How to Save Money When Buying Shooting Game Arcade Equipment

Arcade gaming costs include initial investments for machines and setup, ongoing expenses for utilities and salaries, with income from games and events leading to break-even in 15-24 months.

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Initial investment details

Investment Costs
Before investing any money, let’s discuss the costs associated with buying various arcade games. The price of an arcade machine heavily depends on the type of machine and the various elements included in it. It is known that traditional claw games may cost from $2,000 to $5,000, while highly sophisticated VR games exceed the cost of $20,000. It is recommended to combine more popular games with a few niche ones to attract diversified customer groups.

Location Costs
The location of your arcade should not be overlooked. Renting a floor area with high traffic, for example, in a mall or a heavily touristic area, costs from $5,000 to $15,000 monthly. Additionally, expenses related to the general appearance of the arcade are included in the setup costs. The interior design, lighting, and sitting areas take from $10,000 to $30,000 to make the area cozy and welcoming.

Licensing Costs
In addition, licenses are required to start the business. Business licenses, safety permits, and entertainment business licenses cost from $1,000 to $3,000. Make sure you are aware of the local regulations and consider the expenses to avoid any legal issues.

Technology Costs
Technology cannot be overlooked in the entertainment industry. A POS cash register, security cameras, and cybersecurity measures are required to ensure smooth business operation. A state-of-the-art point-of-sale cash register costs from $1,500 to $3,000, while security setups may add from $2,000 to $5,000 to the cost of the arcade.

Ongoing Operating Costs

Utilities and Rent
Naturally, maintaining an arcade incurs substantial monthly costs, with utilities and rent being among them. In an arcade, monthly utilities, such as electricity, water, and internet, can vary between $1,000 and $2,500, depending on the room’s size and the number of equipment. Rent cost also varies significantly depending on the location, from $10,000 and higher for the best locations. Such expenses must be accounted for in the budget to maintain an attractive arcade space.

Staff Salaries and Benefits
Having qualified workers is a must to operate smoothly. Monthly wages range from $2,000 to $3,500, depending on the role and experience. Furthermore, benefits for each employee, including health insurance, paid days off, and bonuses, add another $500 to $1,000 per employee per month. Investing in workers boosts productivity and customer service quality.

Maintenance and Repairs
Machines need to undergo regular maintenance to run and provide customers with a quality gameplay experience. Monthly maintenance, including regular check-ups and minor maintenance, fluctuates from $500 to $1,500. Subsequently, unexpected replacements and repairs require an additional $1,000 to $3,000 budget per year. Hard regular check helps prevent downtime and unsatisfied clients.

Marketing and Promotions
Finding and retaining clients requires regular marketing efforts. Monthly marketing expenses, including social media, advertising, or event promotion, can range between $1,000 and $3,000. Developing a strong marketing strategy attracts clients, thus covering the expenses. A dedicated budget for advertisements maintains the company’s competitiveness.

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Supplies and Consumables
An arcade requires a regular influx of supplies: tickets, tokens, cleaning materials, and office materials. Bound to vary at different places, costs can be between $300 and $700 per month. Supplying the necessary equipment to operate boosts the clients’ experience.

Income Potential

Daily Revenue from Games
Revenue from arcade games can be generated based on the number of plays. A popular game earns an average of $50 to $150 daily. Having 20 well-rounded machines can generate between $1,000 to $3,000 daily. Perfect placement and machine selection can increase this number.

Special Events and Parties
Special events and parties such as birthday parties, client events, and corporate team building can enhance revenue earnings. Charging between $200 to $500 per event can bring lucrative income. The return generated monthly can top up income from other streams, especially if customized experiences and packages are developed to attract more clients and retain existing ones.

Membership and Loyalty
Inclusion of a membership and loyalty program can bring back clients. A $30 monthly membership that is subscribed by 100 clients can generate an extra $3,000 each month. A formal and effective loyalty system can easily track client behavior and preferences, keeping patrons satisfied and making them spend more.

Merchandise and Concessions
Each client can spend about $5 on snacks and merchandise. If the arcade has 200 customers daily, one can generate $1,000 on a daily basis. High-profit merchandise coupled with an attractive array of snacks and drinks can assure more revenue.

Advertising and Sponsorship
Advertising space in the arcade can bring between $500 to $1,500. Sponsored events generate higher revenue. Such collaborations help generate constant cash inflow.

Break-even analysis and ROI

Break-even Point Calculation
Understanding the break-even point is a necessary endeavor for financial planning. The break-even point is the point at which the total revenue is equal to total expenses, and profit generation follows. To determine the measure, obtain the initial investment and monthly operating costs. In this case, assuming the initial investment is $75,000, while the monthly operational cost is $15,000 and the revenue is $20,000, the break-even point will be as follows: Break-even point = Initial Investment / Monthly Profit. Assuming that Initial Investment = $75,000, Monthly Profit = $20,000, and monthly expenses = $15,000, the break-even point = Monthly Profit / Initial Investment = $20,000 / $15,000 = 7.5 months. The above precision is critical in ensuring that the profitability target is achieved as planned.

Revenue Streams Monitoring
Revenue streams should be consistently monitored to guarantee swift achievement of break-even. Analysis of the machines and the events generating high income will provide the necessary insight to increase the focus on high-performing points. For instance, if the claw machines generate more revenue, more machines should be increased, or thematic events should be organized to bring in more players. Financial analysis also plays a part in the decision-making process, thereby enhancing profitability.

ROI Assessment
ROI is a precise measure of the profitability of the investment. It is calculated as follows: ROI = (Net Profit – Initial Investment) / Initial Investment × 100. A summary of the calculation after two years with a net profit of $150,000 where the initial investment is $75,000 is as follows: ROI = ($150,000 – $75,000) / $75,000 × 100 = 100%. As such, 100% shows a high profitability rate, hence a good investment. The assessment is also critical in evaluating a business’s financial performance.

