Sight Course Certificates
Are these too good to be true?
What is the catch?
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A sample of a typical
Front Sight Course Certificate (this is a 'gray' type
Part of a series on the Front
Sight Firearms Training Institute; what it does, how it does
it, and its relevance for you. Please click the links
on the right hand side for other parts of the series.
Front Sight has used a variety
of innovative marketing techniques in its successful efforts to
grow its user base.
While the 'list price' for
attending a Front Sight Course or buying a lifetime membership
is high, they offer regular discounts.
I've seen deals go as low as,
one-time, an unbelievably low $69 for a full four day course.
Sure, there were restrictions associated with this deal, but
even so, one has to wonder -how can Front Sight afford to do
this? Is this some sort of giant Ponzi scheme that will
implode any time soon?
Or is there a sensible business
strategy underlying their actions?
Deals Below Cost Price?
Some people have expressed
concern about Front Sight's business model, because sometimes it
seems that Front Sight is selling course certificates and/or
life memberships at what might be below their cost price.
Is this relentless drive to
expand and grow, even possibly if it involves growth with no
profit associated, indicative of underlying financial problems -
is it some sort of pyramid scheme that desperately needs future
money today to pay for yesterday's expenses? If Front
Sight stopped growing, would the bubble burst and Front Sight
These are good questions and
relevant concerns. We as observers can't really answer
them with 100% certainty because we're not privy to Front
Sight's financial situation. But there are some thoughts
and comments we can consider.
Only short time risk with most
First, if you are
considering buying a course certificate for a specific course,
and if there is not a lot of elapsed time between when you buy
the certificate and when you take the class, then you have only
a very short period of risk involved.
If you're buying a course in
May and will be attending the course in June, you've only a
month to be concerned about Front Sight's future. That's
much less exposure and risk than if you're buying a certificate
today because it is a drop dead great value deal, but have no
plans to redeem it on a course for some years to come.
If you're worried about
Front Sight's future, don't buy certificates far in advance of
when you might use them.
Just because you can buy a
certificate 'below cost' doesn't mean that Front Sight sold it
Here's another thought.
Maybe a person bought a lifetime membership for some thousands
of dollars, and included in that lifetime membership were two or
four certificates for future courses; certificates that the new
lifetime member didn't need of course (his new lifetime
membership will cover his future courses) but offered as a
'sweetener' to encourage him to sign up for the lifetime
The new lifetime member then
decides to simply cash in the certificates and sell them on eBay
or however else he can. The certificates have cost him
nothing, but he is keen to cash them in so as to reduce his
total outlay to buy the lifetime membership he now has.
Who knows how much he will
choose to sell the certificates for. Maybe he'll find
someone who was going to pay full list price - $2000 for a four
day course (currently most courses are priced at $500/day), and
that person is delighted to buy the certificate for $1000,
saving them $1000 in the process. That's a great deal for
both buyer and seller.
Maybe he'll find someone who
makes him a lowball offer, and maybe he accepts a mere $100 or
$200 for the four day certificate. That's an even better
value for the purchaser, but no-one was forcing the seller to
accept the low price. Perhaps it is still a good deal for
the seller - he has managed to 'unlock' $100 or $200 of value
and to reduce the net cost of his lifetime membership.
So consider the outcome.
Everyone benefits. Front Sight got to sell another
lifetime membership, the new lifetime member managed to cash in
some of the bonuses that encouraged him to buy the lifetime
membership, and the purchaser of the certificate got a course
certificate for pennies on the dollar of its full list price.
Does that transaction mean
that Front Sight is in financial trouble? Or does it mean
Front Sight has cleverly marketed a lifetime membership,
giving something of greater value to the purchaser than the
underlying cost to itself?
Loss leaders to get new
In addition to the preceding
scenario (including free certificates as a 'deal sweetener' when
selling a lifetime membership) maybe Front Sight sometimes sells course certificates at close to their
underlying cost price of training another student. Is this
a bad thing and cause for alarm?
Much of the time, such certificates are restricted to first time
students only. You can get a great deal to go to Front
Sight for the first time, but if you want to go back a second
time (and just about everyone does!) then you have fewer low
cost options, and you're more likely/willing to pay a higher
price, because you now have a first hand understanding of the
value you receive from a Front Sight course.
