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How Much Does It Cost to Open a Driving Range? (Sales Forecast and Breakeven Analysis Included)

Golf Driving Range Business

You need an initial investment of $216,000 as fixed cost to open a small scale driving range; while the variable cost is estimated at $20,895.

A driving range is considered a big business because of the investment involved in getting the business up and running. 

A driving range is referred to as an area where golfers can practice their golf swing. It can also be a recreational activity in itself for amateur golfers or something that can be used when enough time for a full game is not available.

A driving range can usually consist of a few or several teeing areas facing an open field, but some driving range facilities include elaborate entertainment centers to differentiate their services.

There are many options to consider if you want to open a new driving range, and these come with their own various cost ranges.

Opening an indoor driving range in a metropolitan area can cost you millions on the property alone, while one removed from the city can be a fraction of the cost. In this article, we will discuss some of the major factors that can influence the overall cost of opening a driving range.

What Type of Driving Range Are You Opening?

Regardless of your geographic location, simple, outdoor ranges are usually more cost efficient. High-tech, indoor golf simulators can cost six figures per simulator unit, so these types of ranges are best suited for those who have already made a large amount of money in the business already.

If you want to open a golf driving range without a heavy purse, you might be able to do that if you go low-tech with no amenities. If you get this done, the whole set up can cost you around $100,000.

Estimated Cost to Build a Driving Range?

Fixed Costs

A big expense you will encounter while starting up your driving range is obviously the land. In some areas, you could buy a 15 acre plot of land for $200,000.

Make no mistakes, this figure is on the cheap side for a good many areas. You will also need to fix your ball retrievers and this cost can come to around $5,000. Your golf ball dispensers are also part of your fixed cost and that should cost you around $5,000 too.

Your token dispenser comes next at about $3,000. You will certainly need lawn-mowers to take care of the lawns and keep them nice and neat and that should cost you $3,000. On the general side, we are looking at an initial investment of $216,000 for your fixed costs.

Variable Costs

To get an accurate figure of what it costs to set up a golf driving range, you have to consider your variable costs too. The day to day operation costs will include the salary you pay to your staff, and you can put that at around $30 per day.

Depending on your set up, you may have to pay more. You should also factor in your maintenance costs and this can range from property tax, machinery, grass seed, water, flag sticks, etc. You can estimate a yearly expense of $15,000. Property maintenance is key for an outdoor facility.

Such maintenance includes mowing the range, maintaining grass, and keeping tee areas clean. For an indoor facility there are more daily cleaning, payroll, and simulator repair/replacement issues to take into consideration. Your variable costs would generally look like this for a 20 capacity driving range;

  • 20 – Driving Range Mats (5’x5′) @ $250 = $5000
  • 10,000 – Driving Range Balls @ $100 per 300 balls = $3,500
  • 40 – Driving Range Buckets @ $7 = $280
  • 1 – Driving Range Ball Dispenser (10K Capacity) @ $5,000
  • 1 – Driving Range Ball Washer (Economy) @ $1,000
  • 19 – Driving Range Tee Dividers @ $160 = $3,040
  • 1 – Driving Range Caged Cart @ $1,000
  • 1 – 2 Section Range Ball Picker @ $1,400
  • 100 – 2 3/4″ Rubber Tees @ $1 = $100
  • 20 – Plastic Golf Ball Trays (Attach to mats) @ $20 = $400
  • 5 – Driving Range Yardage Banners (50, 100, 150, 200, 250yd) @ $35 = $175

Total Variable Cost = $20,895

Other Expected Cost for Starting a Driving Range Business

  1. Business Registration Fees – $750.
  2. Legal expenses for obtaining licenses and permits – $7,800.
  3. Marketing, Branding, and Promotions – $2,000.
  4. Business Consultant Fee – $3,500.
  5. Insurance – $8,800.
  6. Rent/Lease – $750,000 (If you are Considering an Upscale Area)
  7. Other start-up expenses include commercial satellite TV subscriptions, stationery ($500), and phone and utility deposits ($1,800).
  8. Operational Cost (salaries of employees, payments of bills et al) – $120,000
  9. Store Equipment (cash register, security, ventilation, signage) – $6,350
  10. Equipment, Furniture, and Supplies – $550,000
  11. Website: $1,200
  12. Opening party: $5,000
  13. Miscellaneous: $5,000

At most driving ranges, a basket of balls will cost about $6. On a normal average, each range will see at least 20 golfers per day, which would yield a revenue of $120 a day, which equates to $3,600 a month.

In some areas in the United states, a driving range can only be open for about 6 months due to seasonal changes in weather, so the expected revenue for the year will be $21,600.

After the large investment of $200,000, the driving range business isn’t all it’s made up to be. While it is quite passive, the yearly income (after expenses) is only $6,600 before income tax. It can even take you up to 50 years to recoup your initial investment at that rate.

