Costs basics

This Costs basics Info Guide explains the types of costs incurred in running your Visitor Attractions business, whether it be, for example, a heritage or cultural centre or a historic house. It identifies the three key factors that drive your costs.

Costs

Costs vary hugely with each Visitor Attraction. Your costs may include the following:

Staff costs
Goods for resale
Food and beverage
Marketing
Overheads
Taxes
Capital expenditure
Loan repayments

Staff costs

Goods for resale

Goods for resale or purchase of stock are required when you sell retail goods, eg literature, gift goods or souvenirs, to customers. 

Food and beverage

You incur costs when you prepare meals and refreshments for your customers.

Marketing

Overheads

Overheads include all the other expenses which are incurred in running your business, eg rent and rates, electricity and heating, accountancy fees, insurance, bank charges, security and maintenance. 

Taxes

Taxes include: 

• VAT - if your business qualifies as a VATable activity and your sales are over €37,500, you need to charge VAT to your customers.
• PAYE and PRSI payable on wages and salaries.

Unless your business is a not-for-profit organisation, your business profits are liable to income tax.

Capital expenditure

Loan repayments

You may also be making repayment over an agreed period to an investor or to the person from whom you bought your business.

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Cost drivers

Costs are driven by three factors:

• Costs incurred at fixed times
• Costs driven by sales volume (costs incurred as sales are made)
• Costs driven by decisions you make (discretionary or one-off costs)

Costs incurred at fixed times

Fixed costs include full-time staff pay, rent and rates, lease of equipment, bank repayments, insurance and accounting fees. These costs are fixed on a weekly, monthly or annual basis – you have little scope to avoid them although you may be able to reduce them.

You may incur additional seasonal costs, eg costs for additional staff, such as guides and actors, during the summer months. These costs may also be regarded as fixed in nature as they don't vary significantly in line with fluctuations in admissions income during the busy period.

Costs driven by sales volume

Variable costs include purchases of food and beverage costs, and goods for resale. These costs vary depending on your level of business activity. The more sales you make the more variable costs you incur.
 

Costs driven by decisions you make

Decisions you make to improve performance, enhance visitor experience or increase capacity, eg by adding new displays, will give rise to:

• One-off costs
• Other discretionary costs

One-off costs

One-off costs often require a significant outlay. Finance usually needs to be arranged from lenders to fund one-off costs including:

• Set-up costs, eg key money
• New buildings or equipment
• Health and Safety compliance

Other discretionary costs

You can control the timing and amounts of discretionary costs. These are often incurred when you want to increase capacity by improving performance or by enhancing the customer experience.

Examples of discretionary costs include:

• Marketing and promotional spend
• Instructor / staff training and development

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