VR Franchise profit and rate of return calculation
Prices and costs vary from country to country.
For example, in the US, we consider two cases with venue sizes of 25 and 200 square meters (250 and 2000 square feet respectively).
According to research
— the average rent for a B-class shopping center in a city with a population of 0.5-1.5 million people in the US is $30 per square foot per year, or $2.5 per month.
— one hour of VR gaming for one person costs $45.
Case 1
— 6-Month Period
— 250 ft2 Venue (25 m2)
— 4 Headsets
| Expense | Per Unit | Total per Month | Total for 6 Months |
| Venue Rent | $2.5 per ft2 | 250*$2.5=$625 | 625*6=$3750 |
| Purchase of VR Headsets | $400 per headset | 4*500=$2000 | $2000 |
| Flooring | $1 per ft2 | $1*250ft2 = $250 | $250 |
| Walls | $60 per ft of the wall | (16+16+16+16)*$60=$3840 | $3840 |
| VR Software License | $8000 | ||
| Staff | Half time $1500 | 2*$1500=$3000 | $3000*6=18000 |
| Total | $35,840 | ||
Revenue = $45 * 8 hours per day * 4 players in the game * 30 days * 6 months = $259,200
(at 100% equipment utilization).
Thus, with an equipment utilization of (35,840/259,200) * 100% = 13.8%, you will break even in 6 months.
In reality, we haven’t considered taxes, advertising, and many other factors, but even with these unaccounted for factors, equipment utilization above 17% means you will start making a net profit within 6 months.
What does 17% utilization mean? It means that out of an 8-hour working day, the equipment is only running for 1 hour and 20 minutes. Do you really think you can’t find customers in a mall for an hour and a half a day, including weekends?
Just for the sake of understanding, at 50% equipment utilization, your net profit per month with these numbers would be ((259,200 * 0.5) — 35,440) / 6 = $15,700, and this is from a small venue of 250 square feet.
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Case 2
— 6-Month Period
— 2000 ft2 Venue (200 m2)
— 16 Headsets
44,бб,,
| Expense | Per Unit | Total per Month | Total for 6 Months |
| Venue Rent | $2.5 per ft2 | 2000*$2.5=$5,000 | $5,000*6=$30,000 |
| Purchase of VR Headsets | $500 per headset | 16*500=$8,000 | $8,000 |
| Flooring | $1 per ft2 | $1*2,000ft2 = $2,000 | $2,000 |
| Walls | $60 per ft of the wall | (33+61+33+61)*$60=$11,280 | $11,280 |
| VR Software License | $24,000 | ||
| Staff | $2,000 | 2*$2,000=$4,000 | $4,000*6=24,000 |
| Total | $99,280 | ||
Revenue = $45 * 8 hours per day * 16 players in the game * 30 days * 6 months = $1,036,800
(at 100% equipment utilization).
The break-even point, where the business pays for itself in 6 months, is:
= 97,680 / 1,036,800 = 9.6%
Thus, the business will pay for itself in 6 months or less if the equipment is utilized at more than 10%.
In reality, this number will be closer to 15-17% because we haven’t included taxes and other expenses.
But even if your costs are not $97,000 but $150,000, and your sales are not a million, but a third of that, about $350,000, your profit would still be $200,000 over 6 months, or about $33,000 per month.