Straight-Talk-Secrets to Develop Your Professional Self-Worth and Implement Higher Tuitions

Interview by Toby Milroy, NAPMA Vice-President of Sales and Marketing

Frank Brown
As the Mile High Karate franchise trainer, Frank Brown is in a unique position to observe why school owners are unable to grow their schools; and, often, the major reason is a misperception of their self-worth. That low self-worth results in low tuition rates, which then negatively affects their schools’ position or image.

It’s a truism in the general marketplace that those businesses charging a lower rate for a similar or identical product or service for which other businesses charge a much higher rate are perceived as lacking in quality, experience or student outcomes, in the case of a martial arts school.

This, of course, makes it nearly impossible for those school owners without a proper pricing structure to have the capital to re-invest in their marketing, attract higher paying students, develop upgrade programs that excite students and parents, and improve their schools’ retention rates and bottom lines.

That is why so many school owners are attracted to the Mile High Karate franchise program because it not only provides the systems and processes to reverse those negative trends, but also helps new franchisees develop the mindset that is a prerequisite for success.

Throughout this comprehensive interview, you’ll discover some of the secret strategies and wisdom that will first change your mindset and then provide you with practical implementation tactics to generate the revenues to grow your school and prosper, personally.

Toby Milroy: This month’s Success Story interview is with Master Frank Brown who, as the key trainer for the Mile High Karate franchise system, has extremely detailed and in-depth knowledge about how that structure and system works. He is also the key facilitator for the Extraordinary Marketing Program, which is a very high-level, advanced coaching program for the martial arts industry.

Master Brown has been the “soldier on the ground” for several years in that program, helping martial arts school owners across the U.S. to accelerate their growth from 20 to 30 students and monthly revenues in the $3,000 to $5,000 range to 200 to 300 students and $40,000 to $50,000 a month. Some of his most notable successes have been Miko Peled and Joe Borucki, who were featured as NAPMA Success Stories in recent issues of Martial Arts Professional.

Let’s start at the beginning, Frank. What are the three or four primary steps in the developmental process to accelerate the growth of a school?

Frank Brown: I think the first step, which most school owners overlook, is their pricing structure. Too many instructors devalue what they’re teaching or the systems they’ve developed. They price themselves just a little low and that affects their marketing, their ability to attract new students and exposing their students to a broader and deeper curriculum, which eventually affects school owners’ bottom lines.

I encourage all Martial Arts Professional readers to develop a proper pricing structure, so they have the revenue to provide the highest quality student service, which may include uniforms, success opportunities or training tools. The proper pricing structure also helps to ensure that a school owner can stay in business, so his or her students can continue to train. Many school owners are afraid that they might price their training beyond their market’s ability to pay. The reality is that martial arts is marketed in a vacuum because the average student or parent don’t know what martial arts should cost.Toby Milroy: It’s certainly not a commodity and, even with commodity products, there’s plenty of price elasticity. NAPMA members are able to access a very extensive report on tuition pricing on the members’ section of the NAPMA Web site.

Our research shows that many NAPMA members and nonmembers, in various locations and serving a broad range of students, are dramatically undercharging for their services. For many of them, they must first address their thinking, their mindset, before they can revise their current pricing structures. School owners must learn how to value what they do in the marketplace. For example, there is a Huntington Learning Center across the street from one of my schools in central Florida, and it guarantees a letter-grade improvement in three or four months. I think its program is $1,700 a month for the average student.

Now, it may not be possible to compare a Huntington Learning Center with a martial arts school directly, but they both help to improve and change children’s lives, so they are better prepared to succeed. You may not be able to guarantee an improvement in a child’s academic performance, but that child’s martial arts training will certainly have a positive effect on his or her academic results.

If a martial arts school owner is charging $180, $190 a month, then that’s barely a fraction of what Huntington charges. That is why a mindset adjustment is needed before a pricing adjustment. It’s almost impossible to price yourself out of the market when you compare what you offer to similar services that attract children and families in your community. What spectrum of pricing have you seen across the country? What do you think is appropriate or inappropriate, what’s the bull’s eye?

Frank Brown: I’ve seen pricing from $49 to $997 a month. You hit the nail on the head when comparing a martial arts school to a Huntington Learning Center. You must determine on what your students would spend money that is an equal service. You’re obviously running a school, so what does a private school, learning center or university charge? A useful approach to determine your tuition is to calculate your average student worth. If the average student is spending $250 or $300 a month, then you’re on target. If your average student value is $100 a month, then you’re a little bit behind the eight ball. If they are spending only $49 a month, then that is scary. According to the old saying, you’re rearranging deck furniture on the Titanic, and you’re going down.

