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STG 076: Why You Need To Raise Your Tuition Rates

 

complete guitar player

Are you tired of struggling to make ends meet as a guitar teacher? Ready to break through the financial barriers that are holding you back and also start teaching some better quality students who respect you and your time? The solution you’ve been looking for could be as simple as raising your tuition rates!

In this episode I’ll tell you why you’re probably charging too little for your guitar lessons and what you can do to fix it. Rather than just arbitrarily charging your students more, I’ll explain how to put together a strategy for tuition increases that can actually help your business be more successful, and give you some good tips on how to pull it off without losing any of your current students.

To call in with a question, a comment or to leave feedback for the show, call the Listener Feedback Hotline at (719) 428-5480 and leave a message! I just might include your recorded message in a future episode.

Items Mentioned In This Episode:

Podcast – Episode 70: 3 Simple Sales Techniques To Improve Your Teaching Profits
Video – How To Raise Your Rates

Podcast Transcript

Okay, in this episode, we’re going to talk about money. To be exact, we’re going to talk about why you need to raise your rates as a guitar teacher. Now, many guitar teachers are charging way too little for their lessons, and their either working too hard to make the money that they’re making or they’re barely scraping by and not making enough money. Not doing as good as they could be doing, and a lot of times it’s just because they’re underselling themselves and they’re not charging enough for their lessons.

I’m going to go even further and I’m going to say show me a guitar teacher who thinks making a living teaching is too hard, and I’ll show you somebody who’s probably not charging enough for their lessons. And the solution is easy. The way to fix this is super easy and simple. Just raise your rates.

Now, a lot of teachers are hesitant to do that for a lot of a reason. It all basically boils down to fear. They’re afraid they’re going to lose students if they raise their rates. They’re afraid that they’re going to price themselves so high that they won’t have any new students sign up. They’re afraid that they’re going to get rejection; that they’re going to get flack from their existing students. You know, for whatever reason, it all comes down to fear and hesitation, but the bottom line is you need to get paid the money you deserve for the value you provide to your students.

If you’ve been listening to the Start Teaching Guitar Podcast, we’re on Episode 76 now. That’s 76 episodes of stuff to help you be more successful and add more value to your guitar lessons and to the services you provide to your students, so there’s a lot of value there in your business if you’ve been following some of the stuff that we talk about here on the podcast. Well, you shouldn’t just give all of that away for free. The whole concept of value implies that there is an exchange of value for value. We’ll get into that some more in a second. But the more value you provide to your students, the more results you can give them, the more features you can provide in your lessons, the better you can augment their learning experience, and the better you can make things for them, the more value you’re creating in the situation and the more you can get paid.

Why You Should Raise Your Rates

That’s just basic fundamental free market economics. If you want to get paid more, you add more value, and then you get paid in proportion to the value that you add. So, let’s talk about this whole concept of raising rates, because this is scary to a lot of people, but here are some reasons why you definitely want to consider doing it.

First off, you do yourself a disservice by charging too little for your lessons. You really do deserve to be paid what you’re worth. Now, whenever you’re just getting started and maybe you only have a student or two, then obviously your value as a teacher is not going to be as high as someone who’s been at it for three or four years and has built up a roster of students and has developed some systems that really provide a high level of value to people. So, obviously you’re not going to be able to get paid as much as someone who’s more established whenever you first get started, but the whole point is you improve what you offer. You improve your business. You improve your teaching skills. You improve your ability to meet the needs of your students. And then the better you can do that; the more you deserve to be paid.

And there’s really no limit to that. Honestly, you can improve the level of value that you give and end up eventually, down the road, teaching fewer and fewer students and getting paid more and more money, and becoming a very exclusive and highly-paid music instructor at some point down the road if you just keep growing and keep developing and keep increasing the level of value, and then communicating that to people so that they can appreciate it and understand it and see what their money is really worth.

