Reef Lover - MBA Student needs input Please read and reply

[Iriejedi]

Have you ever wanted a Fresh water, Salt Water or Reef Aquarium - but thought it would be TOO MUCH work? What if you could have one and pay for a service so that you only have to look at it?

I have an MBA project and I'm setting up a business as a Aquarium installer/Maintainer for Offices, Doctors and Homes.

www.AquaticPeace.net

Please take a seconds to answer this question:

If you had 'disposable' income for a luxuary item such as an aquarium and could pay for such a service at work (like a Janitor) or in your home as you would pay for a house cleaner or gardener - what would you consider paying for such a service?

Assume VERY convienent weekly service - working around your schedule.

Most services are $50 to $100 per hour but I want to set up a weekly rate. And I want to know, considering that the hourly rate is such a high variable value, what would you pay for a weekly charge such that time is not a factor.

Please know this is for a project, it is not real and I am not ever going to ask you if I can set up your business with a tank. Even if you beg me!

I just need some feed back for the market survey - so please reply, IM, PM or email me - it is a very important section of the paper.

I really appreciat the Reef Sanctuary community's help

Thank You For Your Time

Iriejedi
George

[SeaTreasures]

There is so much involved with the charging of tank maintenance and setup. It really all depends on what the customer has/wants and what will be needed to keep the tank "happy".
For example a 300gal would take a lot more time to maintenance then a 100gal. Also, if it is a Fish Only system compared to an actual reef system would also factor the expense and time. You would also have to figure out if the amount you are charging the customer would include the cost of supplies (salt, calcium, etc.) or if you would charge for those items seperately.
In the area I am located in, the average size tank for a business is 150gal and the going rate is around $300 - 400/wk plus cost of supplies for reef tanks and $200 - 300/wk plus supplies for a fish only.

HTH

[Iriejedi]

Thank you for being the first person to actually reply - I really need some infor to put in the appendix to prove I sent out a survey like request.

Everyone else - please drop me some numbers and answer the question - what would you be willing to pay weekly (even use comments from your friends as most of us already do take care of our own tanks) for a tank in your house or business. Assume a moderate size 50 to 100 gal - but what price point would it be worth the cost and what would be too much.

$50 a week? $100 a week... I am just getting a population sample of at what point people say - woah!!! that is WAY to much money.

Anyone? Anyone? Beuler?

George
www.aquaticpeace.net

[misbehavior]

I take care of my own but, the people in my area charge about $75.00 per hour. They stay very busy. Hope this helps.

[mps9506]

Very nice webpage, I like the pdf you setup, should make nice handouts.
I wish I could honestely answer how much I would pay, I would say I'd be hard pressed to pay more than $150 a week for basic maintence if the tank was large (150 or so gallons). But I don't have that type of income, so I really don't know. I suspect if I had a very profitable buisness I would pay more.

[addict]

Dang... $150/wk is about $7800/yr just for tank maintenance...

I think that a business would definitely have to be successful to afford a luxury expense like that. Personally I'd say $75/wk plus supplies would be the maximum I would pay if I were a business owner.

Most tanks should only take 1 to 2 hours to clean per week (i.e. scraping glass cleaning filters, etc.) so you're still looking at $37.50/hr simply for cleaning a tank.

Then on those weeks where waterchanges are required, the extra expense for salt and other supplies comes into play... that way you could have a fixed supplies cost per month, per gallon, then charge an hourly rate for labor.

That's the way I would do it anyway (and I have a degree in economics)... that way you're covering both your fixed and variable costs.

Say for example you charge $.50 per gallon for supplies a month, and then $30/hr for maintenance labor.
Even on a 150gallon tank you'll only be changing out 20% of the water twice a month, so you're looking at 60 gallons worth of salt a month, plus test kit supplies, etc., which easily should be covered by the $75/mo fixed rate.