Learn more about Mile High Karate franchise opportunities at MileHighFranchise.com

Toby Milroy: Again, you must take a half step back, and address your value as a martial arts school owner. If you choose to operate a school as a career, a profession, or as a hobby, then that has a dramatic impact on your perception of your value and, ultimately, your tuition structure.

If I were a part-time martial arts instructor who teaches just 15 or 20 students in a recreation center once a week, and I do that because I want an extra $800 to $1,000 a month in my pocket to pay for my boat, then that’s great; there’s nothing wrong with that mindset. If, on the other hand, you consider yourself a professional martial arts school operator with the responsibility of a commercial lease, payroll and other operating costs, then you must think about your business differently, and that’s where the pricing elasticity argument comes into play. Never consider the part-time instructor at the recreation center to be your competition because he or she is offering a completely different product to the market.

Frank Brown: Let me interject that what I’ve also seen is that school owners have a skewed way of thinking that the instructor or school down the street is competition. That’s false security; they’re not your competition. Very rarely will you find people who will shop martial arts schools face-to-face. They may do it on the phone, but no one takes a class with you, learns what your tuition will be and then tries the school down the street. Your competition is all the other activities, not the other local martial arts schools. You’re competing with conventional sports, the Sylvan and Huntington Learning Centers, etc. You must know who the real competition is before you can determine if you charge enough tuition. Compare what a local, highly professional dance studio charges for private ballet lessons to your similarly high quality martial arts and character development lessons, if you’re a full-time school operator or working to become one.

Toby Milroy: You’re absolutely right. I’m concerned that we have a sad state of affairs because I believe that the character development program in most martial arts schools is second to none, and the opportunities we provide kids and families to change their lives is also second to none.

I have a personal perspective on this issue. I have a very close friend with an 8-year-old daughter, who has attended a cheerleading school for two years. My friend probably pays double for cheerleading, compared to the lessons at the average martial arts school.

Recently, I was in the company of my friend and his daughter; I think we were going to the park. She said that we couldn’t go with Sally and Susie because they’re not popular. Obviously, she was modeling the attitudes of the older girls in the cheerleading school. That doesn’t happen at most martial arts schools. We teach a culture of respect, discipline and cooperation in a positive environment.

It’s just another example of what you must take into consideration when determining your real value, and how much you should be charging. The cheerleading school across the street probably reinforces negative social experiences (and the owner and instructors are not conscious of it); and the martial arts school on the other side of the street has very conscientious instructors who are trying to teach the right lessons, the right way, but charge half as much. It just seems as if we have a hard time perceiving that for ourselves.

The Mile High Karate standard pricing model for a new enrollment is $197 a month, for master club, $259 a month, and leadership is $359. That is also the standard pricing structure for Mile High Karate franchise schools, so you can measure yourself against that yardstick.

Let me ask you one more question on this pricing issue because that certainly seems to be where there are many missed opportunities in the industry. How does the current economic climate play into the price elasticity in the marketplace and how does that relate to the students that you’re attracting, if you’re a very under-priced school?

Frank Brown: If you’re an under-priced school, then you’ll attract those who don’t have the money to spend or who aren’t willing to spend the money. If you have a high price point for enrollment and upgrade programs, such as Masters Club or Leadership, then you’ll attract more affluent students and families, those that are willing to pay more to better their children.

You’ll find many parents who really can’t “afford” your tuition; however, if you do a great job explaining the benefits for their children, then they’ll do whatever is necessary to give their children a better opportunity or, at least, the same opportunity as the parents. If you’re under-priced, then you will attract the students, who aren’t willing to spend the money, won’t be as serious about their training, probably won’t put forth much effort and probably not be as supportive of your school.

Toby Milroy: One of your points is very important for our readers. If you position your school and its programs as an inexpensive hobby or pastime, then that will have a direct proportion on your retention rate. Students will perceive your school as the next alternative to soccer for a season, or the next alternative to baseball for three months and then that’s it. If you position yourself the complete opposite, as an educational experience or as a lifetime journey of discovery, then your market of prospective students will have a very different perception of your school. You’re programming prospective students and their families in a completely different way, when they come for their enrollment conferences.

What do you think is the relationship between tuition amounts and retention rates, and the model of a school to improve that relationship?

Frank Brown: Positioning and perception are totally linked. Your mindset of your school and how you position yourself with prospects are functions of the higher tuition you can charge and the higher retention rate you can achieve. School owners with higher price points that perceive themselves as a supplement to academic education have a longer business life. Those who consider themselves as a recreation club, or just another sport, don’t necessarily last as long.

