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Episode 86 - Pinball Economics 101

Wedgehead Pinball Podcast·podcast_episode·53m 23s·analyzed·Jun 9, 2025
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Analysis

claude-haiku-4-5-20251001 · $0.034

TL;DR

Pinball Economics 101: Location pricing analysis and operator ROI calculations.

Summary

Alan, owner of Wedgehead Pinball bar in Portland and host of the Wedgehead Pinball Podcast, delivers a detailed economic analysis of location-based pinball operation. Using historical context (Black Knight's 1980 price increase from $0.25 to $0.50 per play), he argues that current pinball pricing ($0.75–$1.00 per play) has not kept pace with inflation and machine costs, and explores the economic realities operators face: break-even calculations, venue splits, earnings variance, and ROI timelines. He illustrates these concepts through a hypothetical operator scenario with four machines ($32,000 initial investment requiring 43,200 paid plays to break even accounting for free games and venue splits) and discusses real-world earnings data from his own location and other operators.

Key Claims

  • Black Knight (1980) was the first pinball game to cost $0.50 per play, doubling the standard $0.25 price point that had held for over a decade.

    high confidence · Alan (Wedgehead host), opening historical framing of episode

  • $0.50 in 1980 dollars equals approximately $1.95 in 2025 dollars when adjusted for inflation.

    high confidence · Alan, using inflation calculator reference

  • A new Stern Pro currently costs $7,000 MSRP (as of November 2024), and a fully featured Premium costs $9,800.

    high confidence · Alan, providing current pricing data

  • Average modern Stern pinball machines have play times of 3.5 to 3 minutes 45 seconds per game, rounding to 4 minutes with walk-up/down time, yielding a theoretical maximum of $15/hour earning potential at $1 per play.

    high confidence · Alan, based on audits from Wedgehead and other operators

  • Wedgehead operates 44 hours per week (Mon–Thu 4pm–11pm, Fri 4pm–midnight, Sat noon–midnight, Sun noon–10pm) and realistically averages around $5/hour in earnings, not the theoretical $15/hour maximum.

    high confidence · Alan, providing Wedgehead-specific operational data

  • A four-game lineup (Stranger Things Pro $7k, Godzilla Premium $9.7k, Addams Family $10.5k, Cheetah $4.5k) requires $32,000 initial investment and approximately 43,200 paid plays at $1 per play to break even after accounting for free games (10% replay rate) and a 75–25 venue split.

    high confidence · Alan, detailed hypothetical operator scenario and ROI calculation

  • New games typically see peak earnings for 3–6 weeks after placement; if players decide the game 'sucks,' earnings can fall off a cliff, and the operator is stuck with the purchase.

    high confidence · Alan, describing earnings lifecycle based on operator experience

  • Deadpool, Stranger Things, and Godzilla are examples of 'evergreen' titles that maintain stronger-than-average earnings over their lifetimes at Wedgehead.

    high confidence · Alan, citing Wedgehead location-specific performance data

Notable Quotes

  • “Black Knight was a huge sensation for another reason too, one that is almost entirely forgotten today, but at the time was just as earth-shattering as the introduction of the upper playfield. And that is what I want to focus on today.”

    Alan @ early episode — Sets up the historical argument that Black Knight's price increase (not just its technical features) was revolutionary and parallels modern pricing challenges

  • “It just goes to show that people will pay More Brewing Company for a great product in the right conditions. They just need to see the value.”

    Alan @ post-Black Knight discussion — Core economic principle: perceived value drives willingness to pay despite price increases

  • “like it or not, the price of pinball needs to go up again. Now, I know that nobody wants to hear this, but pinball needs to cost More Brewing Company per play in the year 2025 and beyond.”

    Alan @ thesis statement section — Direct statement of the episode's central argument; sets up pushback and counterarguments

  • “If you use an inflation calculator, you will see that 50 cents in 1980 actually has a corrected cost of $1.95 in 2025 dollars. Oh, I wish I could see the look of absolute fucking disgust on your faces right now.”

    Alan @ inflation analysis — Highlights the shock value of inflation-adjusted pricing; illustrates gap between perceived and inflation-adjusted costs

  • “That means that the maximum earning potential is about 15 plays per hour, or simply $15. That's sort of the hard upper ceiling. $15 an hour under laboratory perfect conditions.”

    Alan @ earnings potential section — Establishes theoretical maximum earnings as baseline for realistic ROI discussions

  • “It's not all gravy all of the time. It's a lot More Brewing Company like casting a net, and when you go out to pull the net back up, there will be some varying amount of mate/man in it.”

    Alan @ earnings variance discussion — Metaphor for unpredictable daily/weekly earnings fluctuations; emphasizes that operators cannot assume consistent income

Entities

AlanpersonAlexpersonWedgeheadcompanyBlack KnightgameSteve RitchiepersonStranger Things ProgameGodzilla PremiumgameAddams Familygame

Signals

  • $

    market_signal: Current pinball location pricing ($0.75–$1.00 per play) has not kept pace with inflation or machine acquisition costs; Alan argues pricing pressure is unsustainable.

    high · Alan's inflation analysis showing $0.50 in 1980 = $1.95 in 2025; current Stern Pro $7,000 MSRP requires 7,000 $1 plays to break even before accounting for splits and free games

  • ?

    operational_signal: Pinball earnings at location venues are highly variable by location, time of day, day of week, and machine title; theoretical $15/hour maximum rarely achieved in practice.

    high · Alan's data: Wedgehead averages ~$5/hour in realistic conditions vs. $15/hour theoretical max; new games earn strongly for 3–6 weeks then may collapse; some top locations break even in 6–9 months, others take much longer

  • ?

    business_signal: Operators bear significant risk when machines underperform; sunk cost of $7k–$10.5k per machine with no guaranteed ROI timeline creates financial pressure.

    high · Alan's break-even scenario: $32k invested in 4 machines; need 43,200 paid plays to recover investment; names Avengers Infinity Quest and Led Zeppelin as examples of costly duds

  • ?

    operational_signal: Operator-to-venue splits vary significantly by region: historically 50–50, now ranging from 60–40 (Portland) to 80–20 operator favorable in other regions.

    medium · Alan: 'I hear from a lot of new operators around the country getting much Bob Betor splits than that. 80-20 in the operator's favor seems to be increasingly common in many regions. Not in Portland, mind you, where 60-40 is More Brewing Company the norm.'

