Start thinking supply, demand and price for better revenue
When maximizing win per unit (WPU) on a slot floor, the discussion often involves trying new themes, adding or removing games or moving games around to new locations. Unfortunately, the industry still lacks a fairly reliable WPU predictive model to estimate the effects of these types of changes in advance, though there are many slot professionals with decades of experience who seem to have a knack for getting this right. What’s often overlooked, however, is that, in many cases, WPU of a given slot machine can be increased without changing the theme, box or location, but by simply adjusting the price.
Of course, we need to talk about this concept of slot price. When I once asked a slot manager what he felt the price of the slot machine was, he stated the house advantage, which is certainly one price metric, but the price I’m really talking about is the price per spin. When I say “per spin,” I mean it. Price is not the average bet of a game, but the price per spin. Why does this matter? Well, as you know, slot machines have lots of bet choices. A penny game panel, for example, may allow bets such as 50, 100, 150, 300 or 500 credits. Let’s say the average bet is $1.21. Is that what the player plays? Obviously not, since $1.21 is the average, but average of what? Counting the number of spins at each of the given prices matters here.
If you dig deep into pull by pull numbers, you’ll find that most players are going to bet the minimum. In this example, it’s 50 cents. When I say minimum, I mean playing all the lines at the minimum credits per line. Almost all of my data analytics in slots reveals the same result, that a significant portion of all bets on a game are made at max lines with minimum credits per line. If you’re lucky, you’ll get some higher betting, even max betting, which will increase the average bet and corresponding WPU (don’t we love our VIPs?), but trust me that the vast majority will likely be at the minimum.
So who cares? Well, maybe no one, that is unless a slot machine is in high demand. I wrote a previous article on the supply and demand of slot machines where I referred to the concept of total pulls available and total pulls demanded, and by looking at the total pulls demanded over time, particularly in peak periods such as weekends, we can identify games with constraint (more demand than supply) where a price adjustment could be substantially lucrative. We can increase the WPU of this game by increasing the price per spin, and we do this by increasing the minimum price to play the game.
Now I’m sure you may be saying to yourself, “But that’s not possible” or “We don’t change panels like that,” and of course you’d be right. This is a part of the industry that drives me somewhat mad. I’ve gone so far as to physically remove buttons from games to accomplish this. Some vendors with digital displays can adjust the price offerings to increase this minimum as well. If you’re going to be adding games, at least be sure to ask about what the price breakdowns are. Even if you can’t change a specific game, you can make sure that the new games coming in are set higher on the minimums if you anticipate constraint for that segment of games.
On multi-denomination (multi-denom) games, prices may be raised by simply fixing the game to a higher denomination or removing the lower denomination options. Finally, a change in overall denomination (say, one cent to two cent) may also accomplish this, but unfortunately experience has shown that players are very sensitive to this, which can have an adverse effect on the demand, negating the benefits.
I know these are challenging ideas, but the primary purpose of this article is to promote thinking in terms of supply, demand and price. Adding the concept of price minimums and price controls into our slot decisions can be one of the most powerful tools in your arsenal for floor optimization. It’s about time that slot operators followed the example set by table games managers many, many decades ago, simply increasing the minimums when games get busy. I often ask, how long would a table games director last in their job if he or she didn’t raise the minimums on tables during peak periods? So obvious, right? Yet somehow slots continues to be stuck in the fixed price dilemma. Start thinking supply, demand and price, and you’ll be amazed at the changes and revenue increases that are possible for your slot floor, while hardly spending a dime.