Funworld September 2009

Magic Numbers

Seven ways to improve redemption game payout
by Mike Bederka

A TRICKY BALANCE OF ART AND SCIENCE, redemption game payout can fluster many family entertainment center operators.

“It takes a lot of work,” admits Michael Getlan, director of enthusiasm and opportunity for Amusement Consultants Ltd. in New Rochelle, New York. “You really have to take your time with it. It’s not 1-2-3.”

A lack of knowledge on general payout rules compounds the problem. “No one is really teaching people how to do this anymore,” says Jim Chapman, sales manager for Family Fun Companies, a redemption game manufacturer in Burbank, Illinois, that also runs four FECs.

To make sure every quarter counts, experts give FUNWORLD seven payout tips.

1. Know the Basics

Owners should track and collect every game weekly (ideally at the same time and day), says Harold Skripsky, president of Entertainment Management Services Inc. in Scottsdale, Arizona. Take meter readings for both the tokens in and tickets out, accounting for any jackpots hits.

Convert tickets and tokens into money. Each token equals a quarter, and every ticket is worth a penny. Then, divide the total cash into the total tickets paid out. If in a week a game collected $280 and paid out 10,000 tickets, the payout is 35.7 percent.

The overall facility payout on a weekly basis should be close to 28 percent, Skripsky says. Chapman’s facilities aim for a payout average of 30 percent to 33 percent.

2. Offer a Range

Getlan follows a simple formula with determining payout on particular games. The more fun people have and/or the more time they spend on a game, the fewer tickets it should pay out. The opposite also is true. The less fun and/or time spent, the more it should dispense.

Operators should aim for a healthy mix, says Getlan, author of “How Much Is That Doggie in the Showcase.” Here’s his payout breakdown by game type:
8 percent to 12 percent . . . . . . . . . . . . . . . . . .Alley
15 percent . . . . . . . . . . . . . . . . . . . . . . . .Sport Play
15 percent to 20 percent . . . . . . . . . . . .Roll Down
20 percent . . . . . . . . . . . . . . . . . . . . . . . . . .Ball Toss
20 percent to 25 percent . . . . . . . . .Some Novelty
25 percent . . . . . . . . . . . . . . . . .Video Redemption
25 percent . . . . . . . . . . . . . . . . . . . . . . . . . .Rotaries
25 percent . . . . . . . . . . . . . . . . . . . . . . . . . . .Cranes
25 percent . . . . . . . . . . . . . . . . . . . . .Prize Vending
25 percent to 30 percent . . . . . . . . . . . . . . .Pushers
25 percent to 30 percent . . . . . . . . .Coin Shooting
25 percent to 35 percent . . . . . . . . .Some Novelty
25 percent to 35 percent . . . . . . .Reaction/Timing
30 percent to 45 percent . . . . . . .Fast Coin Action

3. Always Adjust

Some manufacturers will ship their games paying on the high side, Chapman notes. “It’s making so much money, but it’s paying out too much. Most operators don’t know they can go in and adjust it.”

He suggests testing all games upon purchase to make sure they work and pay out to your liking.

Players also become more skilled at certain games, says Getlan, citing another reason to modify payouts. The difficulty of games may need to be adjusted over time. He recommends gauging the games on a weekly basis to look for trends.

4. Feature Big Prizes

Always have large prizes available so people keep coming back to the redemption area, Chapman explains. However, they must be achievable. Some games require bigger jackpots. A guest needs to know he can win a thousand tickets with just a dollar.

5. Keep Them Running

Word of a broken game spreads quickly through an FEC, Chapman says. If a game doesn’t shoot out tickets as it normally should, you may as well unplug it. Again, monitor games regularly to look for anomalies. A report from a card reader system can speed up the process. And, of course, fix any broken equipment as soon as possible.

6. Avoid Overpricing

Customers possess more savviness today than years ago, Chapman says. Owners can’t get away with pricing prizes too high. “My 6-yearold son understands value,” he says. “All kids do. They’ll say this is a rip-off. Parents know it too.”

An owner must price goods lower than stores, Skripsky notes. “That means learning how to buy right. So markup becomes a far more important component than meets the eye.”

His guideline for markup is:

• Low-end merchandise ($.01 to $.20 net cost): 50 percent to 500 percent
  
• Middle low end ($.20 to $1): 40 percent to 100 percent
  
• Upper low end ($1 to $5): 25 percent to 50 percent
  
• Mid-range ($5 to $15): 20 percent to 50 percent
  
• High end ($15 to $1,000+): may have no markup to remain competitive with street prices.
  

7. Don’t Be Cheap

Owners think they make more money by cutting the payouts. “In the short term, yes,” Skripsky says, “but in the long term, they shoot themselves. Kids know. They play games around the community.”

Getlan firmly believes in the “lifetime value of a guest,” the most important calculation of them all: The total dollars spent in one visit times the number of visits in a lifetime times the number of positive referrals that guest will make to friends and family. “At most parks, people don’t appreciate it at all,” he says. “The customer needs to be satisfied.”

FUNWORLD Contributing Editor Mike Bederka can be reached at mbederka@IAAPA.org.