  • ?

Transcript

groq_whisper · $0.160

0:00
Hello everybody i am alan and all you loyal listeners know me by now but i am one of the owners of wedgehead which is a pinball bar in the heart of portland oregon's hollywood district and i'm also your host of this podcast with the same name normally on these episodes i'm joined by my trusty co-host alex the water boy but for this episode i'm going solo because i have this special topic in store for everybody but before we get to this week's episode i need to plug our coffee account to all you listeners out there. As you already know, this show is entirely free, but it's something that I put a lot of work into to bring you all a fresh episode each and every Monday morning. So if you appreciate and enjoy the show and want to donate a few bucks as a thank you, just head on over to ko-fi.com slash Wedgehead Podcast. That link is also in the show notes. All donations will get you a link to join our private Discord channel where Alex and I and the rest of the supporters of the show chat about all things pinball. and there's a lot of access and extra content in there that you won't get anywhere else. The donations help keep us ad-free and without corporate sponsors, and we appreciate each and every one of y'all that listen each week, tell your friends, and donate to the show. We're about 60% of the way towards our goal to get to Colorado at the time of this recording, and I hope that we can get the final 40% of the way there in the next couple weeks and book our trip this summer to the great state of Colorado to play some location pinball with our friends. With all that out of the way, this week's special episode was originally entitled The True Cost of Location Pinball and was subsequently written, added onto, and rewritten by me over the last few years. Long-time listeners of the show may remember me teasing this episode multiple times over the last 85 episodes, but the wait is finally over. This week's episode is Pinball Economics 101, Introduction to the Business of Pinball on Location.
2:24
You my enemy. Black Knight was released in 1980 by Williams. It was a groundbreaking game at the time, and if you're reading this, then you definitely know Black Knight. It's a seminal moment in pinball history. It spawned two sequels, and it changed the landscape of the industry forever. Mostly it's remembered as the first game ever with an upper playfield, and the first use of a Magnesium feature. It was also designed by the freshly crowned king of pinball, Sir Steve Ritchie. But Black Knight was a huge sensation for another reason too, one that is almost entirely forgotten today, but at the time was just as earth-shattering as the introduction of the upper playfield. And that is what I want to focus on today. It was the first game to cost 50 cents a play. Before Black Knight, pinball prices had been very static at $0.25 a play for a decade plus. But with this new game, the manufacturer felt like this wasn't just your ordinary old pinball machine. Something you mindlessly plunk a single quarter into and bat a ball around for a little while. This game had speech. It had multiball. It had an industry first second playfield. Industry first MagnaSave. This game was different, dammit. This game told a story. It was special. All this innovation came with a cost, and that cost was double? Wait, what? So Black Knight comes onto the scene and immediately doubles the cost of a game of pinball. What happened when the price went up? Did players stop playing pinball? Did they boycott this new game and its price hike? Did they bitch and moan and yet begrudgingly pump twice as many quarters into them as they had before? Well, Williams on the manufacturer's end sold the ever-loving shit out of them, excuse the technical jargon, to operators, because once the first units got put out on location, they found that they were pulling buckets of quarters out of them each week. The Black Knight had made every other game obsolete by comparison. It was like seeing the iPhone come out, and everyone immediately wanted to throw out their old flip phones, because all of a sudden, they weren't good enough anymore. They had seen the future. They wanted to play Black Knight because everything else felt like a Motorola Razr now, even if it was going to cost them two quarters instead of one. It just goes to show that people will pay more for a great product in the right conditions. They just need to see the value. But what's up with this history lesson? Why do I care that the price of pinball doubled in 1980? Well, because like it or not, the price of pinball needs to go up again. Now, I know that nobody wants to hear this, but pinball needs to cost more per play in the year 2025 and beyond. So don't try and shoot the messenger here, I'm only telling you the simple fucking truth. So listen up. Some of you may already be thinking, Dude, pinball has already doubled since then. All the new games cost a dollar a play where I live. Well, ignoring the fact that pricing still varies greatly based upon what regions of the country you live in, I will agree that it has become pretty well adopted that a dollar a play has become common if it is still yet to be universally adopted everywhere, including the region that I live and operate in. You can still see new games listed at 75 cents a play. And the graduation to a standard $1 has been slower here than in some other regions of the country. So that is to say that pinball pricing still varies by the operator and era of the game being operated in addition to the region. And so you may say $1 twice as much as 50 cents, Alan. That is also correct. Hello, basic math skills. But here's the rub. If you use an inflation calculator, you will see that 50 cents in 1980 actually has a corrected cost of $1.95 in 2025 dollars. Oh, I wish I could see the look of absolute fucking disgust on your faces right now. Is he suggesting that we should pay an extra 75 cents or $1 a game in this economy?

  • Historical operator-to-location splits were 50–50 (even split); modern splits trend 80–20 in the operator's favor in many regions, with Portland typically at 60–40.

    medium confidence · Alan, based on anecdotal reports from operators across the country

  • Some extremely busy arcades achieve break-even on new machines in 6–9 months; Wedgehead's data aligns with this, though other operators on coin-drop routes see highly variable timelines depending on location quality.

    medium confidence · Alan, mixing Wedgehead data with secondhand reports from other operators including 'rodesy,' described as a legendary old-school route operator

    • “The worst part is that as an operator, once you find out that the game is a dud, like Avengers Infinity Arcade Quest or Led Zeppelin, you already bought the damn thing.”

    Alan @ game performance variability section — Highlights operator risk: sunk cost on underperforming titles; names specific commercial failures

  • “So in reality, you're going to need an extra 3,200 plays, which is a total of 35,200 plays at $1 per play to meet that. Oh yeah, but there's also the split to think about. Oh shit, that's another 25% going out the door.”