Maybe Front Sight doesn't
make a lot of money from your first visit, but they hope your
first visit will lead to a second and third visit subsequently.
They also hope that you'll
be so enthusiastic about your first experience (and nearly
everyone is) that you'll recommend their courses to your
friends, acting as an unpaid advertisement for Front Sight.
Other businesses offer loss
leaders all the time. If Front Sight chooses to do the
same, there's no harm in that.
What is 'below cost' for a
Front Sight Course and Certificate
Before we worry
about Front Sight selling course certificates for below cost,
perhaps we should try and guesstimate what 'below cost' actually
While we don't know the real
numbers associated with its operations, we offer some
assumptions and guesstimates below to get a feeling for the
general ball park situation from the perspective of a four day
Costs per student
Let's look at the variable
and semi-variable costs for Front Sight accepting one more
student onto a four day course.
Paper targets :
Let's allow $2.50 for paper targets per student.
Instructor cost :
A typical range has 40 students, a range master, and two or more
assistant instructors (let's say three). Let's say the
range master is earning $25/hr, one of the assistants is also
earning $25/hr, one is earning $20/hr and the third is earning
$15/hr. So that is $85/hr for all four people; now let's round that up to $100
to cover benefits for the range master (who is probably
salaried - the others probably are part timers on contract only) and whatever other costs are involved.
Update - the official manning level is a range master plus two
instructors, not three.
Let's say Front Sight pays
for 45 hours of time per four day course to its instructors.
That is a total wages bill of $4500, split 40 ways - a cost of
$112.50/student. Update - the hours for the four day
course have been reduced - see our article that
updates on changes to the
Front Sight courses.
(Update, Jan 2011 - I've
been advised that these pay rates may be on the high side for
assistant range masters. A couple of years ago FS was
apparently paying $100/day plus a free lunch to its assistant
range masters - that works out to less than $10/hr - instructor
costs per student could be as low as $100).
Water, Plastic Cups,
Misc : Let's allow $5 per student for these sorts of
costs (update - they no longer provide Gatorade).
Handout notes :
Let's allow $2.50 for the cost of copying hand-out notes (update
- instead of providing these for free, they now sell them for
Wear and tear in general
: Let's add a miscellaneous $15 per student for
'everything else' (whatever that might be). Update - now
that the basic courses don't use turning targets, the wear and
tear is reduced.
The total cost per
student therefore comes to about $137.50 - let's round that
up and call it
$140. (Update - that is starting to look a bit on
the high side with the various cost cutting changes that have
Offsetting revenue items per
In addition to the costs
they incur, Front Sight also stands to make some money from each
course attendee, over and above whatever attendance fee they
Let's look at these other
ways that Front Sight makes money from its students.
First, each new student pays a $50
fee for a background check (returning students also need
to continue to pay this once every year). Let's say that $10 of
this represents above the line costs to search some sort of
online database, and so the other $40 is
Gun and accessory rental
- I estimate that about one third of students rent a gun and
accessories for their four day course. This is a $100
item, with perhaps an underlying $20 cost and therefore $80
profit. With one third of students renting, that averages
to be $26.50 per student.
Ammunition sales -
All students who rent a gun and accessories must also buy
ammunition from Front Sight's Pro Shop - typically 600 rounds
for a four day course. Some of the other students who
bring their own gun and equipment also buy some or all of their
ammunition from the Pro Shop, so as to save on the hassle of
Let's say that 40% of
students buy 600 rounds, at a current cost of $264 for 9mm (ie
$22/box), $336 for .40 S&W ($28/box) or $384 ($32/box) for .45
ACP. I estimate a profit of about $12.50/box - $150 in
total on these prices. With 40% of students buying their
ammunition, that works out to $60 per student.
Other Pro Shop Sales
- Maybe a student buys a training manual (everyone should).
These sell for $40, with an underlying cost of
less than $5 - a $35 profit. (Update 2011 - now they sell
both training manuals and lecture notes too, for $40 each.) Perhaps they buy a Surefire flashlight or a holster or a cap or
some other piece of clothing, or an extra magazine, or who knows
whatever else that catches their eye. Talking about eyes,
maybe they buy some eye protection, or hearing protection, or
gloves. The list of 'goodies' for people to buy is
The Pro Shop is always very
busy selling things. Let's say they make an average of an
extra $7.50 in profit per student (if only one in five students
bought a training manual and nothing else, that would be $7 per
student on average).
