The win percentage should be based on the business philosophy of fair play.
CRANES AND MERCHANDISERS currently make up, on average, 20% of total game revenues in the family entertainment center industry. (Redemption accounts for 65% and video/novelty 15%). But cranes and merchandisers are even more significant to bowling centers that do not have a full complement of redemption games.
Over the past 48 years, I have learned from the crane masters – Achiel Verstraeten (Eric and Helga’s dad, and the founder of Elaut Amusement), Richard Altman (Enchanted Castle/Family Fun Companies), Steve Shoemaker (Wedges & Ledges), and Clarence Mabe (M&P Amusements) – and here pass along the little nuggets of wisdom on how to set up a crane for maximum repeat play and maximum revenue.
People like to win. Not every time, because that becomes boring. They also like to be challenged and have “fun”. Crane players want to use their skill to win the desired prize. We, as the world’s crane operators, can provide all of that while making an honorable and fair profit in the process.
That is the philosophy. The following are the necessary four steps that I go through, in order…
Step 1. Understand two formulas that are intertwined – hit frequency and win percentage.
My hit frequency story actually taught me about cranes. At 11 years old, I was very shy and one of the youngest in my seventh-grade class. It was the first week of junior high school, and our school was combined from other township elementary schools.
There were many new classmates who were strangers, especially lots of new girls. There was a dance and I wanted to go, and it took as much courage as I could muster to ask one of the new girls, “Would you like to go to the dance with me?” She replied, “Sorry, I’m going with Peter.” In baseball lingo, that’s zero-for-one, and a strikeout to boot.
I then proceeded to go to the other side of the room and ask another girl. She also said no. Up and down the aisles I went until I had asked 11 girls, and each of them said no. That is zero-for-11 – quite a slump, and it was quite frustrating. However, on my 12th try, one girl actually said yes. A big smile came to my face. That is one win out of 12 tries (8%), or better known as 1:12 hit frequency – a weak batting average of .083 … but a hit is a hit.
Win percentage is also known as the crane’s cost of prizes won (cost of sales) as a percentage of the crane’s gross revenue, all during a collection period (usually a week). For our industry, a fair and reasonable business model necessitates a win percentage range of 25% to 30%. The remaining 70% to 75% of the crane revenue is needed to pay for purchasing the crane and maintaining it, including parts. Any small percentage remaining is referred to as net profit.
If the crane is revenue-shared between a bowling center and a vendor, the vendor must receive a reasonable percentage (usually 65% to 70%) of the gross crane revenues (vendor pays for prizes won from its share), and the bowling center then receives the remaining percentage. (See Formulas below in Step 3)
Step 2. Choose a price per play for the crane as a starting point.
This must fit into the pricing with your other games. For example, let’s choose $1/play.
Step 3. It’s time to do some simple math, using one prize win in the formulas.
To establish a prize-cost benchmark, at $1/play and a hit frequency of one prize won in 12 plays, what would the prize cost have to be to have a 25% win percentage? Twelve plays provide a gross revenue of $12.
25% = (Cost of Prize/$12) x 100
0.25 x $12 = Cost of Prize
$3 = Prize Cost (Including Shipping/Sales Tax)
You can also do the same calculations using 50 cents as the price per play, which results in requiring a prize costing $1.50.
Next, your task is to find a top prize that you can purchase wholesale for a total of around $3 and has a perceived value of somewhere close to $12. In a perfect world, the player would play the crane 12 times, spend $12 and, on average, win one prize that needs to have a high perceived value (what a customer would pay for it at a retail store or online) for the ”fair” part of the philosophy to hold true on both sides. The prize must be attractive and appealing, and its size and weight must be compatible with the size of the particular crane claw.
Hint: Our industry prize suppliers have dedicated staff that watch Saturday morning children’s cartoons, and go to toy stores and merchandise shows around the world to be on top of this. Today, the top crane prizes are the hot electronic items and accessories and ”licensed” plush toys that are related to newly released movies. These items are listed every other month in my Redemption & Family Entertainment Center Report, including item numbers, prices and the companies that sell them.
Note that you do have some flexibility here, as you could lower your hit frequency to 1:13 (which would, in theory, lower the crane’s weekly gross revenues with a 23% Win%) or raise it to 1:10 (which would, in theory, increase the crane’s weekly gross revenues with a 30% Win%). But this all depends on the desirability and perceived value of the prize you choose. You also could increase the win percentage to 30% and keep a 1:12 hit frequency (which would likely increase the crane’s weekly gross revenues). In the example shown, a 30% win percentage would result in you now being able to choose a $3.60 prize cost item.
Step 4. Play the crane. It is well worth your time.
Load up the crane to the height recommended by the manufacturer (full), and take the time to play it at least 24 times and record the number of prizes you win. If you have average skill, you should win two prizes (two prizes out of 24 plays is a hit frequency of 1:12).
If you win zero prizes or only one prize, the crane has several adjustments that can easily be made to make it easier to win. If you win three or more prizes, the same adjustments are available to make the crane more difficult.
Here is where the philosophy is once again applied. The crane claw adjustments should be used only to ”tweak” either way – but only slightly. Now that you fully understand hit frequency, you do not want to make the crane harder to win and up with a hit frequency of, say, 1:15 as this would end up with frustrated players and lower crane revenues.
Hint: Repeat players also improve their skill over time, so the win percentage can be expected to increase slightly. I also have coined the “1/3 Rule” for maintaining a consistent win percentage and hit frequency of a crane. This rule states that when a crane gets to one-third empty (the same as two-thirds full), the win percentage increases slightly for the players. It then increases significantly after the crane is two-thirds empty to empty.
The best practice is to never let your crane get to one-third empty. That means you must fill it up once or twice per week and keep track of the prizes you are adding so you can do a physical count crane inventory at the end of the week and know for sure how many prizes were won that week.
Another tip is to change the prizes at least every three months, or after a week in which the crane’s revenue has significantly dropped and you are absolutely certain that the cause is not a mechanical problem with the crane.
Conclusion – Follow these 4 steps, and your cranes will make more money. It’s also very important that all of your cranes awarding prizes (rather than ticket bundles/rolls) have the same approximate hit frequency and win percentage. Run your business according to “The Philosophy of Fair Play,” and you will likely be more successful – and you’ll surely sleep better!
Bowling Entertainment Center Magazine – Winter 2018
