Topic ID: 334409)

Rental Games on Location

By sbmania

12 months ago


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    #8 12 months ago

    Insurance and liability are your chief concerns, solve that before even talking about revenue.

    And if this “barcade” owner knew what the hell they were doing this would not have been the approach they would have used.

    Avoid. Danger Will Robinson.

    #15 12 months ago
    Quoted from CrazyLevi:

    Couldn’t he earn more
    As a monthly
    Rental than by doing coin split?
    Just how
    Much $ do you guys think a pin makes in monthly coin drop anyway?

    I’m interested in this question myself. We’ve only ever done free play so my counts way over estimate.

    One thing for sure, the rental fee would have to be high enough that the barcade owner couldn’t just write off as a loss leader and put the games on free play. You’d have to make it high enough that the barcade owner needs the equivalent of that rental fee in coin drop to make it worth his while. It’s why coin drop is the way it usually goes I presume since it adjust for the vagaries of variable income when there is an income split.

    #21 12 months ago
    Quoted from LTG:

    If you do that, get a copy of their policy stating that you are covered.
    Don't rely on the locations piece of paper.
    LTG : )

    And this is why it’s almost never worth the trouble. I suspect many of us could live with doing something like this and making no money. Just knowing you are sharing with the community would be enough. Problem is that bar owner is making money. And he’s gonna do what he can to put liability in your lap not his should the need arise. Ever heard the term “it’s just business” ?

    So by the time you’ve lawyered up enough to hammer out an agreement to make sure your equipment doesn’t get destroyed and you don’t lose your house if something bad happens with your games, all the air goes out of the balloon. Worst case scenario is tough to think about but if you ever get to that point you’ll be damn glad you did.

    It’s why honestly it’s usually not worth doing unless there is a worthy financial incentive. There is so much damn red tape and your time that gets eaten up that you realize doing this for essentially free and with personal liability sucks. I force my business to at least pay me minimum wage for my hours there, even if I own the damn place. Don’t get me wrong I still love having it or I would close it. But this notion of set it and forget it and the money pours in needs to be dispelled in everyone who ever has this notion of monetizing their collection even with only good intentions.

    #23 12 months ago
    Quoted from chuckwurt:

    I mean run the numbers and come up with a monthly rent that makes it worth it, float that to the bar owner. If they agree, then incur the expenses.

    Really not trying to be a Debbie Downer here, but it would really be useful if a route operator would open their books granularly to given a full accounting of what it takes to break even here. I have tried to do it for my all you can play arcade, but those numbers are only peripherally related to the issues at hand.

    1. Average coin drop per month.
    2. Average hours put in each month on repair.
    3. Insurance cost per month,
    4. Repair costs per month.
    5. Coin drop decrease over time per machine (where you have to turnover the machine to push revenue back up).

    I can only comment on the fact that we initially targeted 10% of revenue towards repair costs. We were wrong, very very wrong. It’s less than that now but to begin with revenue was so low that it was the highest cost. My machines were not in tip top condition to begin with and not all new sterns so there’s that. All it takes is for something to short and that +$100 you made on coin drop becomes -$300 due to the $400 board you had to buy. Now it’s 3 more months before you are even back to zero

    We made $225K revenue last year, we had operating costs of $175K, mostly labor and rent and insurance. I paid myself zero. For 4 years I have paid myself zero. I can afford to do that. The games are my capital as is my enjoyment Now you might be like “How the hell did you get to $175K expenses if you paid yourself zero ?” It happens. And yes we ran the business well. I have an excellent manager. Point is you will in starting this massively overestimate revenue and massively underestimate expenses (and time) And it will bury you if you are not in it for the long haul.

    #41 12 months ago
    Quoted from flynnibus:

    The op didn't share the number being floated... but don't go through all the exercise to consider a deal unless the guy is on the right order of magnitude to start with.
    If he thinks he can rent kit from you for a couple hundred a month... you better just stop now unless you want to be a slave. It has to be something that he realizes he's paying for you, services, overhead, AND the games.. not just the games. Don't sell yourself short by assuming "I already have the games.. so its no cost to me".
    Don't whore yourself out for slave wages in a deal that will trap you. It's different when you operate yourself out of a passion... because you are the one making the decisions on when/how much/etc. Putting yourself into a rental agreement takes away that flex.

    So here is the question I’ve always wondered for those running a route. If you placed a Ms Pac-Man versus the latest Stern pin which would have the greatest ROI ? I’ve always assumed it would make more sense to put out 10 Ms Pacmans and no pins, but I don’t run a route. I can say for sure the Ms Pac-Man gets played way more at my arcade. Now you can sell that pin with little depreciation and rarity is a bit more there and it’s $1 or $2 a play not 25 cents so perhaps the upfront split in take given the operator not venue owner is fronting the $10K cost might be more favorable on the pin. But what the hell do I know. I will not be running a route anytime soon but the economics for those who do, do interest me.

    As to the comment that someone knows a person who runs a route who makes bank, well I believe that about as much as I believe Gameseum was a smash financial success.

    #52 12 months ago
    Quoted from doublestack:

    Some truths are universal but its not too bad around here in the Midwest.
    There are definitely some hardcore players here that only talk in replays and soda they drink out at their car, fortunately those players aren't as prevalent anymore as the younger crowd embraces pinball. Casuals are the money maker for the operator and the bar location. I do believe in catering to both but always give the nod to the casuals as they keep the lights on, pinheads love to remind you how much money they just dropped in XYZ game last week, where casuals are in the background feeding the games and just having a good time.
    We had a guy at our league that the staff had to talk to because he constantly brought in his on gas station drink into the place, I wasn't there but that's just plain rude. Speaking of leagues, they are a great way to show a business that you have steady food/drink purchases on a certain night. 65% of our league drink and usually have over 2 beers with food. Also people in leagues bring friends or family members that even if they don't play, will eat/drink.
    I have friends that moonlight for bars doing trivia or karaoke. The going rate for a bar to pay them for one night of service is $4-$600 depending on the size and most places have a weekly night for these events, those costs add up to a location. Those events also have the same issues we see in pinheads, people that go for just the entertainment and don't buy anything, however a bar is willing to pay it to get people in the door. The difficult part an operator has is that his people/following is not set to a certain time or night. I can just as easily make the same amount of food and beverage GP but its not concentrated in a night and therefore easy to see for a bar owner. Education can get them there to understand.
    Dropping a decent lineup of games will cost them floor space and nominal electricity. Its a win/win if the right operator and bar owner are in agreement. I'm not all 100% and most are still 75/25, but the 100% guys will get all the new games, launch parties, more league nights and monthly tournaments. Most bar owners understand that if costs go up, so does the end price to the consumer, they deal with food price fluctuation daily so its a relevant common ground in discussions.
    Pinball is stuck in a weird valuation right now, the public will not pay more than $1 a play but costs are going up, something has to give and for me its the split.

    This is an incredibly helpful post. Thank you for putting up this info.

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