How to Raise Tuition
When you set your future goals for your school in Lesson 50, you may have set a goal to either gain more students, to increase tuition or both.
Raising your tuition is an easy way to get more profit for your school, as long as you’re giving your students double that in service, it’s likely that it won’t be a problem.
If you have 100 students and are able to charge $10.00 more a month (because you’re currently under-charging them) that’s an extra $1,000 each month. That may not seem like much, but when you multiply that by 12 months you get $12,000.
It’s not uncommon for school owners to raise their tuition prices annually, or to at least charge a competitive rate.
If you’re currently the cheapest school in the area, then the perception will be that you are likely the least skilled instructor in the area.
Now you must charge what you feel your time is worth. If you feel your time and skills are not worth that much, then charge low prices.
If however, you feel that you offer a valuable service to your students, then reflect the value of your service in setting the price of your lessons.
Increase Tuition on New Students
The easiest way to increase the price of lessons is to do that for new students enrolling in the school. Since they haven’t enrolled yet, you don’t have to deal with any price increase questions.
If you started your school with your tuition prices set too low, and are afraid to rock the boat with your current students, then a good solution is to raise the prices right away for new members.
All you really need to do is to create new tuition sheets with the updated prices and you’re ready to go.
Communicate Price Increases with Care
If you do need to raise prices on existing students across the board, always explain the reason for your increase. Explain to them that the increase is due to an increase in rent, insurance, or added benefits.
Send them a letter, give them between 30-45 days’ notice and it will fly with ninety-five percent of your students.
Make your letter warm and friendly, thank them for their support, explain the details about the price increase, and appreciate them again for being students.
When you compose your letter, break down the price increase so that it seems trivial.
What I mean by that is if I was raising tuition by $10.00 a month and offer my students eight classes a week, I may put in the letter that tuition is going up by about $1.25 a class or the cost of 1/3 of a Starbucks coffee. This makes the price increase seem trivial. $10.00 or $2.50 a week shouldn’t be a big deal to most.
The easiest time of year to increase prices across the board is at the beginning of a new year. People almost expect prices to go up in January so if you haven’t done it before, then that will be the best time to go for it.
Either way, simply raise your rates with no explanation and expect to lose some students. They will think you just got greedy.
Remember, it’s much less expensive to keep an existing student rather than to go and find a new one.
Using Price Increases to Upgrade Students
You can use price increases to successfully upgrade student programs. This can work well if you’re going to use contracts for the first time or if you’d like to get some early renewals to help with remodeling expenses for example.
If you’ve been allowing your students to pay month-to-month and now want them to convert over to membership agreements or contracts, then offer to keep their rates the same if they renew on the contract but if they want to go on an open-ended arrangement for example, it’s the new prices for them.
If your new rate is $15.00 more a month then they could save 180.00 a year by choosing the contract option.
You could also choose to “grandfather” in early renewals to the old rates or in the future run promotions where you roll the rates back to last year.
Keep in mind, before you do this, raise your tuition prices for the new students coming in and have those tuition sheets handy. This way, if there is any question, you can prove that tuition does cost more because it’s in writing. Either way, more advanced students usually pay more tuition because they require more attention and a higher level of instructor.
The Action List
Know what your local competitors are charging in the area and what they offer versus your program.
2. Evaluate whether you will raise your tuition prices for new students, or across the board.
3. Create new tuition sheets for the new students.
4. Craft a letter to send to current members if they are to have a price increase at least 30-45 days prior to when it takes effect.