[Witfull]

you also have to cover insurance costs, vehicle costs, factor in travel time....theres more,,,,but im not awake yet~

[mps9506]

Time is a huge one. I only devote one day a week for tank maintence now, but I fit 4 accounts and a total of 8 tanks with these accounts. I'm at my store at 8 am filling up barrels of SW and buckets of RO water, getting my supplies, getting any new livestock packed up etc. I hit my first account at 10am takes me an hour to finish, takes me another 30 minutes to drive to my next account (not really that far but traffic sucks here, esp. during tourist season), so to be on the safe side I'm scheduled to be there at noon. Another hour of maintence. Then another 30 minutes to get to the next account. This one is downtown, and I can't park anywhere convient so I schedule two hours for this one even though it only takes me an hour to do the miantence.
You start to get the picture...
Even though I'm only get paid for 5 hours of labor I'm actually doing an 8 to 6.
If you are running a store along with this you better have someone competent running the place while you are gone, if you are the one doing the calls.
Keep the van or truck in top notch shape, if it goes down you might have some pissed off customers.
One thing to advertise also to customers is the tax writeoffs they can get if they are buisness.

[addict]

I see what you guys are saying...

you also have to cover insurance costs, vehicle costs, factor in travel time

Well, this would be something you'd estimate into your fixed 'overhead' costs that I mentioned... Most LFS insurance policies also cover 'outside' installations, so the insurance costs would be something you factor in over 'all' of your prices, not necessarily just your client's installations.

At the $.50/gal fixed cost rate I mentioned, there's still plenty left over for extra costs such as mileage, etc., since the raw materials (salt) cost is probably only about $25 of the $75/mo cost (if even that)... so that leaves $50/mo for the other costs involved.

Of course, there's no 'right' way to cost something like this, it's all just personal preference... I just mentioned how I'd do it. Of course I come from a fairly small city, of only about 85,000 people, so our market here is probably much different than a large market where people would be willing to pay $150/wk for maintenance.

[mps9506]

Salt cost .16 per gallon for me wholesale (IO). The cost of making RO depends on your particular area, we go through 400gallon+ a week, so end up trashing the filters every 2-3 months. I can't really figure how to convert that to a cost per gallon this early in the morning
And yes you do have to factor in location. I live in an area with lots of disposable income, people build 8 million dollar homes 200 feet from the Atlantic ocean. $200 or $300 a week isn't out of the question for them. Heck most of them are only here 3 months out of the year anyways.
Anywho... One thing to keep in mind. At least with the stores here, most of them actually are supporting their retail store with their maintence buisness. As in the maintence is actually what keeps the store afloat. The sales of drygoods and livestock aren't enough for a few of the local stores to stay open, so the actual maintence buisness is what really pays the lease, insurance, etc. I know it's not true in all situations, and isn't the way the buisness plan should be modeled, but that is what I have observed here with the smaller stores.

[Iriejedi]

THANK YOU EVERYONE!

This is great to get this thread up and moving - some really good ideas and things to ponder.

I'm still refining my model. But the one goal is to try and keep it small at first with 2-4 clients to learn things like costs and scheduleing requirements. Like many business's I do not think I will make a huge profit in the first 12 months. But I do fee the risks in themselves financially are small (when comparted to a major corporate venture or even a retail environment) for a service only system where the clients can not only 'grow' my supplies (frags) and pay my PG and E and in some extent support my own hobby. That is the phase I goal. After that I hope to hire someone to do the simple tasks of weekly water changes and once a month I'll do a more detailed job and handle crisis tasks.

My other competitive edge is I want to try and used a fixed cost model - and not pillage costs in areas like drive time. Of course this means keeping Phase I clients close to home.

Also by making ZERO profit on suppllies, I feel that will be a selling point. I can show best price options or if I can get into wholesale and sell items at costs to them. This makes my service fees look even cheaper.

But my professor has requested that despite starting SMALL with just enough profit to pay for my tanks needs in trade for service, I have to present a growth plan. So I am really thankful for all your ideas and shared experiences.

Please keep them coming. I especially liek the logisitc notes and if anyone has any disaster stories (employee dumps coffee in tank after finding out someone made decaf!) those would be great too!

