How Much Do Driving Ranges Make Yearly? (Profit Margin and Sales Forecast Included)
ByTony Martins Ajaero
An indoor driving range 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. It is important to point that no one-mold-fits-all when it comes to how much a driving range owner is expected to make. There are some factors that we are going to look into before giving an estimate and these factors are;
A driving range provides a facility or area where golfers can practice their golf swing. It can also be a recreational activity itself for amateur golfers, or when enough time for a full game is not available.
Many golf courses have a driving range attached and they are also founded as stand-alone facilities, especially in urban areas. It is the norm for a standard driving range facility to provide golf practice, golf driving lessons, golf and accessories and protective equipment rentals and sales as well.
How Do Driving Ranges 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.
In previous article, we analyzed the cost of starting a driving range business, and drawing from that estimated cost breakdown; we have the following:
Sources of Income 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.
7 Factors That Determine the Income of a Driving Range
1. The Size of the Golf Driving Range
You will agree that no one can conveniently state the amount a golf driving range makes yearly if you do not know the size of the facility and the number of members the facility can accommodate per session.
If your golf facility is a large enough, it can accommodate more members and that will mean an increase in membership revenue – If membership at your golf driving range facility is $1,200 per year, you only need 100 members to turn over $120,000 in annual revenue. Please note that you can build your golf driving range to double that number of memberships within 24 months.
We must not rule out the fact that the location a golf driving range is a major factor that will determine the amount the facility will make monthly. If a golf driving range is located in a highbrow area, then the owner of the facility is expected to make more money.
The truth is that, you will struggle to make good money from your golf driving range if you locate the business in an area filled with low income earners.
3. The Type of Services Available in the Golf Driving Range
Another important factor that will determine how much a golf driving range is expected to make is the type of services offered by the facility.
You will agree that the money a golf driving range that offers indoor and outdoor golf courses, food and beverage services, golf equipment rental, golf instruction services, memberships, golf course green use, et al will be far larger than what an indoor golf driving range facility that only offers golf training lessons is expected to make monthly.
4. The Management Style of the Business
Another key factor that will determine the amount a golf driving range is expected to make yearly is the management style of the owner. Trust me, the results you will get when you are a good manager will be different from a golf driving range facility owner with poor management style and customers service will make.
The idea is that a good golf driving range owner will not just retain their old customers (members), they will also keep getting new customers (members).
5. The Business Approach of the Golf Driving Range
There are different business approaches that a golf driving range facility owner can choose from and no doubt it will greatly influence the amount they make monthly and yearly.
A golf driving range owner may decide that they want to operate only one location and do their marketing alone, or they can decide to go into franchising and also partner with other business that will recommend clients to them. It is easier to find golf driving range facility that operate franchises and offers robust services partnering with shooting clubs and security firms et al.
In essence, a well – organized golf driving range facility who works with others will surely make more money than one that only operates from one location.
6. The Advertising and Marketing Strategies Adopted by the Golf Driving Range
Another key factor that will determine the amount a golf driving range facility owner can make yearly is the advertising and marketing strategies adopted by the facility.
Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more. But the results you will make will far outweigh the amount you spent on advertising and marketing.
Of course, you don’t expect a golf driving range facility owner that is engaging in aggressive advertising and marketing to make same amount yearly with a golf driving range facility owner that is passive with its advertising.
7. The Number of Years the Golf driving range is in Existence
Lastly, another key factor that will determine the amount a golf driving range facility owner is expected to make on a yearly basis is the number of years the facility is in existence. In business, the number of years you are in existence will go a long way to determine the amount you will make especially if the business is well – managed.
For example, in your first fiscal year (FY1) you might make a hundred thousand dollars (100,000), in your second fiscal year (FY2) you might make one hundred and fifty thousand dollars ($150,000) and in your third fiscal year (FY3) you might make two hundred and fifty thousand dollars ($250,000).
Estimated Profit Margin from a Golf Driving Range
Findings shows that Profitability and Market Outlook for Golf driving Ranges is put at 8.35 percent annual growth rate projection, so there is plenty of opportunity for golf driving range businesses to make gains.
However, it is important to state that a new data from Sageworks, a financial information company, shows that U.S. golf courses and country clubs, on average, face persistent unprofitability. Average net profit margins for privately owned golf courses and country clubs have been negative for several years.
