- How to Open this Business: Guide
- TOP-7 KPI Metrics
- Running Expenses List
- Pitch Deck Example
- How To Increase Business Profitability?
- How to Sale More?
- How To Raise Capital: Guide
- How to Value this Business?
Introduction
The escape room industry is gaining massive momentum in recent years, with the number of escape rooms increasing by 897% between 2014 and 2018. Escape a room is a great way to join the entertainment trend and can be a lucrative business venture . But how much does it cost to open an escape room?
The ultimate cost of starting an escape room will depend on a variety of factors. Like the size of the room or the number of equipment you choose to buy. The initial outlay can range from a few hundred dollars to several thousand , depending on the level of quality and complexity you are aiming for.
In this blog post, we’ll take a look at the start-up expenses (one-time costs) you’ll cover when opening an escape room. This includes property rental or purchase, escape room design/construction, building permits, personnel/labour costs, initial stock/equipment, gaming systems and consoles, insurance, IT technology and security, legal fees, etc.
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start-up costs
Opening and running an escape room can be an expensive business with start-up costs ranging from tens of thousands to hundreds of thousands of dollars. Below are the costs you can expect to incur when launching an escape room:
| Rental or purchase of property | Escape Room Design/Build | Building permit | Personnel / labor costs | Stock / initial equipment | Game systems and consoles | Assurance | IT technology and security | Legal fees |
|---|---|---|---|---|---|---|---|---|
| ,000 – 0,000 | ,000 – 0,000 | 0 – ,500 | ,000 – ,000 | ,000 – ,000 | ,000 – ,000 | 0 – ,500 | 0 – ,500 | ,000 – ,000 |
| Total startup costs: | ,400 – 1,400 |
Rental or purchase of property
It is important to consider the cost of ownership when opening an escape room. Whether you rent or buy a property, the cost can be quite high. According to Zillow, the median home value in the United States is 5,052 as of October 2019. Additionally, CMHC reports that the average rental vacancy rate in Canada is 1.8% and the vacancy rate is Ontario is 2.4%. Rent for commercial property varies greatly depending on location and size, and can range from to per square foot per year.
If you’re in the United States, the National Association of Realtors (NAR) reports that the average cost of a square foot of commercial real estate was .43 in the first quarter of 2019. The NAR also found that in In the first quarter of 2019, the average commercial real estate price per square foot on existing buildings rose to a high of 4.92. Additionally, NAR also noted that in the first quarter of 2019, the average prices paid for commercial and industrial buildings increased by 5.0% compared to the previous year.
If you choose to buy a property instead of renting, you need to consider the closing costs associated with this. These costs may include real estate and transfer taxes, title insurance, loan origination fees, attorney fees, and investigation fees. Depending on the area, these fees may also include appraisal, inspection and registration fees. In the United States, these costs can vary from 3 to 5% of the purchase price.
In conclusion, the cost of property for an escape room can vary greatly depending on whether you rent or buy the location of the property. Careful budgeting and research is required to determine the cost of property for an escape room.
Escape Room Design/Build
Opening an escape room can be an exciting and rewarding endeavor, but it’s also one that comes with some notable costs. Budding escape room owners need to make sure they have a good idea of the costs associated with building and starting their business. After all, you don’t want to launch your escape room only to find you don’t have enough money in the bank.
The cost of designing and building an escape room can range from hundreds to thousands of dollars depending on several factors, such as size, complexity, and number of parts required. Generally, larger and more complex pieces will require more money to build and design properly. The average construction cost per square foot is normally around to USD, but this can vary greatly depending on the type of construction and materials used. The cost of actual game components, such as puzzles, props, and decorations, will also factor into the overall price of the escape room.
The average cost to build and launch an escape room ranges from ,000 to ,000. If you plan to open a multi-room facility, expect to pay a lot more. The costs listed here are for building and launching the escape room only and do not take into account key elements, such as marketing and staff, that you will need to successfully launch and maintain your business.