Don’t get me wrong, there are martial arts schools that are focused on the athletics of martial arts, whether it’s competition or Olympic training, and that’s another legitimate niche or position. You must realize, however, that your market is much smaller when you’re that specific. The more upscale and professional your school, the more it is a supplement to academics versus another athletic endeavor, the stronger the result and retention, and the stronger your school will be.

Toby Milroy: How universal is that concept? Does it depend on the city where your school is located and your market’s demographics?

Frank Brown: Of course, many school owners will respond that their city, county and state are different, but it has nothing to do with your geographic location. Again, it’s your mindset, your perception of your school: How do you, as a school owner, see yourself, how do you want to be seen and what actions are you taking to be seen by your prospective market in that way.

Toby Milroy: Many NAPMA members respond with the same mindset: my town and state are different; they have different state laws. Those differences may exist, but human constants are more important; those are the triggers that relate to the human psyche. There are people in every city and town and any demographic that value education at a high level, and are willing to invest in high quality, educational programs.

NAPMA’s main mission is to accelerate and increase the quality of school programs throughout the industry, regardless of their locations, thereby, increasing their market penetration and level of success. Those that respond with that my-city-is-different syndrome are actually saying that their thinking is different. They’re saying that they don’t understan how to perceive themselves in a way that attracts those families who value high quality, educational programs.

Let me reinforce one more point before we move to the next topic, which is one we repeat again and again at NAPMA, and that is don’t focus on current economic conditions, the media’s reports of doom and gloom and the rhetoric of political campaigns. Instead, focus on what you can to do to be successful, despite the general conditions.

Another way to look at why tuition pricing is so important is to compare two schools: Both have 100 students, but one charges a low tuition and the other a much higher tuition. It should be obvious that during a general economic downturn, as we are experiencing now, the school with the low price point will have very little capital to reinvest in its marketing to attract more students.

Additionally, those students that the low-tuition school is attracting have very little room in their families’ budgets, so when their monthly expenses increase, they are more likely to consider cutting their children’s martial arts training. Those families who can afford to send their children to a school with higher tuition tend to have more disposable income, and are less likely to want to cut their children’s training. Those parents have the economic latitude to skip an expensive latté today,while the others may have to choose between a full tank of gas and lunch on Friday.

How have you seen the school owners you coach in the Denver area and across the country respond to these economic factors?

Frank Brown: Despite a general fear about the direction of the economy, many of the school owners with whom I’ve worked (and many our NAPMA members and NAPMA Inner Circle members) have experienced record months.

Toby Milroy: Does their success have a direct correlation to the economy, or to their actions?

Frank Brown: Obviously, it’s directly correlated to what they’re doing. Essentially, they are focused on the economies of their schools and not the economy of the country.

Toby Milroy: As we’ve discussed, school owners’ perception of their value is the number one reason they are, in many cases, severely under pricing themselves. That is the first action they must take to break through that glass ceiling and accelerate the growth of their schools.

What would you say is the next step they must take when they hit a plateau to start growing again?

Frank Brown: The next step is an ascension model, an upgrade or renewal process. There are still too many schools without a true ascension process for their students. Those schools may have a Black Belt Club, Master Club or Leadership team, but they fail to realize that an ascension process starts when students are at the basic, or entry, level. What they are missing is generating excitement among basic students about what’s next in their training, and charging a much higher price point for that upgrade program. You want those basic students so excited that they will want to be a part of that new group, without you having to “sell” them.

Obviously, you want to help all your students to achieve Black Belt and their personal-growth goals; however, you can’t do that if they’re dropping out. One of the benefits of an ascension model is to improve and maximize your retention. You must convince your students to make a commitment to you because you are making a commitment to help them reach the upper belt ranks, Black Belt and beyond. You must focus on what’s in it for the student, and not for the instructor or school owner.

Toby Milroy: What do you mean?

Frank Brown: For many school owners, simply moving students into a Black Belt Club, Master Club or Leadership team is good enough. In other instances, instructors are so focused on the style they teach that they are simply happy to have training partners or walking targets, but that mindset doesn’t help their schools grow, and it doesn’t necessarily excite every student.

There are a couple factors that will excite everyone, including parents. They are more excited when their children learn character development, respect and concentration skills to improve their academic performance. In a sense, martial arts is no different than a Baskin-Robbins ice cream shop; it may offer 31 flavors and introduce new ones occasionally, but they still sell more vanilla than any other flavor. Character development will always be our biggest sellers, and we must make sure that we’ve created an environment where students can see how those skills work, and an opportunity to experience how they work.

As martial arts professionals, we know that martial arts does indeed develop discipline, focus and confidence, but, in some schools, that’s a 5- to 7-year journey. School owners must have tools, classes and exercises in place that provide students with some immediate results, which will make it easier to upgrade them through schools’ ascension models.