    Alan @ break-even calculation — Demonstrates cascading complexity of ROI: initial investment, free games, venue split each reduce net earnings

  • “pinball is booming right... if you listen to the echo chamber on pinside or the pinball subreddit or you go to pinball shows or you watch twitch streams you might even be led to believe that Pinball is More Brewing Company popular now than it has ever been before. Is that true? Well, sort of.”

    Alan @ pinball popularity context — Critiques echo-chamber perception vs. reality; contextualizes modern popularity as 30-year high but well below historical peaks

  • “Some of the games en route [earnings depend heavily on location quality]... you will inevitably have a mixture of some great and some other not-so-great earning locations.”

    Alan @ concluding thoughts — Sets up reality check: operators with multi-location routes experience significant variance in earnings

    • Cheetah
    game
    Deadpoolgame
    Harry Williamsperson
    Sterncompany
    rodesyperson
    Avengers Infinity Questgame
    Led Zeppelingame
    Rain City Free Playorganization
    Ko-fiproduct
    Pinsideorganization
    IFPAorganization

    product_strategy: New pinball machine costs have increased significantly: Stern Pro $7,000 (Nov 2024); Premium $9,800; used high-quality games from 1990s $10k+; early solid-state games $3k–$6k.

    high · Alan provides current MSRP and median used sale prices for multiple machine tiers

  • $

    market_signal: Collector investment in home machines may be inflating secondary market prices for used location machines, reducing operator margins.

    medium · Alan notes used classic games (Cheetah, AIQ) cost $10k+, nearly equivalent to new Stern Pro MSRP, making operator ROI difficult

  • ?

    gameplay_signal: Classic solid-state games (early 1980s) lack ball saves and safe ramp returns, resulting in shorter play times and higher difficulty; modern Sterns have longer average play times due to safety features.

    high · Alan: Factory ROMs on classic games 'feature a bunch of dangerous shots very close to the Flippers Arcade,' making them 'much tougher game, i.e. shorter playing game than most of the brand new Stern games'

  • ~

    sentiment_shift: Online pinball communities (Pinside, Reddit, Twitch) may overestimate pinball's current popularity; Alan clarifies that modern pinball is a 30-year high but far below historical 1970s–1990s peaks.

    medium · Alan: 'if you listen to the echo chamber on pinside or the pinball subreddit or you go to pinball shows or you watch twitch streams you might even be led to believe that Pinball is More Brewing Company popular now than it has ever been before. Is that true? Well, sort of.'

  • ?

    operational_signal: Operators benefit from organizing events to drive venue foot traffic and justify venue's space allocation to pinball machines vs. tables/seating.

    medium · Alan: 'It also pays you and them to be organizing events there because you need to get people into the brewery to buy beers. This will make sure that your funny little pinball experiment will get to stick around.'

  • $

    market_signal: A small subset of pinball titles achieve sustained above-average earnings ('evergreen' titles); Deadpool, Stranger Things, and Godzilla cited as examples at Wedgehead.

    medium · Alan: 'once every few years you seem to get an evergreen title that becomes a classic. And those titles will continue to have stronger than average earnings over their lifetimes. Deadpool, Stranger Things, and Godzilla are good examples of this. At least they are for us.'

  • ?

    operational_signal: Factory settings for free games (replays, matches, High Score rewards, specials) typically result in 10–20% free game rate; operators can adjust settings, affecting payback timeline.

    high · Alan: 'most factory settings on most games would probably equate to a 15 to 20 free game rate once you add replays to matches to High Score Arcade rewards to specials but i'm just going to call it 10' for conservative break-even calculation

