In my School Owners Coaching Program I go through my full Pricing Roadmap so you find out exactly how much to charge.
And the one word of advice I hear all the time from experienced school owners is
“don’t price yourself too low”.
In the beginning it can be so tempting to say “well, I’m just starting so I’m not sure if I can charge as much as everyone else” or to under estimate all the expenses (and taxes) that will need to come out of your student’s fees.
Without a doubt the price you are thinking of charging is too low.
Plus in many markets to a customer that means it’s not worth as much as the more expensive place down the road!
The worst thing is that once you have set your prices low it is very difficult to raise them. I know I made the same mistake with Genki English. I set my prices very low, and very often have customers with a suspicious tone asking “why is the teaching package so cheap compared with all the other systems out there, where are the hidden fees?”, especially compared to Europe or Japan where systems often cost thousands of dollars for schools to use, or where they have to pay a certain fee per student to use a lot of materials. But I’m sort of stuck with the cheap pricing – at least for now!
So please don’t make the same mistake I have!
Value not price
However much customers say they want something cheaper, and they always will say that, what they act on is value. As long as you are giving them an over abundance of value they will pay almost anything. Some language teachers command incredible prices + first class travel and accommodation!
Do it like the airlines do ….
When you travel on an airline, do you pay the same price as the person in the seat next to you?
Do you get the same rate on your mortgage as your neighbour?
Do you pay the same rate for your mobile phone?
If you’re still not sure about pricing high, or don’t have the confidence to put up all your prices straight away, then one tip to learn from all the major industries is to do a tiered pricing structure.
- You start out at one low price for the first student who joins you. That student, or your current students, pay that same price forever.
- The next new student who joins you charge just a little bit more.
- Then a bit more for the next student.
- Repeat from step 3.
Everyone ends up paying different amounts, so you have to keep track of things, and someone is always paying more than you so everyone is quite happy. (After all if you’re on an airplane you know the people who booked 6 months ago paid less than you, and you also know the people who just bought their ticket paid more than you, but you don’t mind. )
Ninja Tip: Lots of teachers get really worried by this saying “Oh but the parents will talk!” Yes they will. They’ll be talking about your school. To all their friends. And saying how you have to get in quick before the prices go even higher! Don’t believe me? Give it a try 🙂
If the students ever quit and rejoined, they’d give up their price and have to join at the latest, higher price, so you get less people quitting.
If they do quit you simply rent that slot out for the current higher price.
Eventually you will hit a plateau where you can no longer increase the price, but you will be amazed at just how high you can go. In my Coaching Program I show how all of you can double your income very quickly. Some treble their income. And some even more. You realise just how much money you are leaving on the table.
And the real magic? The students and parents are happy that you are charging more because now there is no disconnect between your unbelievably high quality of lessons and corresponding high level of pricing.
Ninja Tip: Obviously if you have really rubbish lessons you can’t put your prices up. But you don’t. You’re doing Genki English. So your lessons are awesome!
This works in many fields, just look at how much Starbucks charge for coffee compared with other places that assumed the price could go no higher. And many other examples.
As long as you keep delivering an awesomely amazing quality product you’ll be very surprised at just how much people will be willing to pay you, and I’m sure that would make your family very, very happy!
Keep tuned in for more tips!
You are so right Richard!
I started out last year setting my prices quite low, but I didn’t calculate all the taxes and hidden costs I’d have to pay!
A “solution” I’ve found for this year is to offer shorter courses at a higher price, where psychologically the client feels he’s paying less. Example: normally I ask parents to register for a 15 hour course to be paid in advance. Now I’m also offering 6-hour courses, that cost more, but the parent feels that their paying less, because if the child gets fed up with the course they haven’t spent so much money in advance!
This is possible firstly because GE is so good I’ve never had a child who didn’t want to continue, secondly because people believe that paying for example 100 euro immediately is worse than paying 50 euro in three instalments!
sussie
A tip that I can only agree with. I guess that is a mistake that every “newbie” is doing. When I compare the prices I took at the beginning and what I get now, is really worlds apart. You should never underestimate yourself, even when you are new in the business, doesnt mean others are teaching better than you
A very useful tip I also agree with. I don’t have my own school (so far;-))but I did the same mistake with the private classes. It;s hard to set up a good price for my classes because most of my students are my friends’ kids. That’s why I feel a bit uncertain talking about the price and sometimes even try to avoid it as long as I can. My husband adviced me to do the following: if I want to give a kind of discount to my friend I can give a couple of classes for free or half priced and the rest of them of full price. Or I can suggest several variants of pricing as it was mentioned in the first comment. This helps me to feel better while talking about money with my clients. It gived me more confidence.
This wonderful discussion just caresses my ear.I’m in the process of thinking to start my own school and your advices are the great find for me.I worked with kids of different ages in the government educational center the last year. The salary they payed me was very miserable plus I had to provide all the nessessary stuff myself.And by the way thank to GE I survived! At lastI have an opportunity to hold my future lessons in my sister’s husband’s office.She gave me an advice on how to set the price-you give a bonus to thе students who invite their friends i.e. they pay less. As for me the first comment is quite available.The only thing is to think it over…
Yeah, I found it difficult to settle on a price at first, but that tiered system is a pretty good idea. One I never really considered. Another great tip. Much appreciated!!!
