Inside the Bookstore:
The Fee Trap
T'S ONE OF THE TOUGHEST DECISIONS any music teacher has to make: how much should you charge for the lessons you provide?
It's tempting to keep the price low, particularly if your studio is establishing itself; the logic is that when prospective students call you, they will be pleasantly surprised by how modest your fees are compared with other teachers they may have spoken to.
Don’t fall for this. Setting your price too low is one of the worst things you can do to promote your studio. In this article, IMT looks at why, and what smarter options are available.
So why is undercutting tantamount to sabotaging your studio?
It's all about perception. You have to remember, you are a service provider, not a retailer, and when people hear your price, they will make assumptions about the quality of your service. So if your lessons are $15 for half an hour, when most other people seem to be charging $25, the caller will start to wonder why you’re so cheap.
For this reason, if most other people with similar qualifications to you are charging $25, you should be charging $28. Your price is part of your lobby, and the ticket will sometimes say more to prospective students about your studio than all your advertisements combined.
Not convinced? Think how you react as a potential client. Let’s assume that you were getting your house painted. Most quotes came in at around $1500. One comes in at $950. Another at $1700. Ask yourself right now—who do you think the best painter is likely to be? Knowing nothing about them except the price, it’s hard to shake the feeling that if you wanted the best job possible, you should at least talk to the painter that charges the most.
Whether or not you actually go for the $1700 job is a separate question, and might be a function of your own financial limitations, but the fact will remain that part of you will wish you could have afforded the premium service—and if you go with a cheaper option, every tiny blemish will have you regretting that you didn’t spend the extra.
Well guess what. Parents who are conscientious enough to be contemplating music lessons in the first place are usually conscientious enough to want a first rate job, and they’ll be quite prepared to pay a couple of extra dollars per lesson to make it happen. A few extra dollars per lesson is not going to make a huge difference to them, but as we'll see, it can make an enormous difference to you.
What about those parents who would prefer to save a couple of bucks by going somewhere else? You’re better off without them. When the first question I hear from a parent is "how much are the lessons?", I have lost interest already, because I know their priorities are suspect.
As a music teacher, you're not just selling your expertise. You're renting out your time. And so when you undercharge, your time becomes cheap. Like all cheap goods, you then have to sell large volumes of it to be profitable.
So before you decide to offer budget lessons, consider this: if your fees are 25% higher, then you would only need four students to bring in income that you used to need five students to produce. This means that even if the price hike leaves you with only 32 students instead of 40 that you use to have, you're actually earning just as much as you were previously AND you've got an additional four hours a week to spend on other things.
Still not convinced? In the course of a forty week teaching year, those four hours add up to 160 hours of additional free time—only a few hours short of a whole week! It’s enough time to pursue some extra qualifications, write articles for local newspapers, volunteer to help with a local school's musical, or any of the dozens of other studio promotion activities outlined elsewhere in the Studio Promotion Guide.
Your time is precious. People should pay accordingly. Otherwise you'll end up paying, through hours of additional and unnecessary work.
So what do you do if, despite the price increase, you still have 40 students? Or, as is sometimes strangely the case, you have more? Obviously you don't save any time, but you will find yourself with additional cash, which creates a wonderful opportunity that's simply not open to many other teachers:
Instead of looking at lifestyle improvements from your higher fees, what if you were to use them to purchase exciting new facilities for the studio itself (recording equipment? aural training software? expanded listening library? Seriously comfortable chairs for parents to sit in, with magazine subscriptions to ensure there's always plenty of interesting reading material? Exciting prizes for your upcoming Practice Competition? A high impact Yellow Pages ad that you thought you couldn't afford?) In short, you're reinvesting back into your studio to help furnish resources that most of your competitors simply cannot match.
In this way, your additional income translates directly into an improved capacity to attract new students and keep the students you already have—a self-sustaining cycle that helps ensure that your studio continues to grow for years to come. In this game, like any other, success breeds success, and the pain of investing in your studio will be quickly forgotten when you see the impact it has on your future student numbers.
And of course—once your schedule is full—you are in a strong position to put fees up again...
While this principle of setting a price point that creates a perception of quality, and then reinvesting a percentage of a healthy fee back into the studio is a sound recipe for growth, you can’t stretch the logic and decide "Wow! If I put up my fees 100%, then I would only need to teach half as many students!".
There has to be a sensitivity to two things before you start charging $500 an hour:
While your fees can certainly be higher, they do need to be in the same ball park as other equivalently qualified or resourced teachers. As long as you are within a few dollars per lesson, then you’re in the hunt—if your Lobby is more compelling than theirs, then you should get the interview. (your Lobby is not a physical location, but the various public faces and first impressions your studio creates, see the relevant chapter in The Studio Promotion Guide on creating a Lobby that will have any prospective student assuming yours is the Biggest and Best Studio In Town). But if you are suddenly $10 a lesson more expensive than your competitors, then your promotion campaign is going to have to be very slick for the gap to be perceived as worthwhile.
So how do you find out what your competitors charge? That’s easy enough—simply call up (or have a relative call up) and pretend to be a potential student. Not only can you learn about their fees, but you can learn a thing or two about their telephone manner in the process. If you hear a great way of handling one of your questions, write it down (See the article on studio voicemail messages)
Even if it’s now clear to you that your fees are too low, you can’t suddenly hit your current students with a brand new bill. Otherwise you might find yourself with a lot more spare time than you intended.
You either have to view the increase as an incremental exercise over several years, or consider a "loyalty bonus" that means that that the new rate applies to new students only. In fact, an announcement to established studio parents that fees have gone up, but not for them, can generate tremendous good will among your existing students. You normally have to be very careful about charging different students different rates, but a date-based cutoff like this is discriminatory in a way that nobody can take offence to— as long as you're up front about it if challenged.
You're a highly trained professional, and it's not unlikely that you've had years more training than the various solicitors, accountants and doctors who charge you a fortune for their time. Music teachers will never earn what orthodontists do, but there are few among us who don't deserve more for our time...that starts by expecting more in the first place.
This article is an edited excerpt from The PracticeSpot Guide to Promoting Your Teaching Studio, 224 pages.
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