    • 6:37
    Relax, everybody. I'm a pinball player, too. and even I would balk at that $1.75 or $2 games of pinball. And as an operator and location owner, I know that the location market simply won't bear that cost. People just wouldn't play them at that price point. At least not enough people. I can feel y'all vigorously nodding your heads angrily right now. I'll be damned if I'm going to play $2 for a single game of pinball. I'd rather quit playing pinball altogether. To be fair, in my example, pinball also promptly crashed like two years later, after Black Knight. And I don't have good data on exactly how prevalent the 50 cent price point was back then, and really probably not very. It seems like a bit of an outlier. Because even then, 50 cents was only what the manufacturer recommended. What the actual operator ended up charging was ultimately up to them. And I'm sure that many of them opted to keep it at 25 cents. Pinball almost died in the mid-80s. But by the late 1980s, games like Elvira and the Party Monsters were back to recommending 50 cents on their flyers as a price per play. So let's look at what 50 cents was in 1990, since games definitely cost 50 cents throughout the 90s. According to the same inflation calculator, 50 cents would be the equivalent of $1.23 today. So where does that leave us? Because the fact remains that machines of all eras cost a whole hell of a lot more than they used to to buy and maintain. A new Stern Pro costs 6.9 thousand MSRP, and a fully featured premium now costs 9.8 thousand. A desirable Bally Williams from the 90s, like Addams Family, Twilight Zone, Theater of Magic, costs about 10 thousand or more, in nice use condition. Shit, even late 1970s and early 80s solid states are regularly being sold for 3 thousand to 6 thousand undesirable titles. So what exactly are the problems and what are some of the possible solutions? Because doubling the price per play isn't viable. And I'm not suggesting that it is. So save yourself the time. You spend writing me some fucking hate mail. I'm repeating myself a little bit just to be crystal clear. I'm not advocating for $2 games. Okay? But we need to explore more about why the price as it stands right now is too low. And what are some clever ways to change it. without gouging the location player in the process. For some of you, you may have already started to spot a few issues in the data given above. For the rest of you, let me start by asking you a question. This is a thought experiment time. Let's say you walk into your local bar, arcade, brewery, or whatever, and they have a four-game lineup. Let's just say there's a Stranger Things Pro, Godzilla Premium, a Cheetah, and an Addams Family. My question to you is, what would you expect to pay to play each game? If you're talking about the two modern Sterns, it should be a minimum of a dollar a play. Hopefully you already understand that. But let's look a little bit closer, because there's another wrinkle to this first comparison. Obviously, one is a pro, and the other is a premium model. These games have different gameplay features, but more importantly, they cost significantly different prices to buy. However, I would wager to guess that most of you don't expect to pay any extra money to play the more expensive premium model, nor do I know of many operators that do charge more. But if the premium game costs 26% more to buy and own, then why doesn't the player expect to pay more to play them? Like, why would a pro model cost $1 a play, but a premium wouldn't cost $1.25? But what is the actual point of paying more for the same title if there's not a commensurate return on the investment for the operator? I feel like I can hear the groans coming through my headphones right now. Settle down. We've only just begun. And remember, y'all asked me repeatedly for this episode. Now on to the next question. What would you expect to pay for a game of Addams Family? And why isn't it also a dollar plus? As established above, getting your hands on a good copy of an Addams Family will easily cost you more than even a new Stern Premium to buy. So it should bear to reason that a game of Addams Family should cost at least what playing a Stern Godzilla Premium would cost, right? Right? Not to mention these older games typically require more maintenance. Pinball machines are like cars. The more miles you put on them, the more wear and tear they accrue, requiring more maintenance the older they get. But I would guess that this hasn't entered your mind if you're being honest, or unless you're already an operator. I would bet that most of y'all's reasoning would say, well, that game is old, or that game is basic and shallow, thereby inferring that it should somehow cost less to play than a brand new Stern. However, I would posit a better argument that might foreshadow some of my later conclusions.
    11:47
    The factory ROM for Addams Family shipped without a ball safe, features a bunch of dangerous shots very close to the flippers, and has the power magnets in the center of the playfield, all of which can make Addams Family a much tougher game, i.e. shorter playing game than most of the brand new Stern games. Now obviously, you can run into a very friendly copy of Addams, but in general, and since the average game time is shorter, the cost per play being less can make sense within reason. Now let's talk about the oldest game in this hypothetical lineup, Cheetah. How do you properly evaluate a game of such a different era? It doesn't have ramps or modes or multiball. It just doesn't feel right that this game would cost a dollar a play. The early solid-state era is so dramatically different from modern pinball and playstyle. But again, what I think that this should come down to ideally is playtime. Since these games don't have ball saves and since they don't have ramps with safe returns to flippers, these solid state games are much more difficult to control. And this leads to much shorter game times. And once again, this can mean a smaller price per play. But these classic Sterns are increasingly selling for a whole hell of a lot of money. Cheetah costs about 5k or about 1900 less than their brand new Stern Pro model. Not really that much of a difference compared to a brand new game. Hell slightly used Stern Pros out of the box cost about the same So the important question right here is how much should a solid state game like Cheetah cost per play Surely it less right But wait why and how much Well, before I attempt to answer all these questions definitively, let me first explore the concept of perceived value. What it is and what it means for the price of things. You see, everything that we buy or consume comes with an expected price or cost that lives within our minds. These expectations are based upon all of our previous experiences within a marketplace. Market forces and competitions are large drivers in what you can expect to pay for goods and services within a marketplace. But if we're going to look at the location play pinball market and try to apply some simple mechanisms like supply, demand, cost to own, return on investment, we come up with a problem. Let's begin by taking a look at what I'm talking about here in a little more detail. And don't worry, I will keep the jargon to a minimum. This is meant to be a very basic introduction to the economics of location pinball, not a peer-reviewed economic paper. First of all, we have the cost of the machine itself. And for this, I'm going to just look at the cost of a Stern Pro because you can buy them new and they are the most common game that you'll see out on location. I will also be using MSRP, even though what a person actually pays on any given title may be a couple hundred dollars less or sometimes even more, depending on various factors like distributor relations or scarcity of a title. I am trying to keep this simple by using the MSRP of Stern Pros in this example, but my greater point translates to all pinball machines of all eras purchased on both the new and used pinball market. What you pay for a pinball machine is a sunk cost investment, whether it's new or used. As of this writing, November 2024, all Stern Pros now cost $7,000 to buy new in box. Obviously, this will be more if you're listening to this episode in the future. Inflation and whatnot. I bet you've heard of it. So now we have our cost to own. Well, sort of. I haven't included tax or ship, but let's just pretend like those don't even exist, even though they do, and oh boy, do they ever. But