Lunches - It
seems that between half and two thirds of students order boxed
lunches from Front Sight's official caterer. I can only
guess as to what type of arrangement Front Sight has with this
company, but it seems reasonable to assume that Front Sight
receives a fee per lunch sold/delivered - let's say $2.50 per
lunch (just under a 20% commission - with the lunches costing
$12.95, there could easily be $3 or more in fee paid to FS and
still allow the lunch company to make very good money). With four lunches on
a four day course, and let's say 60% of students buying lunches,
that is an average of $6/student.
If you buy a soft drink from
one of the vending machines at Front Sight, you're probably
contributing the better part of $1 each time you do that to FS's
So in total, Front Sight is
easily averaging $140 of income per student who attends one of
Sight Breaks Even on Student Training
Now you're going to think
that I've deliberately manipulated these figures to establish a
point, because look at this - Front Sight averages costs of
about $140 per student, and averages income of about $140 per
student - in other words, Front Sight pretty much breaks even on every
student before charging any fee at all to attend.
If Front Sight sold four day
courses for any price at all, the total amount of the course fee
ends up as being profit (well, then it has to be allocated to
overheads, depreciation, management and marketing, and so on).
For the record, I have
no dog in this fight. I'm dispassionately doing the sums
as best I can guess them, without any interest in if the final
result is positive or negative.
Note that you can argue a
different set of numbers probably just as convincingly as I've
offered these. But the range of averaged results from best
case assumptions to worst case assumptions suggests that, worst
case scenario, maybe Front Sight loses $50/student for a four
day course, and best case, maybe Front sight earns $25.
New Calculation Based on 2011
For 2011 it seems that Front
Sight incurs the following charges, more or less :
Paper Targets - $2
Instructor Costs - $75
Water and Cups - $2.50
Wear and Tear - $7.50
Total Cost = $87 - call it $90
Offset against this are the
following revenue items :
Background check - $40
Gun rental - $25
Ammo sales - $50
Manuals - $10
Other Pro Shop - $5
Lunches/Food Franchise/Drinks - $6
Total Income = $136, call it $130
In other words, in 2011
Front Sight is now making a $40 profit out of every student, up
from a 2010 scenario where it was probably slightly better than
No wonder Front Sight has
been recently and aggressively marketing very low cost lifetime
Extra Profit on Certificate
Sales - Breakage
Now let's think some more
about what happens when Front Sight sells (or gives away) a
Like any other sort of thing
entitling its bearer to a future benefit (eg a store gift card,
a frequent flier mileage award, a mail-in rebate, etc), some of
these certificates will never be used. Some will be lost,
others forgotten about. Maybe the current owner of the
certificate gives it to someone else, who isn't really
interested in ever redeeming it. Maybe the current owner
dies and the certificates are lost when his stuff is cleared
out. Or maybe any of many other eventualities.
One quite common occurrence
is that a person with a collection of certificates then becomes
a lifetime member and no longer has a use for the certificates.
Maybe that person will then try and sell them, maybe they'll
give them away, and maybe they'll simply throw them away.
One can only guess about what
percentage of breakage occurs with Front Sight certificates, but
it is reasonable to assume that this is at the very least a
minimum of 10% and potentially as high as 50%. Let's set
this at 25%.
In other words, with 25% of
certificates never being redeemed, if certificates are being
sold for $100, this equates to a net of $125 per actual redeemed
Front Sight's very liberal
terms associated with certificates - giving them no expiry and
allowing them to be assigned to other people - actually
encourage breakage because people feel no pressure to urgently
Extra Profit on Certificate
Sales - Future Redemption
Front Sight's very liberal
terms not only encourage breakage (see above), but also
encourage people to hoard them for an extended time before
How long does the average
certificate sit in someone's filing cabinet before it is
redeemed? It would be rare for a certificate to be bought
or given away on one day and to be redeemed for a course the
very next day.