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[edit: changed title of thread from "...to start an arcade" to "...to buy video games" for more clarity]

Hi everyone here at KLOV. This forum seems to be filled with lots of experienced and helpful people so I am going to try posting here to see if I can get some insight. I would like to one day start an arcade. Now I don't know how far I will be able to go, but I'm going to try my darndest to make it. I've been told that before trying to get a loan, the more arcades you start out with on your own, the better off you will be. So is there a method you all can share with me for getting arcades at good deals? Any tips or anything would be most helpful.

My experience is very little, but I do have passion. Just now, I bought my first arcade from Ebay, Ultimate Mortal Kombat 3 for $740.00 total. Was this a good deal? Might it be cheaper to buy parts, like say, a cheaper cabinet, and a PCB seperately? Is this a good idea or could it be improved some way? And I also just saw there is a section for buying and selling arcades on this forum that looks really cool would that be better or a good addition to Ebay?

Thanks everyone. Re: Cheapest way to start an Arcade?

Hi everyone here at KLOV. This forum seems to be filled with lots of experienced and helpful people so I am going to try posting here to see if I can get some insight. I would like to one day start an arcade. Now I don't know how far I will be able to go, but I'm going to try my darndest to make it. I've been told that before trying to get a loan, the more arcades you start out with on your own, the better off you will be. So is there a method you all can share with me for getting arcades at good deals? Any tips or anything would be most helpful.

My experience is very little, but I do have passion. Just now, I bought my first arcade from Ebay, Ultimate Mortal Kombat 3 for $740.00 total. Was this a good deal? Might it be cheaper to buy parts, like say, a cheaper cabinet, and a PCB seperately? Is this a good idea or could it be improved some way? And I also just saw there is a section for buying and selling arcades on this forum that looks really cool would that be better or a good addition to Ebay?

Thanks everyone.

Hello Mike and welcome to the madness.

I hate to be the one to break the news to you, but what you are considering taking on is a losing proposition. There is a reason why there are few arcades out there and even those are closing their doors.

Bottom line is that if you are super rich and can support running an arcade with your own personal dough and you want to do it for the "fun"... go for it. If you expect to make money and a living doing it, run away... fast.

The vast majority of arcades out there are losing money hand over fist. The only exceptions are the Dave and Busters of the world that have the $$$ backing and use their facilities to make money other ways (restaurant, bar, bowling, miniature golf, go-carts, water slides, etc.).

This question you ask has been asked more times than I can count on these forums and, unfortunately, the answer is always the same. Don't do it. Re: Cheapest way to start an Arcade?

Easiest way to understand is numbers

Say you paid $350.00 for a machine
.25 a play
Yeouch - a hell of alot of time/plays just to get your initial investment back out of it

Now you have your overhead (IE rent, utilities, wages, cleaning supplies, isurance).

I would say (and have seen it many times) to have an arcade is a great idea as long as the business isn't an arcade. Pizza joints seem to do quite well with games. However most kids don't want Ms Pac and the likes. So you better plan on installing games that were made within the last 3-5 years and go back to the math now. Let's say $ for a game @.50 a play. Not oog - not good at all. Re: Cheapest way to start an Arcade?

Hey guys, thanks for the input and advice. Yeah, I kinda agree that it will be like that as I've been reading that it just doesn't work anymore as a business. It's cool though. Either way, I've always wanted to own all my favorite arcades. I've got to do this one way or the other so if it doesn't work out I'd be happy to make a hobby out of it So any more advice for just getting as many as I can for the best prices?

Long story short, please save the "don't do it" advice. I'm really asking for help on buying arcades. Re: Cheapest way to start an Arcade?

Learn to work on them!!!! Is the easiest way to get A 500$ game for 100$. It might be as simple as a fuse, or a bad board. But if you can trouble shoot games its easy to get them cheap!!!

As far as your Mortal Kombat 735$ is a little high for me, but im a cheap ass...350-475$ is more like it for me!!

Last I have a few games on route!! About 20 to be exact!!! I have some ddr's and even a pacman out there..I work the deal with the owner that he pulls all permits ,and is responsible for damages...He gets a better cut that way...I do a 60-40 or a 70-30 on the ddr's. I like to see all the kids/adults enjoy games like i did when i was a kid!!!

THE HOME GAMING SYSTEM KILLED ARCADES!!!!

Don Re: Cheapest way to start an Arcade?

I'm still running a route but it's super hard to make any money at it. I have about 10 accounts I built up from scratch and last year I tried to open an actual arcade at a smaller mall in Sacramento and was told NO. I contacted the big malls in Sacramento that are losing businesses left and right and still was told NO. (westfield malls)
I thought about opening up something in Downtown Sacramento until I found out they charge $500-$600 for an arcade permit, you have to get approval from the police chief, you have to have a background check and be fingerprinted, etc..
The games can be had for $300- apiece and my estimate was about $15-20 grand to buy equipment. You'll need to have more for overhead and be able to keep it open for at least 6 months on your own cash.
With the economy the way it is you would have a hard time for sure. On my route I have 44 games or so and they break all the time. Yesterday I pulled in about $220 profit in one place and today another $100. That's in one month for each place.
Anyway it's not that we wouldn't like you to succeed at what you want to do but most of us already though of it and some started to do it like me and found out the hard way. I have at least 20K into my business and I'll either go into bartop machines in bars or something like that or sell off my route soon. It's not really worth it for the money involved.

I think where to get games has been covered fully, you just need to have an ear and eye out for them. Networking works wonders, just driving around sometimes you can find them. I picked up a free Asteriods one day just driving around.