at least we have the purchase price. Again, mostly. Minus those pesky taxes and shipping. Let's look at that initial cost and see what we can expect to see about a return on investment. ROI. Why? Start with the simple math. You buy a machine for full MSRP, and you place that machine out on location for $1 a play. It would take you 7,000 plays until you broke even on this investment. Now, does that number sound big to you? Well, that's because it fucking should. That's a shitload of plays. Here, let me put this into perspective for you a little bit. The average modern stern pinball machine gets average play times of around three and a half minutes to three minutes, 45 seconds per game. Obviously, this varies from machine to machine somewhat. But after checking the audits on our sterns on route and asking for audits from other operators, this is a fair and conservative estimate for the average stern playing time. Let's round that number up 30 seconds to account for walk-up and walk-away time, since there is time when a player is putting quarters into a game, reading the rules card, adjusting their headphones, sipping their beer, etc. Let's just call it an even four minutes a game. That means that the maximum earning potential is about 15 plays per hour, or simply $15. That's sort of the hard upper ceiling. $15 an hour under laboratory perfect conditions. That's player in, player out, constant games with little to no downtime, wilds being played constantly, and with no sharks or highly skilled players in the middle of that peak magical earnings hour, having marathon games and completely tanking and destroying your perfect take. The low end for an hour is obviously $0, which can and unfortunately does happen all the time for a pinball machine out on location. Just because a game is on and a location is open doesn't mean that the game is getting played. No plays equals no earnings, no shit. Every single location, no matter how popular or famous, will have a variance on earnings based upon time, day of the week, and title. It's not all gravy all of the time. It's a lot more like casting a net, and when you go out to pull the net back up, there will be some varying amount of money in it. It's not just like turning on a money faucet and filling up bottle after bottle of cash until you're satisfied for the day, then turning the money faucet off at the end of the night just to tap it again the next morning. Earnings aren't guaranteed and can fluctuate a lot and for a lot of different reasons. For example, the newest game usually earns great. sometimes even gangbusters for a short time as the regulars and pinheads in your local scene flock to play the newest game. It will continue to do extraordinarily well only until those players have gotten the chance to play the newest game enough to decide whether or not they think it actually sucks, and if they do, they will simply stop playing it and revert back to sessioning their other, more preferred games instead. This period is roughly three to six weeks long. After this point, earnings will either taper off gradually to the mean, or sometimes they'll fall off a fucking cliff. The worst part is that as an operator, once you find out that the game is a dud, like Avengers Infinity Quest or Led Zeppelin, you already bought the damn thing. On the bright side, once every few years you seem to get an evergreen title that becomes a classic. And those titles will continue to have stronger than average earnings over their lifetimes. Deadpool, Stranger Things, and Godzilla are good examples of this. At least they are for us. But most games are, by definition, mid. They fall somewhere between these two extreme sides of the spectrum. I'll be going with just our location, as that's the direct data that I have access to. And because we're a fairly popular pinball location in a big pinball city, I feel like these numbers can give you a good representation of what the higher end number of plays can be. For the record, we're open 7 days a week, 4pm to 11pm Monday through Thursday, 4pm to midnight Friday, and noon to midnight Saturday, noon to 10pm Sunday. That's 44 hours per week for those of you keeping score. So if we ran a game at perfect efficiency, the mythical $15 an hour we established before, that would be $660 a week or $2,640 a month. I will tell you, though, without a shadow of a doubt, that this isn't possible anywhere on God's green earth. This should already be obvious, but in case it isn't, we'll explore it further in a little bit. First, I want to continue our thought experiment. I want to put you in the seat. You've decided to become a pinball operator. Now, let's say you got your games placed into a premier pinball location. maybe it's that local brewery that's always busy and you're in a town that's currently underserved and starved for location pinball you know lighter competition and all and you see that you can bring water to the desert you are the quesadilla you are the lisan al-ghaib the chosen one you're harry potter luke skywalker katniss everdeen proto baggins you get it same shit the first variable you're going to run into is the split. Because you see young operator, you need a venue to place your games into. In this example, there's some popular microbrewery in your town. You approach the owner of the brewery. You successfully pitch them that having pinball machines in their business is a good idea. I'm breezing past this part because obviously not every business owner is going to want pinball machines in their brewery. Crazy? I know. Not this one. Your charm and powers of persuasion were simply too overwhelming. You got the riz, as the kids say. Even still, you're going to have a split. Historically, an operator to location owner split was 50-50, or an even split. Whatever is in the cash box at the end of the month or quarter was then counted and split between the operator and the location owner. In the modern day, I hear from a lot of new operators around the country getting much better splits than that. 80-20 in the operator's favor seems to be increasingly common in many regions. Not in Portland, mind you, where 60-40 is more the norm. But hopefully you're not in this hyper-crowded Portland market and are getting a much better split elsewhere in the country. Since I don't know what every operator split in every single market across this country, I'm just going to split the splits. For our thought experiment, your split is 75-25. That means you keep 75 cents of every dollar that your machine brings in, and you're giving a quarter per game back to the location owner as a reason to keep your games there. Space is extremely valuable in a bar or restaurant, or in this case, a brewery. A busy location could always look at a row of your pinball machines and simply say, man, I could really use the space for some extra tables. And that's what their side of the split is there for. You want to be able to present them with a few hundred dollars every collection to keep them from their own intrusive thoughts. It also pays you and them to be organizing events there because you need to get people into the brewery to buy beers. This will make sure that your funny little pinball experiment will get to stick around. But all that's for a future talk. Let's get back to the nuts and bolts. You have your location. You have your initial four games that I mentioned before. A nice little mix of two of the best earning sterns, complete with Insider Connected, the best selling and most famous pinball machine of all time, the Addams Family, and a classic early solid state for the true connoisseurs out there, Cheeto. Designed by the greatest pinball genius of all time, Mr. Harry Williams. Now let's calculate how much you invested in these four games. First, for your Stranger Things Pro and Godzilla Premium, I'm using MSRP like I said above. yes you can get them for less slightly used but buying new box games as their release is very common by many operators so that's what i'm going to assume you did here for adams and cheetah i'm using the median sale price from pin side yes i also know that this varies on region condition working not working etc but this is a fair median price for both of these games so your stranger things pro is seven thousand dollars without tax or shipping your godzilla premium is nine thousand seven hundred dollars without tax or shipping adam's family is ten thousand five hundred dollars you found a nice one a couple hours away in good working order and cheetah is four thousand five hundred dollars and it's a steal at that price for such an excellent and rare game so now you have $32,000 invested in just these four pinball machines. Does that number surprise you at all? Maybe you just stuck to four Stern Pros and you're at $28,000.