On the other hand, it would
also be unusual for a certificate to sit unused for ten or
We can't even start to guess
at the average age of a certificate when it is redeemed, but
clearly some value has to be ascribed to this - whether it be
six months or six years. Let's be conservative and
cautious and say it is only one year.
So that means Front Sight
has had the benefit of your money for a year, interest free.
How much is that worth to Front Sight? Depending on the
type of financing they might otherwise have or need, and
depending on how effectively they could employ the money from
your up-front certificate purchase, depends on the value to
Let's say that there is a
10% value to Front Sight for getting your money for free for a
So that means each $100
certificate they sell for redemption in an average one year's
time is the same as selling a $110 course today for immediate
Special Deals to Jump Start New
Capacity and Courses
Front Sight recently started
offering midweek courses as well as weekend courses. This
almost, sort of, doubled their capacity in terms of how many
students they can train per week, month, year, etc.
Front Sight also recently
added a second set of ranges, again pretty much doubling their
capacity for students.
With these two doublings in
the last few months, they can now handle four times as many
students as before.
Doesn't it make sense to
sell some additional course certificates at low cost so as to
get some people in the door and onto the ranges? It is
understandable that Front Sight would wish to kickstart their
massively grown business by discounting some certificates for
future training, particularly on their new mid-week courses, and
that is exactly what they did.
Future Sales to New Students
Have you ever been to a
time-share promotion where you were given something quite
generous as an inducement to attend - maybe a several night free stay at the
time-share resort, in return for you attending a one or two hour
This is because they hope to
sell you a time-share membership during your stay, and during
the presentation you attend as part of the deal. Of
course, not everyone signs up for the time-share, but enough
people do to make it a sensible strategy.
There is something slightly
similar occurring with Front Sight, except in their case, they
wish to do two things. First, they wish you to come back
again and again, paying higher fees for each future course (and
when you remember that just about anything and everything you
pay for a course is profit, this is an important benefit to
Secondly, they would like
you to buy a lifetime membership at a cost of some thousands of
dollars. This may possibly be considered the 'jackpot'
outcome for Front Sight and their ultimate goal.
Just like time-shares, not
everyone will return, and not everyone will sign up for a life
membership. But with even a very small number of people
returning, and an even smaller number of people buying life
memberships, this will be more than sufficient for Front Sight,
particularly when their costs associated with you attending your
first course are close to nil.
Similar Considerations with
Lifetime Memberships Too
We've also seen Front Sight
selling lifetime memberships, sometimes for less than $1000 per
Similar considerations apply
to explain why this might be a good strategy. They get your
money up front. You might never go to Front Sight at all; or
maybe you might only go one or two or three times.
Only a very few people will go
dozens of times with their lifetime membership, and I guess
probably FS is happy to have those people as 'loss leaders' to
bring in all the others who don't visit as often.
Summing it Up - A Sensible and
Yes, it is a sensible and
profitable strategy for Front Sight to sell massively discounted
certificates for future courses.
First, consider that Front
Sight probably more or less breaks even on the courses, without any payment at all
from the attendees.
Second, to the face value of
any certificate sold, you need to add a 25% breakage factor and
a 10% 'time value of money' factor, so each $100 in certificate
value sold is actually worth $137.50 to Front Sight.
Third, there is a measurable
future value to Front Sight in getting a new student to attend a
course. That new student may attend subsequent courses in
the future, and may eventually buy a lifetime membership for
thousands of dollars (much of which is pure profit to Front
So doesn't it make sense for
Front Sight to sell certificates for any amount they can, and
even to generously give them away when it can help them sell
future courses and lifetime memberships, to keep their ranges
full and to keep their marketplace awareness high?
The bottom line seems to
suggest that Front Sight is well advised to sell course
certificates at low cost, and doing so does not suggest that
Front Sight is desperately scrabbling to get money, and neither
does it suggest that low priced certificate sales are below
Front Sight's cost.
Instead, it is an example of
Front Sight rationally growing its business - an outcome that
appears supported by their claims of having 'doubled their
business by some measure every year' over their 15 years of
existence so far.
Part of a multi-part series
Please click the links at
the top right of this page to read through
other parts of this extensive series on Front Sight and the
training they offer.
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3 Jan 2011, last update
30 Dec 2011
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