The following list includes some common expenses associated with opening an escape room:
- Meta Puzzles and other components (e.g. locks, keys, accessories): 0 – ,500 USD
- Game design and build: ,000 to ,000 USD
- Furniture and set design: ,000 to ,000
- Building materials: 0 – ,500 USD
- Installation costs: 0 to 0 USD
- Insurance and legal fees: 0 – ,500 USD
- Marketing and advertising: variable
Overall, the cost of designing and building an escape room will vary depending on the type of construction, size, complexity, and materials used. As a result, it’s important to do your research and find a budget that works for your individual situation. With the right plan and strategy in place, it is possible to turn your escape room business into a profitable one.
Building permit
Opening an escape room requires obtaining building permits and meeting requirements set by the local government. The amount of your budget for permits depends on the complexity of your project and your location. Generally, permits start at a few hundred dollars and add up to thousands of dollars in more complex projects and locations with high permit fees. According to Statista, the total cost of building permits in the United States was approximately $ 10,280 million in 2018.
Permit fees may need to be paid for a variety of reasons, including:
- Construction or renovation
- Get location approval
- Installation of mechanical systems
- Installation of plumbing systems
- Electrical System Improvements
Before applying for a building permit, it is important to have a complete list of the work that needs to be done. This helps ensure you don’t miss any permit fees and apply for the appropriate building permits. You may also need to obtain separate state or local permits.
Building permits aren’t the only way to spend money when launching an escape room. You will also need money for equipment and decorations, as well as permit and legal fees. Be sure to calculate all costs when creating a budget for your getaway business. This will help you plan costs down the road and ensure your project stays within budget.
Personnel / labor costs
When starting a getaway business, personnel/labour costs are an incredibly important factor to consider. Depending on the size of the escape room and its capabilities, you may need to hire a team of staff responsible for managing, supervising, and facilitating the escape room experience.
According to The US Bureau of Labor Statistics (BLS) , the median annual salary for gaming supervisors was ,550 in 2018. So, if you are planning to employ a gaming supervisor, you should budget accordingly.
In addition to a game supervisor, you should budget for the following staff/job positions:
- Escape room game host: median annual salary of .01/hour
- Escape room game designer: Median annual salary of ,538
- Escape Room Game Maintenance: Median hourly rate of .60
- Concierge/greeter: median annual salary of .50/hour
These numbers can be increased if you need qualified or experienced escape room personnel. Additionally, you must consider taxes, social security, and other benefits that may be required by law.
In summary, staffing an escape room can be expensive, especially given today’s economic climate. It’s best to determine your staffing/work and budget needs accordingly to ensure that your getaway business is well run and generates a healthy profit.
Stock / initial equipment
Opening an escape room can be an expensive business. The cost of the initial stock and equipment that must be purchased will be a major budgetary consideration. According to a 2019 survey conducted by RoomEscapeEarttist.com, the average upfront expense that is reserved specifically for furniture, fixtures, and puzzle design is ,370 USD . This cost can vary greatly, depending on the size and complexity of the escape room.
This cost can be further broken down into its individual components as shown in the following list:
- Furniture: ,000
- Props/Decor: 0 USD
- Puzzle Design: 0 USD
- Electronics: 0 USD
It’s important to note that these costs are all estimates and the exact amount needed to run an escape room can be highly dependent on the type of puzzles, theme, and storyline of the room. Additionally, the cost of labor and technicians should also be considered when budgeting for starting an escape room.
Game systems and consoles
When it comes to opening an escape room, gaming systems and consoles can play an important role in helping create a unique and immersive gaming experience. However, this equipment does not come cheap, and it can be an expensive component of an escape room. Additionally, an escape room owner should research and understand the latest game systems and consoles. As technology continues to change and update, gaming systems and consoles become outdated quickly, so it’s important to stay current and invest in the latest gaming gear.
Based on the latest statistical information, the average cost of consoles and game systems can be estimated between 9 – 9 for each console with different game titles available for around – for each game. consoles would be game controllers that cost anywhere between – 9 per controller. As for accessories and additional items, they vary in price and they are often bundled with game consoles or purchased separately. Therefore, the cost may depend on the style and complexity of the game system and the type of equipment an escape room needs.