    24:39
    Does that sound all that much better? I think y'all can put A and B together, but that now means that if you charge $1 per play for each one of these games, you would need a minimum of 32,000 paid plays before you even broke even and paid off your equipment. Oh yeah, but this is actually not just 32,000 plays, is it? Because I slipped the small little word paid in there. And of course, that's because not all plays are paid for in pinball right you got your replays and your matches your high score rewards and of course the old holdover from the em days the special to consider once again these are all factory settings and settings mean that operators can and do change them as they see fit even the factory settings for these different free game types vary by era manufacturer but to continue on our quest of finding some generic one size fits all metric for each variable i'm going to conservatively place the numbers of free games at 10 honestly most factory settings on most games would probably equate to a 15 to 20 free game rate once you add replays to matches to high score rewards to specials but i'm just going to call it 10 so people don't accuse me of exaggerating So in reality, you're going to need an extra 3,200 plays, which is a total of 35,200 plays at $1 per play to meet that. Oh yeah, but there's also the split to think about. Oh shit, that's another 25% going out the door. Guess it's time to move those goalposts back just a little bit more. But at least it's only 25% of the paid plays and not all those free games too. Holy fuck, that's another 8,000 plays? So that means in deep breath time you actually need 43 plays to break even cool cool cool cool no doubt no doubt no doubt so now that you know the rough number of paid plays that you will need to break even but how long would that actually take you know in time well the good news is that pinball is booming right i mean you're into it and you have some friends that are into it probably a few more people in your life are at least humoring you in your niche obsession with pinball and pinball podcasts plus there's more manufacturers nowadays and it's definitely more accessible than it was 10 years ago hell if you listen to the echo chamber on pinside or the pinball subreddit or you go to pinball shows or you watch twitch streams you might even be led to believe that Pinball is more popular now than it has ever been before. Is that true? Well, sort of. I mean, it's definitely not more popular than it's ever been, but more popular than it's been in about 30 years. And that's not nothing. They don't make the same amount of games that they did in the early 90s. And the death of the arcade is well documented. I mean, depending on your age, you probably lived through it. And it's also nowhere near the peak from the 1970s, over 50 to 60 years ago. But we are getting more arcades again. They're mostly just arcade bars now. And pinball is very visible right now thanks to technology like the internet and the accessibility of pinball content that has allowed a home collector market to boom. So this answer is going to come with even more caveats and variables than anything else, because this answer is going to depend so heavily on the location, the hours of operation, and the surrounding market or region. But since we already established your chosen one hero arc at the beginning of this hypothetical operator journey, where you get yourself the most blessed and bitchin' first spot, it's open long hours, which is great. The longer the better, really. More time for your nets to be in the water, so to speak. and it's conveniently located in your town. You already got lots of foot traffic and built-in potential customers. Clientele is relatively young, and there isn't a whole lot of other competition around you to worry about. You get to be that oasis in the desert.
    29:16
    Even still, that $15 an hour I talked about at the beginning? no fucking way averaging five dollars an hour would be huge the most reliable info that i've been able to gather is that some extremely busy and popular arcades can pay certain games off in as little as six months maybe nine to twelve months for their other less popular games and that's sort of in line with us too at wedgehead we do free play at wedgehead now so the math is slightly more complicated since it's not per play but if most of the new games are measured by play count they would reach their break even in six to nine months but rodesy my business partner and legendary old school route operator still runs a route on coin drop and how long a game takes to make its initial purchase price back varies a lot depending on if it's at one of his best locations or one of his lesser locations and yes as an operator if you ever branch out past this one mythically perfect location into more, you will inevitably have a mixture of some great and some other not-so-great earning locations. I would say that some of the games en route can even take upwards of a year and a half to two years to pay themselves back. And almost certainly, there's some hobbyist operator out there listening to this right now and screaming, up to two years? Are you kidding me? I would kill to pay off a pin in two years. It takes me three or four or five. But that's not you, Ponyboy. I love you. Stay golden, Ponyboy. I gotta pee. You're special, remember? Top tier earnings or bust straight out the gate for you. To the moon! So here's another way to visualize it. Let's use your Stranger Things Pro as the example. That one that you bought for $7,000, new in box, no shipping or taxes. Plus 10% for free or non-paid games. plus 25% as you're split to the generous location owner to which this mighty windfall of operating pinball machines you owe in part to them. That's $9,450 that that game needs to bring in. Remember, this is the pro model that you bought for $7,000. Hopefully you've realized by now that a dollar a play is where you need to be. So that would be 9,450 plays to reach break even. But just in case you opted for 75 cents a play instead, that means you actually need 12,600 plays to recoup and break even. And God forbid, if you're trying to run a brand new game in the year 2025 and beyond, on only 50 cents a play, that would be 18,900 plays until break even. How long would that take, though? Now, again, it depends. I've spoken to some operators where they're fine as long as the game earns $50 a week, which is $200 a month. And I know that Roadsy likes to look at route games through the lens of if it doesn't earn $75 a week or $300 a month, then it isn't really worth the time and energy to maintain those locations. But then again, the split is lower here, too. So the game's got to make even more to make the same as some other operator in a different region with a better split on less plays. For those of you still playing along, $300 a month is 10 paid plays per day average. Now this might not sound like a whole lot, but it certainly can be. Rhodes definitely has locations or certain games on location that do less than that. This is why longer hours help so much at the end of a month. But that rate is still only on pace to pay that game off in about 2.5 years. So to get a game paid off in a year, you're going to need to do much better than that. You need that game to make $800 a month, which is $180 a week for 25 plays a day to meet that pace. And I think that's about the edge of reasonableness for a great location with a motivated operator who throws events, maintains the games, doesn't have a lot of other well-established competition surrounding them, has long hours of operation at the location, something like 10 hours a day or more, because that's 2.5 plays an hour on average every single hour of a 10-hour day. every day of the week not just weekends or league night every single month with no drop off it sounds simple but in practice it can be hard to do or to replicate from one location to another doing it in six months is usually only in rare circumstances where the game is a certified banger and usually only in dedicated and very busy arcades where there is no split involved. Because that would be $1,600 a month, which is $360 a week, or 50 plays a day for six months solid. It's possible, but rare. And