The Cost of Chicago Skydiving Explained
The skydiving business is a tricky one. As many entrepeneurs have learned, just because you can do something doesn't mean you can run a business doing that thing (this applies to all aspects of business). From a business perspective, the entity has relatively low fixed costs (as a proportion of sales) and very high variable costs. Fixed costs are defined as those that recur regularly (i.e. rent, utilities, insurance, licensing, etc...) Variable costs are defined as those costs that a business incurs based upon volume (for skydiving that is the cost of flying the airplane, packing & maintaining parachutes, etc...). These facts are one reason that so many dropzones start (and fail) each year (often times taking customer's money with them).
Groupon, Living Social, and all of the others on the bandwagon of social couponing greatly assist a dropzone in startup needs, but also directly lead to the eventual collapse (usually within one season) of the dropzone because the revenue is not sufficient to sustain the business. Other companies that hurt the sport, and increase the cost are those that resell the service (Rushcube, Spot, Adrenaline365 to name a few). These companies act as a middleman and sell you a product they cannot provide, then find a skydive center to provide the service (and charge you extra for their time). You should always deal directly with the skydiving center (whereever you choose to jump).
The average cost of a tandem skydive is between $200 and $230, and here is why it seems to cost so much:
- The smallest aircraft generally used for skydiving costs upwards of $120 per flight, the bigger the aircraft, the more it costs per flight, but more customers can share that cost, so the cost per customer decreases.
- The equipment used for tandem skydiving costs nearly double to purchase as personal skydiving equipment. One can buy a new parachute system (middle of the road) for about $8,000.00, but a tandem system costs nearly $16,000. Tandem skydiving is hard on equipment, with repetitive jumps and heavy loads. One can tack on an additional $2700 to the purchase cost for average maintenance costs over the effective lifespan. Tandem systems are generally used for about 5 years or 2000 skydives, which results in a nearly $10/jump cost to own/operate a tandem parachute system.
- Generally skydiving workers are hired as contractors, and migrate south in the winter. They get paid per jump, per pack, or per flight. The instructor can get paid between $30 and $70 per jump depending on experience and video duties
- Marketing costs can be substantial. Competition is fierce, and small dropzones like ours must compete with giants in the same market area.
The larger the dropzone, the larger the fixed cost, but the lower the variable cost (per customer). At a large dropzone, the profit may be $100 or more on a $200 tandem, while at a small dropzone it may be $30 or less. You may think... $30 per customer that isn't bad! What will help you understand is volume. A small dropzone may only complete 800 tandems per year. Larger dropzones can serve 5000 customers or more. In our area of the country we also only operate between 6 and 7 months each year, so we need to use our profit to survive the downtime in winter.
Why do small dropzones even operate if they barely scrape by? The primary reason is the love of skydiving. Skydivers break-away from large centers to provide a better experinece. Smaller skydiving centers are generally more receptive to individuals and can provide the best customer service. At the smaller dropzones your instructor generally establishes a bond with you, if not a friendship. Larger dropzones must do high-volume, and therefore it is more often than not like a cattle-call. Larger dropzones can also only be supported around major metropolitan areas, where the volume is large.
Small skydiving centers generally compete on quality and customer service, whilst the larger dropzones can compete on price.
Skydive Windy City Chicago is one of 6 skydiving centers in the Chicagoland area that operate sustainably. We are one of the smallest, but we have the best customer service, location, and view.