Revenue Streams for a Driving Range

  • Bucket Sales (Balls): 12,000 buckets sold in Year 1, with a 10% annual increase in sales volume.
  • Price per Bucket: $10 (Most driving ranges charge $6 per bucket)
  • Membership Sales: 60 memberships sold in Year 1, with a 5% annual increase.
  • Price per Membership: $1,000 annually
  • Golf Lessons: 250 lessons in Year 1, with a 10% annual increase.
  • Price per Lesson: $50

Yearly Financial Forecast

Year 1:

  • Revenue: $192,500
  • Net Profit: -$44,395

Year 2:

  • Revenue: $192,500
  • Net Profit: -$46,484.5

Year 3:

  • Revenue: $208,750
  • Net Profit: -$32,532.95

Breakeven Analysis

To breakeven in the first year, considering only buckets contribute to covering the fixed and initial variable costs, yoir driving range would need to sell approximately 23,690 buckets at $10 each.

This forecast indicates that a driving range business faces a challenge in reaching profitability within the first three years based on the initial assumptions.

Strategic planning to increase revenue, manage costs more effectively, or a combination of both would be necessary to achieve financial sustainability.

Factors That Influence the Cost of Building a Driving Range

  1. The Size of the Land and Infrastructure

One of the major factors that can greatly impact on the cost of opening a driving range is the size of the land and infrastructure required.

Note that the bigger the size of the land and infrastructure you settle for, the more you are expected to spend on lease or rent, or acquiring the land and infrastructure. Aside from the rent or lease of the land, you will also be required to spend money on the construction or renovation costs.

Please note that the cost of acquiring the land and installing the needed infrastructure can vary depending on the location, size of the property, design complexity, materials used, local construction costs, proximity to urban areas, and local real estate market conditions.

  1. The Cost of Utilities

Another major factor that will influence the overall cost of starting a driving range business is the amount you are expected to spend on utilities.

Trust me, the amount you are expected to spend on basic utilities such as electricity, water supply, drainage systems, irrigation systems, lighting, parking areas, and access roads is no doubt highly significant and can add up significantly.

  1. The Cost of Acquiring Driving Range Equipment and Supplies

If you are starting a driving range, you should expect to spend money to acquire the needed equipment and supplies. You should make plans to spend on; range balls, ball dispensers, mats or turf, target greens, flags, tee boxes, practice aids, maintenance equipment, and safety equipment.

No doubt, the budget for acquiring driving range equipment and supplies will influence the overall cost of opening a driving range.

  1. Pro Shop and Inventory

As expected, aside from operating a driving range facility where people play golf, almost all driving range facilities usually have pro shops where they retail things to people who are making use of the driving range.

So, if you plan to have a pro shop, then you need to spend money on stocking it with golf clubs, golf balls, golf bags, apparel, accessories, and other merchandise. Trust me, the extent of inventory and the quality of products you choose to retail in your pro shop will impact the overall cost of starting the business.

  1. The Cost of Insurance, Licensing, and Permits

Another major cost that can influence the overall cost of starting a driving range is the amount you are expected to spend on insurance, licensing, and permits.

You should make plans to spend on zoning permits, environmental permits, business licenses, and health and safety certifications. So also, you need to purchase the needed insurance coverage, such as liability insurance and property insurance.

  1. The Cost for Hiring Employees

Another major cost that can influence the overall cost of opening a driving range is the cost of hiring employees. It will be impossible to operate a standard driving range alone, hence you will require some key staff members that will work in the driving range.

You will need instructors, safety officers, customer care officers, administrative officers, security officers et al. With that in mind, you should have a budget for hiring your employees, training the employees, paying their salaries, and other employee benefits.

In essence, the larger your driving range, the large the number of employees you are required to hire, and of course the more you are expected to spend.

  1. Miscellaneous Expenses

Lastly, aside from all the factors listed above, other factors may be unique to each entrepreneur that can also influence the overall cost of starting their driving range. For that reason, we will classify such factors as miscellaneous expenses.

Miscellaneous expenses can cover expenses such as land mortgages, construction loans, equipment financing, working capital, interest rates, insurance, taxes, professional consulting fees (such as architects, engineers, lawyers, and planning, design, legal compliance, and financial matters), and unforeseen contingencies.

So also, costs associated with legal fees for consulting with an attorney and drafting necessary contracts and agreements should be grouped under miscellaneous expenses.

How Can a Driving Range Make Money?

Driving ranges make money by charging customers for the use of golf balls and a tee area where they can practice their swing. While a bucket of balls can cost you $20 as an initial investment, you’ll be re-selling the balls over and over before you’ll need to replace them through loss or damage.

The trick for finding real profit is generating enough traffic such that you sell a sufficient number of balls over the year to cover payroll, insurance, cost of property and maintenance. The retail sale of golf equipment can generate a substantial portion of your income.

The more services you offer, the more you can charge for a bucket of balls. Most ranges offer 50-80 balls for $5-$8. Monthly memberships go for $50 to $100 for valued customers.

An indoor facility with full-service restaurant and rental space in a high-traffic urban environment can see a net profit of up to $2.9 million a year. However, if you have a low-tech field in the country, you could see an income as low as $40,000 a year.

In conclusion,

It is important to note that all the factors listed above no doubt will influence the overall cost of opening a driving range, but an entrepreneur may decide to choose which of the factors listed above they can fit into their budget. Interestingly, driving ranges come in different sizes and with different complimentary service offerings. The one you settle for will determine how much you will spend.