Martial Arts Business Advice on Raising Your Martial Arts Tuition Rates…
Inflation and your operating expenses go up every year and so should your tuition rates
Here’s a question for all you martial arts business owners out there…
When was the last time you raised your martial arts tuition rates?
According to the U.S. Department of Labor’s Bureau of Labor Statistics data, the Consumer Price Index has risen on average about 3% every year for the last twenty years.
That means your costs and expenses for running your business also increased roughly 3% a year since 1989.
Have you raised the cost of your martial arts classes to match? Here’s some food for thought…
If you were charging $80 a month for martial arts lessons in 1990, and had raised your tuition to match consumer inflation accordingly, in 2014 you should have been charging $153.71 for monthly martial arts tuition, according to the DoL’s inflation calculator.
Now, just think… if you’re charging what the average school charges these days (around $120 a month), that means your expenses have nearly doubled while your tuition has only increased by 33%.
So, you’re basically paying yourself 30% less than you were in 1989.
Your Students Are Never Going To Volunteer To Give You A Raise
You may feel guilty about raising your tuition, but the fact is your customers really don’t care about your quality of life all that much.
Oh, it’s not that they don’t care about you – it’s just that they’re too busy worrying about their own family to think about whether or not they’re paying you enough so you can have a decent quality of life.
In other words, your students are never going to give you a raise. (You might want to read that last line again, and roll it around in your head a while.) At least, not voluntarily.
As a martial art school owner, you are your own boss. So, the only person who can “authorize” a raise for you is you. And if you don’t increase your tuition regularly in order to cover the increased costs associated with normal inflation, within a few years you’re going to be scraping by and wondering why you’re struggling, even though your gross profits are the same.
The Most Profitable Martial Art Schools All Do This
I speak to a lot of school owners, and I can tell you for a fact that the most profitable martial art schools all do this. In fact, many of them also do regular price testing and pricing research, to see if they are charging enough in their area.
You might be surprised to find that many schools in your area are charging much, much more than you are. And, by pricing yourself in the low- to mid-range of schools, you’re sending a message that says, “We are a bargain-basement martial art school.”
And honestly, who wants to be known for that?
The bottom line? Start increasing your tuition on a yearly basis to keep your profits constant in relation to the economy.
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Mike Massie is the author of Small Dojo Big Profits and runs a martial arts business coaching website for new instructors and small school owners, MAbizU.com.
Questions? Comments? Completely disagree? Let the world know – post your comments below:
hi to all,amgreatful to the insight you give out there especailly for the instructors who are in need for more knowledge on how to improve and have some revenues to keep up with the economy.
i do see the sense behind this idea,and i will try it out and see how its going to work.
am from africa and instructing a super martial arts is truelly a challenge,
thank and hope to hear from all of you and especially mr. mike massie.
thankyou
Hi, I\’m Sean and I agree with you on raising your tuition about 3% ayear to keep up with inflation (COLA, cost of living adjustment) which is done in normal business all the time. However, is it wise to do this when we are all trying to keep our customers? Most people are cutting back right now and looking for any reason to cut expenses. If you have a student who comes to you because he/she says they can\’t afford to continue their lessons isn\’t better for your business to give them a reduction in tuition for 6 months until they get back on their feet? I know this is another subject but this is currently more the norm right now. This will keep them active in your school and you have a better chance at keeping them and their word of mouth for your graciousness.
Sean, your customers aren’t used to your tuition rates going up every year, which is why you’re afraid to raise your rates.
Lowering your rates devalues your service. I think most of your students would understand if you told them you were raising tuition on all NEW memberships based on the increase in your overhead costs.
But, keep your old students’ tuition the same, as a way of saying “thank you” for sticking with you. And let them know you’re doing just that.
Sean, I completely with Mike…
A few months back I had to raise prices to cover increases in expenses, and though I didn\’t particularly think it was a good time to do it, I had no choice. I was thinking almost identically to what you posted above.
When I did raise prices I followed the model of raising prices for NEW students first, and then over the course of the next few months brought everyone up to the 2009 prices.
This is the safest way to do it, because it allows you to test the water before jumping in. If you\’ve got to jump out, you still can, without drowning.
I understand what you\’re saying about giving them a \"break for 6 months until they\’re back on their feet\", but the word will spread like wildfire and before you know it you\’ll be doing that for a bunch of people, shooting yourself in the foot in the process.
History shows that in times of recession (not to be confused with *life threatening depression*) that people\’s personal interests remain solid. Especially when kids are involved!
Parents will cut their extravagant expenses for themselves before they cut their kids interests and education.
Wouldn\’t you?
There is no question in my mind that I would give up certain things before giving up things for my daughter.
Hope this helps!
Jason
Thanks guys, I do understand your strategies to keep your income up with inflation so you don’t go backwards as far as revenue. I was not impliing(implying? sorry no dictionary) that raising rates yearly is a bad idea I agree with this wholeheartedly but, I guess I have been letting all this negativety get to me from the news. Some big gyms in my area are decreasing their members tuition for six months in some hardship cases and I thought that was a good idea to keep a few clients tied into a school. However, you are right this could spread like wildfire through your school if not done right. THanks again I like the good advise.
This is a great article for all instructors. I know so many owners that charge “X” dollars a month because that is what they paid when they were students… Good grief!
I remember paying $65 a month when I was a student back in 1976. According to Westegg.com inflation calculator, that would be $243.33 in 2008 dollars. No wonder my Korean instructor had a nice home and sent his kids to great universities!
And people wonder what the rationale is for charging $150 to $250 a month for lessons… all you have to do is look at the steady 3% average inflation rates over the last two decades to see that most martial arts school owners have chosen poverty by refusing to raise their tuition rates to match.