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12 Months of Revenue

Value and Annual Fee Structure

· Music Business

Admit it, you’re a piano teacher that teaches at least one makeup lesson every week of the year, and you spend “summer” doing too many makeup lessons. You feel indebted to your students. When asked why you teach all the time, you say, “I have to make a living!” What if I told you that I have 12 months of revenue and have 8 to 10 weeks off each year and don't guarantee makeup lessons? Don't be a martyr. It’s all in the strategy!

I have a mortgage (and now) car payment that come up every month. The electricity needs paying each month, and I have recurring expenses (like food) that happen every month, so I like to have cash coming in just as regularly. Seems simple, right? If you're a piano teacher, you may have been conditioned to think in terms of monthly payments and you aren't comfortable charging 'tuition', but it really changes the tone if you think in a semester or annual format, and look at 'payments' as tuition.

Assumptions:

  • You create invoices for one semester at a time, or one annual invoice. You do this in QuickBooks, or your CMS, which in my case is Studio Helper
  • When payments are made, they are being paid against the outstanding invoice balance. This is called a tuition payment or tuition installment. Kind of like your homeowners insurance. You have an annual price, and you have options to pay against the balance monthly, quarterly or in full.
  • You accept credit cards, and set your price to include this (approximately) 3%. If you want, offer a cash or check discount. It's 2017, assume people will use their card. Carrying cash or a checkbook is what you do if you live in the country (I should know, that's where I am from) or if you are older than cell phones.
Here are the top 3 reasons reasons for changing to a 12-month revenue calendar:
  1. By invoicing for a semester at a time, you are showing a longer-term commitment, which is exactly what music lessons are. It's a journey and an investment of time and financial resources.
  2. You need scheduled time off in increments of weeks, not a day here and there. Teaching and owning your own business is not only time-consuming, it's energy-consuming. In order to not burn out, it's imperative you take weeks off. 
  3. I personally REALLY like having 12 months of revenue, and a couple times a year it’s nice to have larger sums to work with. See our Enrollment Form for an idea of tuition schedule. 

Take a look at how I approach tuition collection...It’s actually quite simple. Each year has three semesters: Fall and Spring are 16 weeks and Summer has two or three different packages to choose from. When asked about an hourly rate, I say we don’t have one - think of it like private school tuition. Of course they can do their own math, but I do my best to psychologically set the tone for "I offer so much more value than the weekly 45 minutes I spend with your child." Parents are paying for teacher’s time spent with the student, but also for their time spent planning their child’s lesson, the teacher’s expertise, experience, education, professional development, etc...

We send out invoices through StudioHelper that show line items and include:

  • Annual Enrollment Fee
  • Fall 16-week Semester
  • Spring 16-week Semester
  • Summer Package
  • Carefully constructed (concise) verbiage for payment instructions. 

Communication

Email: Invoices for the entire semester are sent to each family two weeks before the semester tuition payment is due, or if paying in advance (see below) we send information out up to two months in advance of the Annual Discount that happens in February/March. We have quite a few families that take advantage of this promotion. We set the tone very carefully. It's imperative you regularly communicate your value through sharing your career highlights, your student highlights and all of the things you do to contribute to your community and your student's lives.

Enrollment Form: Each family is required to fill out the JotForm/Enrollment form we have on our website, so the parents read the important information there, and then they receive their invoices.

Newsletter: We also send out a brief reminder in our monthly newsletter of any financial information we think should be front and center, such as paying in full discounts. It gives everyone a 'heads up' so nobody is taken by surprise.

Voila! Three semesters (Fall, Spring and Summer) that have a set number of lessons so the same tuition amount due on the 1st of every month. Fall and Spring have 16 weeks, and you set summer according to what works for you and equate the value to three months tuition. You MUST ensure value. I cannot stress this enough.

Summer: I recommend a camp plus a few private lessons option, and another option that has mostly private lessons with a few group lesson options (older kids like this one.) The point is to add value and keep tuition as a set amount, that is due each month, or 4 times per year. During summer, all students should have 45 min or one hour lessons and come less frequently. We use SignUpGenius to schedule summer lessons according to availability. See our summer flyer for an example of our packages we offered this past year.

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