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Adventure Retreat Leader is a resource for Coaches, Speakers, Authors and Writers, Educators, Practitioners, and all Heart- and Nature-Based Entrepreneurs and Professionals. We offer teleclasses, audios, guidebooks and coaching; all designed to help you lead Outings, Adventures and Retreats in nature as a profitable part of your business.

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Sunday, March 13, 2011

Are You Making Money on Your Offering?

Have you considered all the expenses related to your adventure before setting your price? There are two kinds of expenses:
  1. Fixed Expenses are the expenses you will pay if only one person registers or if 20 people register for your retreat. Fixed Expenses may include, to name only a few, advertising and marketing, rental of a facility, guest speakers and presenters, and any costs to you related to your offering (your accommodations, your transportation, your meals) etc.
  2. Variable Expenses are the costs that occur only when a participant registers for your offering. Variable Costs may include, to name just a few, handouts and other materials for that participant, perhaps accommodations and meals for that participant (if you are paying the facility a per-person rate), equipment rental for that participant (if you are including equipment costs in the registration fee), etc.
Once you've determined all your expenses, the steps in a simple Breakeven Formula can be applied.

  1. What is your best guess about what you should/want to charge? Let's say for our example you want to charge each person $75 for a one-day outing.
  2. What You Are Charging - Variable Cost = Contribution Margin. The Contribution Margin is what's left to contribute to your Fixed Expenses after you deduct Variable Expenses from your participant's fee. Or, in our example $75 - $38 (materials, meal and equipment per participant) = $37
  3. Fixed Expenses / Contribution Margin = Number of Participants You Need to Break Even. Or, in our example, $353 (Advertising, a guest presenter, plus your transportation, meal and equipment) / $37 = 9.54 participants.
This means that you need 9.54 people to attend your retreat at $75 each in order to break even (before you start making money). Too unrealistic? You've got to either raise your price per participant or cut your expenses.

Let's say in our example that the guest presenter costs $150. So you remove the presenter from your offering and still charge $75:
  1. $75 - $38 = $37
  2. $203 / $37 = 5.49 participants at $75 each in order to break even (neither lose nor make money)
Still unrealistic? Raise your price to $99 and try the formula again:
  1. $99 - $38 = $61
  2. $203 / $61 = 3.33 participants need to register at $99 each for you to break even.
Better?

Keep in mind that you will be making a profit of not $75 or $99 per participant after you meet your Breakeven Point. You will, instead, be making a profit of your Contribution Margin ( $61 in our last example) after you meet your Breakeven Point.

So, for example, if you charge $99 and 10 people register for your offering, you make a profit of $61 x 6.67 participants, or $406.87

The bottom line counts. Offering retreats, adventures and outings is fun. But if it's part of what you do for a living, make sure your income is reflected in what you charge.
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