In addition to the cost of consoles and gaming systems, escape room owners should be prepared for the running costs and expenses associated with them. This includes electricity consumption for gaming systems and consoles, setting up the gaming system, additional gaming technology, and updating equipment. Game consoles may require from time to time, which can be a costly expense that an escape room needs to keep in mind.
To sum up, the cost of gaming systems and consoles depends on the type of gaming system chosen by an escape room. Although cost is a considerable factor, it is important to ensure that gaming systems and consoles meet quality standards and provide an excellent gaming experience. Maintenance cost should also be taken into consideration when making installation of game systems and consoles.
Assurance
When opening an escape room, it is important to be aware of the costs associated with insurance. Exhaust involves using chambers and accessories that could potentially be dangerous, so you’ll need a comprehensive insurance policy to ensure you’re protected if something goes wrong. According to the Insurance Information Institute (III), the average cost of commercial property insurance in 2019 was per ,000 of insurance coverage, with a median rate of 0. This means that a general liability insurance policy for an escape room with a coverage limit of ,000,000 would cost 2,000 per year.
There are a few other factors to consider when selecting insurance for your escape room. It is recommended to seek an insurance policy with:
- Property Coverage : This will cover physical properties that are part of the escape room, including furniture, fixtures, walls, and signage.
- Liability Coverage : This will protect your business from claims for bodily injury or property damage when someone visits the escape room.
- Loss or Damage Coverage : This provides protection against loss or damage to the physical escape room prop or items
These components of the insurance policy are important to ensure that your escape room is properly protected and that you will not end up with a large financial burden in the event of an accident or legal action.
IT technology and security
When opening an escape room, technology and IT security must be taken seriously to ensure the safety of customers who can relax and enjoy their time. It is important to keep data and personal information safe, not only to comply with government regulations, but also to protect clients and escape room operators. With the ever-changing technology landscape, the cost of opening an escape room could include the cost of IT security.
IT technology and security costs
Here are some of the IT security related costs to open an escape room:
- Firewall or malware protection – this can cost anywhere from 0 to ,500 depending on the size of the escape room .
- Security Software – Depending on the size of the escape room, there could be various software subscriptions, such as antivirus software, for 0 per year .
- Data backup – It is recommended that data be backed up and stored securely, which can cost 0 to 0 per year .
- IT Staff – Depending on the size of the escape room, it may also be necessary to hire an on-site IT specialist, which can cost ,000 to ,000 per year .
These costs may seem daunting at first, but are necessary for the overall well-being of both clients and escape room operators. It is important to ensure that all security measures are up to date and secure as technological advances and new threats emerge.
Legal fees
For an escape room, the legal fees involved can be significant. It is important to have an experienced attorney on your side who has a clear understanding of the regulations in your local jurisdiction and the applicable zoning regulations. With a good legal advisor, you can expect to pay anywhere from ,000 to ,000 in legal fees depending on the complexity of your business and the services you need.
According to the National Law Review in 2019, legal fees, fees, and expenses can account for approximately 3.7% of the total cost of starting a business. Specifically, the National Law Review estimates the legal costs associated with starting an evasion business to be between ,000 and ,000.
It is also important to consider any additional licenses or permits that may be required to open an escape room. Fees for various licenses and permits can vary widely from state to state, municipality to municipality, and in some cases, county to county. Additional charges could include charges for:
- Trade license and filing fees
- License to sell or conduct business in your state
- Fire code permits for escape rooms that involve entering and exiting small spaces
- City zoning and/or permits
Overall, when determining the legal fees associated with opening escape rooms, it is important to take a careful look at local jurisdiction fees, including license and authorization fees that might be required. This can ensure that you are able to start your business with the lowest legal costs and fees possible.
Conclusion
Starting an escape business can be an exciting opportunity, but it requires careful planning, budgeting, and research.
The cost of launching an escape room can range from a few hundred dollars to several thousand dollars, with the exact amount depending on the quality and complexity of the desired setup. Common financial responsibilities include rental or purchase of properties, escape room design and construction, building permits, staffing and labor costs, expenses for gaming systems and consoles, and computer security.
By considering these factors in advance and budgeting appropriately, you can ensure that your escape room can provide excellent entertainment experiences for many years to come.