Great advice Richard! I am planning to open up some kindy and early elmentary classes– of course with your material (However, I haven’t purchased it yet..sigh!!)
One thing I would like to ask is, do you- or, anyone else know if a tiered pricing system is legal in Korea?
I am contemplating a tiered pricing system, or trying to teach large groups of students for a set cheap amount (because of the quantity). I am aiming at $13 per student for one hour ~ I intend to max the class out at 30 students.
Any advice would be great to hear!!
PS.. Since you are talking about pricing,, it would be great to here what you think is a reasonable price to charge students, with different class size variations ^^
the parents in my area have complained about a local competitor who charges different rates for different class sizes. They think it’s unfair to get charged more because that school couldn’t find enough students.
I charge the same for all (about 230USD/30hrs or 8USD / hr. in Thailand) but keep a cap of 9 students for little ones and 11 for older kids.
I’m also quite new at this and I think everyone would be interested if lots of people would just post your price structures for reference.
I’m not sure of the legalities etc. (always check with a lawyer! 🙂 ) But in general nearly all companies charge different prices to different people, e.g. no one pays the same price for a seat on the same aeroplane and even things like “student discounts” or “elderly discounts” are just ways of tiering pricing to people who can afford to pay different amounts.
@Matthew: The mistake your competitor made was to bring their prices *down* That will always get a none too favourable reaction! 🙂 What I’m suggesting here is to start low(ish) and then build your prices *up* That way everyone feels fantastic that they are getting a cheaper price than the people who came later, you find out what the true value you provide is and it keeps the turnover rate down as people want to keep enjoying the nice feeling of having the cheaper price!
If you notice it’s the same as I do here too, the Download Pack price just keeps going up and up as, hopefully (!), I keep adding more and more value to the system, and all of you who got in early get to enjoy all the material for the lower price!
Caps are a great idea, I really should have a set limit too, then once that’s gone the packs come off the market! 🙂
Fees wise, just keep in mind this is a very public blog so all your competitors are probably reading! 😉 (The forum is semi-private so might be better, but then again they’re probably in there too! 🙂 )
Living in Colombia I had a friend checking out the local market prices for me. And I set my price just a little bit higher – being native as opposed to Colombian this is only fair. This works for me. And I entirely agree that people distrust the value if the price is too low.
The school I work at is introducing different pricing for different priced classes. At first, I was put off by this, but then my girlfriend explained that the higher prices for smaller classes is based on request. If a class is a “normal” class, but just happens to have 4 kids the price remains normal while the “small” 4 kid class opened AS a SMALL class has a higher rate.
With those variable rate kind of systems, the parents need to agree to the terms. For instance, somewhere else on GenkiEnglish someone shared how they charged for classes. One kid pays 100% of the price for the hour, Two kids pay 50/50, three kids split it three ways. Of course, this means the class will probably been very expensive for a small group as you’d want to be making reasonable coin for a 12+ kid class.
@Martin: I’d always recommend calculating your “break even plus a little bit price” for individual lessons (if you really feel you have to do them!) and then keep a very similar price per person for the larger groups. Don’t discount it. Up to about 8 kids in the class, they are actually getting a much better experience as they are communicating more and learning from each other. So you all win! (And as most people set their prices far too low then 8 times what you originally thought you were worth is usually much nearer your true value!)
Yeah, more kids in a class…between 8 and 20 is really good for the conversation type games. The small classes lend themselves well to playing One Card Left with the teacher.
Hello!
What happens when parents ask “Why am I paying more than the others?”
In some countries, it would be a bit more tricky to introduce that notion, though I’m loving the concept!
Thank you in advance.
Usually they don’t ask (after all you don’t ask the person next to you on an airplane what they paid 🙂 ) If they ever did, just tell them the truth that as they joined earlier they get a better price than the people who are joining today. As long as you are consistent they are actually happy as they are paying less than new people and are getting more value than they originally thought! (The extra value is because when you put your prices up you start to panic if you are really good enough to charge so much, so you improve your teaching skills tremendously!)
Hi Richard,
Thanks for all the great advice and opportunity to discuss with others our worries and successes.
I’m have recently started playing with the idea of setting up my own school in Colombia, so when I saw Charlotte’s comment that she has already opened one there, it got me excited thinking that she may be able to advise me further on current market and so on, I doubt I’ll be giving her any competition as I intend to head north to the coast, but it would always be valuable to hear from someone already in play there. I wonder if you would be kind enough to put me in touch with her? Highly unusual am afraid but would be helping me out immensely .
Do you work there yourself? the course looks really interesting, and having worked with Le Club Francais before, I know the benefits of teaching after-school with play method in mind. I would also agree with your comments on the pricing; it is always worth starting on a tiered platform at first, but very rapidly approach said plateau you speak of.