What Do I Charge?
“But I Can’t Do That In My School Because Of…”
Your services are likely worth much more than you think they are. So long as you set your prices lower than your value, you will never experience the true potential of your success.
Last week I sent out an email that listed actual enrollment numbers for three members of the Martial Art School Alliance website.
These are three instructors who are kicking tail despite the down economy. And, one of them actually lives in an area where the unemployment level is 15%.
It just goes to show you can succeed in this economy, and that most of the things we think are holding us back from being successful are internal and self-imposed.
Which bring me to today’s topic…
What To Charge, What To Charge
Earlier today, I received the following question from a reader regarding that email:
“Even with their below average facilities, do you recommend them charging $99 a month?”
People quote me on that $99 a month figure all the time (and the 10% of your gross for marketing – it’s a guideline, people, not an unbreakable rule) and I have to remind them that was the absolute lowest I thought a school should charge…
Back in 2003.
Seven years later, your cost of doing business has increased significantly. You need to be charging at least 20 – 30 % more today than you were seven years ago. That is, you should if you want to have something left over after overhead, taxes, inflation, and the sinking value of the dollar are done with your revenues.
They Are Doing What With What?
For the record, two of those guys have nice schools. Jim is the one teaching out of a warehouse facility, and he is doing phenomenal at it due to having the right mindset and being an awesome teacher and coach. (And actually, I kind of like his school… it takes me back to when I first started training. Who needs heat and AC, anyway?)
But here’s the kicker – all three of these guys charge about $150 a month average in tuition.
Now, I know for some of you out there this isn’t a shocker. You’re already charging that much or more.
But for many of you, you’re thinking that’s an impossible figure to charge your students for lessons.
Some of you are outraged, thinking these guys are ripping their students off (baloney – every one of them is worth that and more). Others of you think they must have something you don’t in order to demand those rates. Still others of you are wondering if I’m even telling the truth.
And that’s why you’re always broke.
You Can Lead A Horse To Water…
I’ve argued and argued this point for years. Well, I’m finally sick of arguing and fighting with instructors about how much to charge.
For those of you who are willing to believe your value merits charging a premium for your services, outstanding. You deserve to be successful and well-respected. Just keep adding value to your services and bringing value to your communities and you’ll continue to be rewarded for it.
But for those of you who don’t want to believe you can charge a premium for your services, for whatever reason, that’s fine by me as well. You can stay broke, while instructors who know their value will have nicer schools, better equipment, higher salaries, and a better quality of living.
Not because they have something you don’t.
No, it’s because they have the proper mindset for success.
Until next time,
Michael D. Massie
P.S.: I am inundated with requests for “free” advice these days. I am simply too busy to give away my valuable time and knowledge for free, as it’s a disservice to my paying clients.
Remember, if you are a MASAI member you can almost always get your questions answered at no additional cost in the member forums. However, if you need to correspond with me by phone or email for help with a pressing business issue, please visit the MASAI online store and order phone or email coaching with me.
Thanks for your understanding!
-- Mike Massie has owned and operated martial arts schools and fitness studios for most of his adult life. A lifelong martial artist, he is the author of "Small Dojo Big Profits", runs the Martial Art School Alliance International (MASAI) business coaching website, and is the creator of The Self Defense Black Belt Program (TM) and Fighting Fit Boot Camp (TM). For martial arts business coaching, visit http://martialartschoolalliance.com.
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Right on, Mike! Anyone needs to see it for themselves go to my blog and see the names and results firsthand.
I am telling you straight. Mike knows how to help you succeed; you just have to be receptive and willing to take action!
Jim Mahan
absoluteselfdefenseandfitness.com
The basic rule of thumb is to give the customer more than what they ask for and provide a higher value of product or service than you charge
With that rule you can charge anything you want to basically as long as you can sell the prospect on the perceived value of the product or service
I agree with Richard Kirkham’s statement on value. A big part of charging what you are worth is giving the students more than they expected. Not only will it entice new students to sign-up but also act as a “switch barrier” and help us keep our current students. The key is in creating in our students, or more accurately, communicating to our students the perceived value of our instruction. The question then becomes less about whether or not to charge more for our services but rather what actions do we take that will best convey our value?
