How to price a rehearsal room

Take one room and work out what it costs you in a month: its share of rent, its share of rates and utilities, insurance, the amortised cost of the gear in it, and the share of staffed hours it consumes. Divide by the number of hours a month you can realistically sell it for. That is your floor. It is almost always higher than people expect, because the divisor is not 24 by 30.

The divisor is the number that decides everything. A rehearsal room sells in the evenings and at weekends, and a lot of the week is structurally unsellable. If your room realistically sells 60 hours a month and costs £900 a month to hold open, your floor is £15 an hour before you have paid yourself or made anything. Price at £18 and you are running the room for the pleasure of it.

Only once you know the floor is the market rate useful. It tells you the ceiling, not the price. If the floor is above the ceiling, the answer is not a better booking system — it is fewer rooms, cheaper rooms, or a different building.

Evening and weekend hours sell themselves; weekday daytime hours mostly do not. Charging the same for both means you are either underpricing the hours everyone wants or overpricing the hours nobody does, and usually both.

The useful split is not two prices, it is two jobs. The peak rate's job is to capture the value of a slot people will queue for. The off-peak rate's job is to convert an hour that would otherwise earn nothing into an hour that earns something — so it can go a long way down before it is a bad deal, as long as it covers the marginal cost of opening the door.

The trap is discounting off-peak so hard that peak customers move into it. That is only a loss if peak would have sold anyway. If your Tuesday 8pm is booked out for the term, a cheap Wednesday 2pm costs you nothing and gains a daytime band you did not have.

• Set the peak rate from what fills but does not empty the diary — if every peak hour sells the day it opens, the rate is too low.
• Set the off-peak rate from marginal cost: power, wear, and staffing if the hour needs a person.
• Review both twice a year, not never. A rate set three years ago is a price cut you did not decide to make.

A one-hour rehearsal is worth less to you than a third of a three-hour one. The room still has to be reset, the band still has to be let in and got out, and the hour either side is often unsellable because nobody wants the fragment left behind.

A two- or three-hour minimum at peak solves that without touching the price. It also changes who books: bands that turn up for an hour are usually the ones that cancel, and bands that book three hours have planned their week.

The other half of the same idea is the turnover buffer — the gap you leave between bookings so a room can be reset and a band can get its gear out. It applies on both sides of a session, and it is not free time, it is time you have chosen not to sell. Price accordingly: a room with a 30-minute buffer has fewer sellable hours than the clock suggests.

There are two respectable ways to charge a regular less than a stranger, and neither of them is a discount code. The first is a weekly slot: the band commits to the same hour every week and gets a better rate for it. The second is a block of hours bought up front, used whenever they like.

Both are the same trade — certainty for you, a lower unit price for them — and both change your cash position rather than just your revenue, because the money arrives before the room is used. A block of hours sold in January pays for the amp you buy in February.

What neither should be is open-ended. Hours that never expire are a liability sitting on your books indefinitely, and a weekly slot with no end date is a room you cannot re-price. Put a term on both.

Card processing is a percentage, and a percentage of a big booking is a big number. Whatever you use to take payments, put its cost into the floor calculation rather than treating it as an accounting problem — on a £120 booking a 1.5% + 20p fee is £2, which is 7 minutes of a £18 hour.

Cancellations are the other one. A room that is cancelled with two hours' notice is almost never re-sold, so a policy that refunds in full up to the day of the session is not a customer-service policy, it is a price cut applied by whoever cancels most. Deciding what a late cancellation costs is a pricing decision, and it belongs in the same conversation as the rate.

Finally: put the prices on the site. A studio that makes people email for a rate loses the bookings that were never going to email, and they are the ones you do not hear about.