How To Justify The Price Of Your Open-Play Passes By Increasing The Perceived Value With One Simple Policy

I often hear from prospective indoor playground and play cafe business owners that pricing is one of the most difficult aspects of launching their play spaces.

This is especially true when it comes to the services they’re providing that don’t necessarily have a direct cost associated with them– making it impossible to utilize a simple profit margin calculation. For example, if you were a PRODUCT based business, if your COST was $2 and you wanted to ensure an 80% profit margin… it’s simple– you’d calculate your perfect price to be $5 (by taking your COST divided by 1 minus your desired margin).

But for services that don’t have a direct cost as I mentioned? It gets more complicated. The most common example provided is the pricing of open play sessions. 
Before we dive in, to eliminate any chance of confusion I first want to provide a few relevant definitions. 

A direct cost is a cost that can be tied to the production and sale of specific goods and services. For example, the food that you purchase for a specific birthday party is a cost you're incurring for the purpose of making a sale. Therefore, your profit is going to be the difference between that direct cost and whatever the customer paid.

Operating costs (sometimes referred to as overhead costs) are the ongoing expenses incurred from the normal day-to-day responsibilities of running a business. These are costs that you incur whether or not you have any sales or customers. Examples are your rent, your point of sale system monthly fee, any salaried employees, utilities, etc. 

These are the bills that exist whether your business is generating income or not.

Finally, opportunity costs can be defined as the loss of potential gain from OTHER alternatives, when one alternative is chosen. An example for the indoor playground industry is if you have consistent open play hours where you are open to the public. The opportunity cost of opening for open play would be your inability to book a birthday party (which could have generated more revenue) during that time frame.

All three of the above definitions are going to be major factors in your open-play pricing decisions. However, it’s important to note that there is not a one-size-fits-all to naming a price for these types of services. 

There are so many factors for your personal business that I could never fully speak to, such as the cost of living in your area and the competitive landscape (other indoor playgrounds or family entertainment center options). 

However, no matter the factors contributing to your pricing structure, it can still be difficult to express the value of the price to potential customers– as they may not understand those overhead or opportunity costs, or the other considerations that contribute to your decisions.

This is why it's crucial to understand the concept of Real Value Versus Perceived Value. 

The real or actual value is what a product is worth– while the perceived or intangible value is what customers think or feel the product is actually worth. 

In my experience, we considered our open play as an audition for birthday parties in our indoor playground. 

Therefore, our main goal with pricing was to be competitive with other play spaces in our area, while simultaneously attracting the right customers that may be interested in booking a party in the future.

To put it more simply, our goal for open play was NOT to get any certain number of people in the door daily, but rather hit our ideal number of birthday bookings from open play traffic (of course in addition to our online traffic and other inbound marketing strategies). 

We knew that our business could have survived without open play, but only if it didn’t cause a dip in birthday bookings.  

But beyond the business decisions that went into our pricing of open play, customers still have a hard time justifying spending $15 on something intangible like play, even though we KNOW as business owners that it's crucial to a child's development and we additionally understand the operating costs associated with providing a play-based service (we know it ALL too well, don’t we?!). 

The policy that helped us increase the perceived value of our open play pass (and help justify the price we charged) was making our pass usable for the entire day–  allowing someone to leave and come back without being charged again. 

Typically, this advantage doesn't cost you much, and I can't tell you how many people were so delighted with the flexibility our open play passes offered. Below I will share a few reasons why this simple and cost-effective policy was overall beneficial for our business.

1) It Increases The Perceived Value Of Our Open Play Passes.

As previously mentioned, this play-all-day policy helps people justify the cost of an open play pass because it increases what people feel the value is.

2) It Decreased the Amount of Refund Requests We Received. 

Previously, when a child would have a tantrum or if it was busy and the parent didn't feel comfortable staying, we would get a lot of requests for refunds. But when we instead explained that per our policy we do not offer refunds, but that they’re welcome to come back later in the afternoon, it typically appeased them. This policy allowed us to remedy the situation, prevented a loss of revenue, and also turned a potentially negative experience for the customer into a positive one.

3) It Helped When We Were Extra Crowded. 

If I noticed somebody was having a really poor experience due to the crowd, I would simply tap them on the shoulder and offer,  “Hey, did you know that you can actually leave, do nap time or lunch, and come back when it's less crowded in the afternoon?”. Again, just them realizing that I noticed that they weren't really comfortable or their child was a little overwhelmed helped prevent any negative reviews, experiences, or social media posts afterward. Even if they did not take us op on this offer, it showed that we cared about our customers and their families and that we were paying attention.

4) This Policy Meant that Parents Rarely Battled Out Tantrums Inside Our Space.

The flexibility this policy provided gave parents the option to take their child home to regroup and stop by later, once things had calmed down if their child was experiencing big emotions.

 In turn, this created a better experience, not only for the family who was dealing with a tantrum but also for any other families who were playing at the same time, as sometimes it can trigger other tantrums or it can just make the whole situation loud or uncomfortable.

5) Honestly, People Will Rarely Use It.

While people appreciated the flexibility and while this policy increased the value of our open play pass– to be honest, people rarely came back– even if they had planned on it when leaving. Things come up, unexpected naps happen– but the point here is that they CAN come back of they choose to. Again, this will help turn a potentially negative experience where someone felt “robbed” of their admission if they had to leave early due to an accident or tantrum– to an overall positive experience that just didn’t work out that day for whatever reason. 

Allowing people to leave and come back with one open play pass, or making your open play pass be available for all-day use is one way to justify your pricing model to your customers. 

It’s important that you consider what makes sense for your business and your play community when developing values, such as the flexible play policy, to make your pricing structure more attractive. 

Take some time to think from your community’s perspective, and get creative from there!

If you need help pricing your open play passes, memberships, parties, cafe items– or ANYTHING in your indoor playground business, play cafe business, or family entertainment center– I’d love to welcome you inside my membership with over 200 owners called Play Maker Society! You can get a free month inside the membership when you enroll in Play Cafe Academy, my signature program, today! Click below to get all the details and limited time bonus info!