On a slightly different tack, I tend to believe part of the resistance to charging more stems not only from the fear of pricing ourselves out of business but also by how we view success. We all want a school full of students to show how great of a teacher we are and as a result we will do just about anything to get students in the door and on the mat. Including selling ourselves short.
I easily fall into this group. I always have. The way I got past this way of thinking was to get what I wanted. 15-20 years ago I had a school full of students and in this sense was very successful. I was also working 65-70 hours a week and making squat. I had to reevaluate my approach because it wasn’t working. I only had so much time and energy and I needed to find a balance between me as “the martial art instructor” and me as “the person who had to eat, sleep, pay my bills and have a life outside my school”. It was during my preparations to commit ritual suicide (joking) that I played with the numbers and stumbled across the reality that was staring me in the face.
Making a change in what I charged my students by as little as $5 dollars a week would increase my student’s tuition by $20 dollars a month. $20 dollars a month should not be enough to cause satisfied students to quit. I think most people spend at least that much per week on fast food. By changing our pricing from $15 dollars a week to $20 a week our tuition went from $60 dollars a month to $80. Did I lose students? Of course. But nothing I didn’t expect. The lesson here was not about the money, it was about my time. That small change in my tuition allowed me to make the same amount teaching 75 students that would have previously taken 100. Because of the way our teaching structure was in our school I was able to free-up close to 20 hours a week without a drop in income. And if I wanted to teach more then I was compensated for my time.
I hope this story helps those sitting on the fence to reevaluate your worth.
“We all want a school full of students to show how great of a teacher we are and as a result we will do just about anything to get students in the door and on the mat. Including selling ourselves short.”
Excellent observation, Mark. I think this also goes back to the old, “What’s your active count” question you always hear when instructors talk numbers at those industry events. I was talking with Jesse Elder from San Antonio a while back, and his statements echoed my sentiments exactly: “I could care less what your active count is… what’s your net profit?”
The more you charge, the better off you are (within the reasonable bounds of price elasticity). You are able to provide better facilities, you’re probably going to be happier because you can easily pay your bills and have plenty left over at the end of the month, you can hire additional help to provide better service… it’s just a better situation all around.
Now, we all know the story of the school that teaches crappy martial arts but still charges an arm and a leg for lessons (typically, these are schools where you can get a “black belt” in two years or less…)
If that hacks anyone off, the question you need to ask yourself is, “If they can charge that and teach a terrible program, why can’t I charge that and provide really excellent instruction?”
Hi Mike,
Interesting comments. We have been chargine $149 per month for our Basic Member for a little over a year and $179 for our Full Member. Also we do a full family membership at $358. I should note that we only charge $99 for our MMA Fitness Program and for full time college students.
That said, we opened our school in the Fall of 2007 before the bad economy and we have incrementally increased our rates to their present levels and we are about to do so again for some of our programs.
I should note that our last quarter was the best to date and January was our best month to date. That said we still have goals of improving our recruiting, retention and bottom line.
That said I’m looking forward to implementing your summer camp program again this summer and expect to do much better this time around. Thanks for a great summer camp program. It was very valuable to us this last summer when attendance and enrollment is typically lower. It was a big help.
Best!
Mick
P.S. No easy black belts.
Mick, I think you are right inline with what most professional schools are charging across the nation. It’s great to hear about MORE NEW SCHOOLS that are doing well in this economy.
Also, thanks for the kind remarks on the summer camp program. I’m glad it helped your school out financially during those lean summer months!
Hey Guys,
Here’s a thought for you, coming from a student.
When I consider how my life has changed, (in fact a total 360 turnaround) because of starting martial arts. How my body has changed is but the tip of the iceberg! The stronger mindset I have developed, increased awareness of my values and how i want to show up in the world, the inner strength i gained which has helped me not only cope with some intense change in my life but to transcend this and go onto to create a life of value and joy … how does one ever put a price to this!
A good instructor and school teaches much, much more than martial arts, technique etc.., (which is fantastic by the way
) … but you bring much, much more to a students life.
Charge for your services, so that you stay in a good space, your school rocks, and focus on just to what extent you’re changing your students lives.
Just a thought … all the way from Africa