dedicated arcades also have more overhead too. So it could be argued that by keeping 100% of the drop, it really comes out as a watch. or even behind in some cases, since you're now paying the rent, utilities, labor, permits, insurance for the business location yourself. Because at that point, you're essentially butting up against what is probably the more realistic real-world limit of $5 an hour max earnings per hour. Because if you recall, the $15 an hour figure I quoted at the top is probably only possible in a lab under perfect factory conditions. the theoretical limit, so to speak, the terminal velocity for a modern pinball machine and its earnings. The real world has chatty Cathy's, bathroom and smoke breaks in between balls, or pinball sharks stacking free games and extending the average game from three and a half minutes to over 20. A single shark can absolutely decimate an hour or two of your peak earnings single-handedly, say 9 to 11 p.m. on a Saturday night. this has always been true and will always be true about pinball the best players will always pay less for pinball than the average person this is why pricing is such a delicate and often debated issue amongst both players and operators the reality is that pinball is kind of a hard sell to new players there is immediate feedback given to them that when they put money into the machine that this mechanical game requires some kind of skill of which they do not possess. And putting in a dollar, 75 cents, or even only 50 cents still feels bad when you lose each ball in 20 seconds. The learning curve is higher in pinball than it is in video games or skeeball or whatever. The inclination might be to adjust and charge less, make it up in volume, so to speak. but the problem is always that the experienced pinball will come in, dominate your games, scoop up replays, use those to hit high scores, then play those extra reward credits, all while extending their average game time well past the three and a half minute mean. If you've been operating pins for any amount of time, you will not only see this happen, but you'll also likely hear said players bragging loudly that they can quote, play all night on $5. Now, this is hyperbole, but these kinds of players can make each one of their dollars last a whole hell of a lot longer than a new player can in any case. And if they have decided to park themselves in front of your Stranger Things pro, then you aren't going to get that cycle of cash that a whole lot of casual players can pump into your machine. They are going to be milking free games out to pair with their already much longer paid games. and the reality of pinball is such that many of your players are going to be more seasoned or converted players in a perfect world you'd be able to charge the new or unskilled players less per play to help take out the sting of pinball steep learning curve and charge the experienced and skilled players more per play to account for their longer game times and free game winning abilities unfortunately that's not possible at least not on coin drop i would argue that free play accomplishes this and it is a big reason why we ended up switching to it but i digress we can dive deeper into that in a future episode discussing the free play model in greater detail as i do think it's very often misunderstood and lots of coin op operators love to shit talk about it but i do think we can take a quick detour here and explore the concept of lowering the price and attempting to make more money by charging less because here's the thing at some point someone is going to tell you that oh man one dollar a play is too expensive i would play your games way more if they were cheaper so you might therefore be thinking what if i did charge less per play and what if that person did play more because of a 25 cent or 50 cent price bait for play let's just say for that the sake of argument that actually is the case you drop your prices by a quarter and the squeaky wheel does in fact play more games because you gave them a 25 cent discount the issue is that for you to make the same amount of money as you did before at one dollar a game you would need that squeaky wheel to actually pay and play 25 percent more games hypothetically if squeaky was coming in and paying for 40 games of pinball per month at your location they would need to increase that up to 50 games of pinball per month just to break even on what they were already giving you before. But wait a sec, you didn't lower your price per play just to break even, did you? And you know that those extra plays aren't actually free, right? Because every play means fractionally more cleaning, maintenance, and repair on your part. Something that I conveniently haven't mentioned thus far into our thought experiment, because there far more that goes into the price of a game of pinball than just the initial purchase price Those games will need maintenance and repair and will need more of said maintenance and repair the more that they get played Think of it just like putting miles on a car. You're putting more mileage on your machine with more plays and that comes with maintenance. So you're definitely expecting that Squeaks McGee is actually going to come through and play something more along the lines of 60 paid games of pinball in a month instead of their usual 40. You know, so you can actually make more by charging less. In this example, 40 games at $1 play is $40. And 60 plays at 75 cents a play is $45. Remember now, this whiny player did actually hold up their end of the bargain, increased their plays by 33%. They're playing 33% more pinball. But does that $5 extra really seem worth the extra maintenance calls? And is it actually extra profit? Or is that extra coin drop just going to be swallowed up by extra cleaning and repairs? Or by a single extra trip across town to clear a coin jam? Will Squeaks actually hold that pace month over month? In this hypothetical, they actually held up their end of the bargain. But will that actually be true in the real world? I wouldn't hold my breath personally. And if they do regress to their mean, and you lowered your price down to 75 cents, then they've just gone from spending $40 a month down to spending $30 a month playing the same 40 games that they were beforehand. But what if they were 50 cents instead? Surely that'll work.
    41:46
    Oh, wait, you're serious? Let me laugh even harder. Hopefully you're following along by now because the squeaky wheel would need to more than double their plays just for you as the operator to even make a tiny bit more than you already were. And here's where we actually run fully into the problem with this logic. And that's the variable of time. Players will very often come in with an expectation or a budget of what they're going to spend, whether that's $5, $10 or $20. And they also do this with their time. I have 30 minutes, 45 minutes, 90 minutes, etc. They don't simply decide to spend $10 instead of their original $5 or spend 90 minutes instead of the hour they were planning on when they arrived due to the price break that you gave them. These incentives aren't correlated that way. They instead simply consume their predetermined cost or time limit and then they leave. If that means that they run out of time before they spent their $10, then they will just pocket that remainder and keep it, resulting in lost revenue. The math is slightly different with non-fungible payment methods like tokens or cards, but if you want to hear more about those differences, maybe you should go back and listen to episode 35, Payment Systems. so if you chose to change every game to cost much less then you're allowing players to consume their predetermined length of play at a lower rate than they were expecting or willing to pay and that's where the difference manifests itself at scale they aren't simply just playing way more games because surprise surprise squeaks mcgee is actually just playing the games they would have played anyway but at a lower cost thus lowering your gross revenue they may be playing a few more games but they're on your dime or quarter in this case i myself often leave coin applications with money in my pocket because i ran into a bunch of replays or played a few massive high score runs and as such i'm leaving with money that i was ready willing and able to spend but was unable to, likely because I have a dinner to go catch or some other engagement where I need to leave the location. I was there for my predetermined two hours and now I'm