Before our live meeting this fall, I asked every school owner in our group to bring three numbers: their active count broken into basic, black belt and leadership students; how much of their gross comes from each group; and what percentage of their students they have renewed. Most had never put those numbers side by side. The ones who did could see their next three years.
The short version of this column is this: in a martial arts school, revenue grows by stacking. Every student you renew keeps paying while next year’s new students join on top of them. Renew enough of them and your gross rises year after year even if your marketing never gets better. Renew too few and you are refilling the same bucket every January.
What Tuition Stacking Actually Means
Picture a school starting from scratch. In year one, every paying student is a first-year student. Some of them renew and some of them leave.
In year two, you have your new first-year students — plus every student who renewed from year one, still paying. In year three, you have a new crop of first-year students, the second-year students, and the third-year students. By year four you have four layers paying you at the same time.
That is stacking. Each year’s renewals sit on top of the last, and — if your price point is right, and your upgrade programs charge more than your basic program — each layer pays more per student than the one beneath it.
Stacking is also why active count and gross move together. If your active count is not going up, it is very hard for your gross to go up, short of raising prices. And the fastest way to grow active count is not always more enrollments. It is keeping the ones you already have.
A Worked Example
Here is a simplified illustration. It is not any real school’s numbers. It assumes a school enrolls 120 new students a year, treats each year’s students as paying all year, and assumes that of the students who reach year two, eight in ten continue each following year. The only thing that changes between the two schools is the percentage of first-year students who renew.
| Year | School A: 25% renew after year one | School B: 60% renew after year one |
|---|---|---|
| Year 1 | 120 | 120 |
| Year 2 | 150 | 192 |
| Year 3 | 174 | 250 |
| Year 4 | 193 | 296 |
Same marketing. Same 120 new students every year. By year four, School B has about 100 more students paying tuition. At an illustrative $200 a month, that is roughly $247,000 a year that School A never sees — and School A probably thinks its problem is lead generation.
Enrollments Minus Dropouts Is the Only Growth There Is
Here is the same idea from the other direction.
One school enrolls 20 students a month and loses 15. It grows by five a month. Another school enrolls only 15 a month but loses five. It grows by ten a month — 120 more students by the end of the year. That second school is the one with 300 or 400 students next year that it does not have today.
So when an owner tells me how many enrollments they want, my next question is always, “How many are you losing?” Some schools need 20 enrollments a month just to stand still.
Renew Earlier Than You Think
When we have had schools sort their dropout cards by the month each student quit, the pattern is the same almost every time: the biggest pile is in the first and second months, and the next biggest is in months three and four. I have written before that your retention rate is the only metric that matters. This is why.
The practical conclusion: the longer you wait to renew a student, the fewer students will still be there to renew. If your renewal conversation happens at the end of a twelve-month program, you are only talking to the survivors. Our goal has always been to renew at least 50 to 75 percent of our basic students, and you do not hit that by waiting.
Do the research yourself. Pull every student who left in the last year. Put each one in a column by the month they stopped coming — month one through month twelve and beyond. Wherever the biggest column is, that is where your renewal system needs to reach before the student does.
What to Measure
To see whether your school is stacking, you need four numbers, and you need them every month:
- Active count — students actually training, not names in the billing system.
- Active count by program — how many are in your basic program, how many in your black belt program, how many in leadership.
- Renewal percentage — of the students eligible to renew, how many did.
- Dropout month — when, in a student’s life with you, they leave.
If you know those four numbers, you know whether next year’s gross is going to be bigger than this year’s before the year starts. If you do not, you are guessing.
Questions School Owners Ask
How do martial arts schools grow revenue year over year?
By adding new students while keeping existing ones. Renewed students continue to pay while each new year’s enrollments are added on top, so a school with a strong renewal rate grows its gross even when new enrollments stay flat.
What renewal rate should a martial arts school aim for?
Our target has always been to renew at least half, and ideally 50 to 75 percent, of basic-program students. Treat that as a coaching target, not an industry benchmark — measure your own last twelve months first and improve from there.
When do most martial arts students quit?
In the schools we have analyzed, the largest share of dropouts happen in the first two months, with months three and four next. That is why the renewal conversation needs to start early.
Stacking is not a secret and it is not a trick. It is arithmetic. The schools that understand it stop asking how to get more leads and start asking how to keep the students they already paid to get.
Grand Master Jeff Smith is the first PKA World Light-Heavyweight Kickboxing Champion, who defended the title seven times and retired 32–1 with 16 knockouts. He earned his black belt under Grand Master Jhoon Rhee in 1969 and served as Senior Vice President of the Jhoon Rhee Institute from 1970 to 1985. He is Chief of Instruction for Mile High Karate and co-author, with Grand Master Stephen Oliver, of Extraordinary Teaching. Read more from the Martial Arts Professional columnists.