George

www.aquaticpeace.net

[addict]

Hi again Mike,
Well, to cost out the RO/DI water, you'd take your gallons per week (I'd say 400) multiplied the amount of weeks (12), divided by the cost of a new filters ($80 or thereabouts)... so the equation would look like:

(400 * 12)/80, which equals about $.0166/gal... or basically two cents per gallon.

So you factor that in with the salt per gallon cost (.16/gal), and get $.18/gal just for the water changes.

You'd have to go through each of your costs and do it this way, but the nice thing about a tiered costing system, is that you can accurately set your profit level depending on your hourly rate... you just subtract either your employee's (or your own) hourly wage, and the remainder is profit, since all of your fixed costs (materials, mileage, insurance, etc) is contained in the per-gallon cost.

But like I said, our markets are completely different... we have quite a few million-dollar+ homes out here (Chico, CA has the second highest per-capita house prices next to San Diego, in the nation), but everybody are still cheapskates.

Looks like Iriejedi got in as I was typing my reply to Mike.

Glad we're able to help. I have a minor in Business Administration, which is where I got my newfangled costing methods.
I saw a thread somewhere at a forum where the guys daughter dumped a cup of sugar into his sump, and his tank went really cloudy for a few days, until he did a massive water change. I've also seen stories of people dumping coffee/wine/beer/whatever into their sump on accident, and the tank wasn't really the worse for wear (aside from drunk/caffeinated fish).

[ScottT1980]

I know quite a few folks in the business, and I think the estimates of $200-$300/wk for larger, reef systems is accurate (I had one veterinarian ask about setup on a 500-1000 gallon system in his new practice, and recognized that the costs would be pretty high).

I think the cash cow is in marine, fish-only tanks. Much lower startup costs, much lower liability, still unique, etc... I know folks that use fake coral, replace it in tanks every month or so (if algae starts to accumulate), and clean it by soaking in a bleach solution. It is a way of roatating "substrate" while maintaining a clean appearance. It is also helpful to have direct access to distributors, have plenty of tanks setup for taking in and Q/T new livestock, and know (or learn) about fish husbandry (health management).

If you plan to go with a reef tank, I personally would stick with softies. The maintenance of an SPS reef tank for a commercial enterprise would cost them a fortune (it should if you value your time and a healthy looking setup). I wouldn't sell myself short on something of that magnitude, it could really come back to bite you in the rear.

Most folks that have gained success in the business aren't just "scraping by," but instead are producing growth and turning up some good profits. Of course, I have also seen a number of them go under. A succesful model (as I have seen it here in Raleigh) is one that has fewer, large coorporate clients. They have a large system, you have the time to keep it in top shape, they have the money to pay for it, and everyone is happy.

Take er easy
Scott T.

[mps9506]

Originally Posted by addict

Hi again Mike,
Well, to cost out the RO/DI water, you'd take your gallons per week (I'd say 400) multiplied the amount of weeks (12), divided by the cost of a new filters ($80 or thereabouts)... so the equation would look like:

(400 * 12)/80, which equals about $.0166/gal... or basically two cents per gallon.

Don't forget about the 4 gallons of water that go down the drain for every gallon of RO you produce

Glad to get you buisness guys in a thread, I'm thinking of going back and getting a degree in buisness, but more along the lines of operations management. Maybe if I'm motivated and good enough an MBA, don't know if it is my cup of tea yet though, put the application to the buisness school last tweek. Will see what they say soon

[Witfull]

I think the cash cow is in marine, fish-only tanks...If you plan to go with a reef tank, I personally would stick with softies. The maintenance of an SPS reef tank for a commercial enterprise would cost them a fortune (it should if you value your time and a healthy looking setup).

i totally agree here,,,look at the time we spend with our tanks. the quality appearence of artifical corals is superior and affordable. in a retail LFS a nice reef is doable, but if you look at the man hours spent on it, doing many tanks outside of the store is time/cost prohibitive.