out of time, which means that potential income remains just that, potential. Or to put into words more important to you as the new mythical operator, lost revenue. Promotions and effects upon earnings. I received an email from someone who was interested in the economic side of operating pins and wanted to give me a data point from his local scene after listening to one of our older episodes. It had to do with a promotion that his local spot does every month where they choose a different game to put on $0.25 a play for the month. I was told that newer games at this location are typically $1 a play, unless they are chosen to be this $0.25 game of the month, and that despite only being $0.25, whatever this game is for the month, it will end up earning more than every other game on the floor. He specifically asked me not to name the location in this email, even though it's a location in a major U.S. city, so I don't know why the owners would care, but I won't name the informant or the city since those details would make it too easy to identify this location. It's always kind of hilarious to me, but it's extremely common for operators to keep their numbers and earnings very closely guarded for some reason, something that I'm hoping I can help normalize through this podcast and this episode. But either way, I thought this was a good way to end this Pinball Economics episode. Here's the response email that I wrote back to this informant and the final food for thought for this Pinball Economics 101 episode. Maybe I'll do another one in the future, but who knows. Hello, thank you for your email. I think it's a smart promotion, but I think it wouldn't scale well if you try to make every game this new and lower price. It works as one game in a room full of pins is heavily discounted, but it doesn't work if they all are. If everything is special, then nothing is. This is the textbook definition of diminishing returns. The special quarter game benefits from all the other games on the floor costing more, and thus anchoring the consumer's perception that this is a very special value that cannot be missed. It's literally 75% off, so why wouldn't it work for a month? You're introducing market scarcity. I would also argue that it has something of a gravitational effect as well, where the special 25-cent game is the greatest earner because it's actually pulling quarters that simply would have been put into other games instead, all other things having been equal. My question is, are we actually sure that we baked a bigger pie, or did we merely cut the same pie into different size pieces? This is what the next economics episode will be about if I ever do one. And that's the concept of measurement and why I feel that most operators are measuring the sizes of the individual slices of pie, but aren't measuring what is actually more important. And that's the size of the pie overall. When we do promotions or provide incentives, are we actually increasing the overall size of the pie? or are we merely cutting up that same pie differently? As an example of a promotion like the one that the anonymous listener above emailed to me, we do something similar. We run a high score game of the month. In our promotion, we take one game, we put it in our lower dining room, and we put it on coin play. At the end of the month, the player with the highest score gets their name on a trophy and a $50 gift certificate. We have done this since we opened and ran all of the games on coin play. And even though this game wasn't ever discounted, the game always out-earned everything else on the floor for that month because it was special for that one month only. It was singled out and incentivized to play. But instead of the anonymous emailers example and a lower price, we offered a prize bounty and recognition on our trophy. But the result was exactly the same, and it's still the same to this day. We still run a different game separate from the rest as a high score chase for the month. It's the only game that isn't set to free play. This month, it's Monster Bash. And it's a dollar play, and it's crushing earnings. Actually, when I'm recording this, it's not Monster Bash anymore. But we're going to go with this. Because I wrote it, and now I'm recording, and I don't want to change it again. Monster Bash. It's a dollar play. It's crushing earnings. Absolutely bananas. I did Lord of the Rings at a dollar play. Same story. I also recently ran the old Stern Electronics game, Stars, a couple months ago. and I set that game to 25 cents for the game of the month. It also went crazy. Now to some people, my Stars pricing might seem cheaper than average. Maybe they think 50 cents is more normal. And my Monster Bash pricing seems maybe higher than average and should be 75 cents instead. Again though, this is depending on market. I would say Monster Bash should be a dollar. But I wasn't discounting Stars to get more plays as the game of the month. I was merely recognizing that Stars had average game times of 45 seconds, while Monster Bash had average game times of 3 minutes and 45 seconds, and I priced them accordingly. The main impediment to the ceilings of pinball earnings is playtime, as only one player can ever be playing at one time. Even a four-player pinball game isn't the same as a video game cabinet that allows four players to spend their money concurrently, rather in series, one after another like pinball. So time on device greatly limits how much a popular game can earn in a single hour. Four players can play the new Pac-Man battle game at the cost of $4. The cap on game time is about two minutes. That means for you to earn the same on a pinball machine, you would still need four paid plays at $1 a play. But that same round would take, by average game time audits, 15 minutes or so. And that time means that even if the demand to play the pinball machine is high enough to have people queuing up to play it one after another nonstop, it still wouldn't have the ride capacity to compete with earnings that the single Pac-Man battle game is capable of. A price break can drive volume to a game, but since a pinball machine bottlenecks at one player at a time, and since skilled players play longer because there's no set match time, like in video games or in claw or redemption games, then a pinball machine has a hard limit as to what it can earn. And if you're pricing your games too low, you're only decreasing the potential earnings by a level of varying magnitude based upon the discount difference between market price and the discount price you're offering. So this episode has actually been in my drafts over the last three years, and I wrote and rewrote parts of it over that time. I teased it on this show multiple times, and the scope of it has grown as well over that time. Originally, I just wanted it to be a small essay or article that I could publish through a pinball publication, but then it just got way too long. And in 2023, I started this podcast with the goal of creating a show about all the aspects of the pinball hobby with a heavy focus on location play and to help illuminate the business side of it through the perspective of an operator. And it seemed like it would best be explored as a lecture like this instead as an episode of the show rather than an article that you would have to read. I hope that you all enjoy this episode, even if it's a bit of a stylistic departure from a normal show. If you like it and you want to hear Pinball Economics 102 in a future episode, shoot me a message on our Discord, which is accessible to anyone who chooses to support this completely free and unsponsored show through our Ko-fi account at ko-fi.com slash Wedgehead Podcast. There's a whole lot more to cover if y'all are interested. But I will end this episode like I end every episode and as to remind all the listeners out there to go and play pinball on location. Pinball on location is a hard business full of passion and sacrifice, but is essential to the future of pinball that it remains even remotely viable as an on-location, profit-generating game. So do your part, use the pinball map wherever you're at, and go out and play some pinball on location this week. Support a local small business owner and have some fun at the same time. And until next time, good luck, don't suck.
    52:48
    Get a good job with the pain, you're okay. Money, it's a gas. Grab that cash with both hands and make a stash.
    53:10
    A new car can't be our four-star daydream team. Come on, New York football team.