If you would not sell your own martial arts training back for a million dollars, you have no business being timid about what you charge to teach it. Higher tuition with fewer students produces more gross revenue, more net profit and fewer operational headaches. I have never raised my prices and then watched my enrollments fall.
Key Takeaways
- Instructors at my bootcamp said they would not quit training for a million dollars, yet were timid about charging one percent of that for Black Belt training.
- What the school down the street charges is the wrong benchmark. Calculate what your own program is worth instead.
- A 450-student school at $75 per month grosses $33,750, with five staff members and 6,400 square feet of rent.
- A 300-student school at $189 per month grosses $56,700, staffed by the chief instructor and his family in 2,500 square feet.
- The smaller school pays at least $10,000 less in monthly expenses and generates roughly $23,000 more revenue with 150 fewer students.
- At a seven-percent dropout rate, halving the student count drops the monthly replacement requirement from 31 new students to 16.
The Bootcamp Footnote That Was Worth the Tuition
My Ultimate Martial Art Marketing Bootcamp is an intense 30-hour weekend for school owners looking for ways to move their schools to higher levels of growth and profitability. What began as nothing more than a footnote, during my agenda preparation, became of the greatest value to all the participants. In fact, they told me unanimously that learning this one concept was worth the $2,750 and more they paid to attend.
What Would You Sell Your Own Training For?
Let’s say that you’ve invested $10,000 to learn your martial art from a master. If I offered to return your investment on the condition that you must quit training and teaching, then would you take the money? If your answer is no, then why would you ever be timid about asking for a reasonable tuition from your students to learn what you’ve learned (and maybe even faster and better)?
Some of the instructors attending my bootcamp said they wouldn’t quit training and teaching even if I upped my offer to one million dollars. They were also those who were too timid about charging even one-percent of that amount for First-, Second- or even Third-Degree Black Belt training.
“I have never raised my prices, only to watch my enrollments drop.”
Why Your Competitor’s Price Is the Wrong Benchmark
I can hear you asking, “What about the price the guy down the street is charging, and the recreation centers and health clubs? Shouldn’t I know their charges, and then find a middle ground?” To that I ask, “Why should you care how they value what they do? Why not calculate what your program is worth, and then make an effort to convince your prospects to share your perspective?”
Two Schools and Their Real Numbers
Let’s take a look at some real numbers. One participant at my seminar has 450 students and is charging $75 per month, or $33,750 in gross monthly revenue. Set aside family discounts that will reduce per-student revenue and paid-in-fulls, and retail that add to per-student revenue.
Factor in five staff members, 6,400 square feet of rental space and a seven-percent monthly dropout rate that requires him to find 31 new students each month to remain even.
Now let’s look at one of my schools. It serves fewer active students (300) crammed into 2,500 square feet of training space. The staff is the chief instructor, his wife and their two daughters. There is no real payroll, otherwise. He charges $189 per month for tuition, or $56,700 in gross monthly revenue.
Comparing the Net Numbers
Let’s compare those net numbers. At a minimum, the second school pays $10,000 less in expenses per month and generates approximately $23,000 more in revenue, with 150 fewer students. If the first school doubled its prices and the active count drops by half, then the gross monthly revenue is $35,775 (225 x $159).
Both the gross and net revenues increased because a smaller staff and facilities are needed, thus fewer operational headaches. Don’t forget that at a consistent seven-percent dropout rate the first school now needs only 16 new students per month to remain even.
What Actually Happens When You Raise Prices
I have never raised my prices, only to watch my enrollments drop. In fact, usually we enroll more solid students, who we retain longer at the higher price point. Remember, it’s considerably easier to maintain a tight hold on your students, provide high quality instruction and minimize the dropout rate at 225 students than 450 students. Why not work a little harder to help your students understand the value of what you teach and, while you’re at it, ask for a little more compensation?
Frequently Asked Questions
Will raising my tuition cause students to quit?
In my experience it does not. I have never raised my prices only to watch my enrollments drop, and we usually enroll more solid students who stay longer at the higher price point.
How should I decide what to charge for martial arts tuition?
Calculate what your program is actually worth rather than looking for a middle ground between the school down the street, the recreation center and the health club. Then work to convince your prospects to share your perspective on that value.
Is a smaller school with higher tuition more profitable than a large one?
The numbers say yes. A 300-student school at $189 per month grosses $56,700 while carrying about $10,000 less in monthly expenses than a 450-student school at $75 per month, which grosses $33,750.
How does tuition affect how many new students I need each month?
At a seven-percent monthly dropout rate, a 450-student school needs 31 new students each month just to stay even. Cut that count to 225 students at double the price and you need only 16.
Why is it easier to run a school with fewer students?
A smaller staff and smaller facility mean fewer operational headaches. It is also considerably easier to hold on to your students, deliver high quality instruction and minimize the dropout rate with 225 students than with 450.