So, if you don’t raise your rates, if you just settle for the same thing that you’ve always been paid for your lessons, or if you really undersell yourself, then that’s the second thing; is you really rob yourself of financial success that you deserve and that you could have. Don’t do that. Don’t sell yourself short. Reaching your financial goals as a teacher could only be one price increase away maybe. I mean I don’t have a crystal ball here, sitting in front of me. I can’t read your mind and the mind of every person listening to this, so I don’t know what your specific situation is, but if you need to get to the point where you’re making another five hundred to a thousand dollars a month, then raising your rates could take you there. So, don’t rob yourself of the financial success that you deserve to see in your teaching business just because you’re afraid to charge what you’re really worth.

Another reason why you should think about doing this is that raising your prices is a good way to get rid of students that you don’t want to teach. Now, that might sound kind of cold-blooded. Why would I want to get rid of students? But truth is not all guitar students are equal. They’re not all the same. Some of them are really good students. Some of them, you know, are not so good. And the not so good students are the ones that tend to dominate your time and attention, and require high maintenance, and give you the most problems, give you the most headaches, and just are a drag on your motivation. They don’t practice. They don’t show up on time. They don’t pay you on time. They don’t do the things that you tell them to do, which means they don’t have respect for your time. They don’t have respect for you as a teacher and a musician. You know, you don’t need to settle for teaching a group of people like that just to have income coming in from your teaching business.

And raising your prices is an excellent way to weed those kinds of people out. High maintenance students are typically going to leave and go someplace cheaper and go be a burden to someone else. And if you raise your rates and you attract more higher paying, higher quality students, well, obviously you can make more money teaching less lessons and have a lot less hassle. So, it’s a good thing to do. When you raise your rates, you also increase the perceived value of your lessons in the eyes of everyone else in the marketplace, because people tend to think that someone with higher rates – we just assume that they must also offer a higher quality of service as well. They must be doing something right. There must be something special about this person if they can charge higher rates and people are paying it.

Okay, it’s a perception in the minds of other people that increases the value of your lessons and of you as a guitar teacher, just by raising your rates. You don’t have to change anything else and you’ll create that impression in people’s minds.

Another reason why it’s important to consider is, like I mentioned before, you get more respect for your time. Students who pay more for lessons are a lot more likely to show up on time, a lot more likely to be prepared for the lessons, and a lot more likely to take them seriously, because they have more skin in the game. There’s more at stake. It’s not like: “Oh, I’m going to lose twenty dollars if I don’t show up for this guitar lessons.” It’s like: “Wow, okay. I’m paying this guy some serious money and he doesn’t accept just anyone, so I need to take this more seriously.” Okay, so as a result of your higher rates, you get more respect for your time. You kind of forklift everything up to a higher level just by raising your rates. It’s pretty cool.

And then also you get to work with more serious guitar students too. You know, a lot of teachers are plagued, like I said before, with students that just don’t really want to be there or don’t really want to learn how to play the guitar. You know, not the ideal student that you want to be teaching and pouring your knowledge and experience into. So, if you raise your rates to the point where you filter those people out, then you’re going to get a higher quality group of students. People who pay more will work harder. They will listen more to what you have to say. And as a result, they’re going to become better guitar players. They’re going to value your time and instruction more highly.

It Comes Down To Basic Economics

So, those are some reasons why it’s important to not be the cheapest person. And really even not be right in the middle of the pack. You want to at least be above average for your area so that you can differentiate yourself from everyone else and then attract those higher quality students that are looking for a more serious and, you know, cool experience with their guitar lessons. So, let’s talk a little bit about this rate raising stuff. And it comes back down to basic economics.

The more value you bring to your guitar students, the more money you can and should charge for your lessons. So, it’s not the kind of thing where, you know, I can charge what I think I should get paid. You’re actually able to charge what your lessons are really worth. Okay, that’s what people are going to pay. And the way that you increase the amount that you can charge for your lessons is you increase the value of the lessons that you teach. So, every guitar teacher that’s listening to this podcast right now can start charging more for your guitar lessons. Every single one of you can if you can just more effectively convey the value that you bring to the table.

Okay, once you convey – communicate – the real value in what you offer as a teacher, then price doesn’t really matter so much. You know, if you can help someone understand that you can take their musical dreams and make them a reality within two or three years, for example, if you can help them understand that and grasp that, that is why they want to take lessons in the first place. And if they feel like you can give them that, exactly what they’re looking for from a guitar teacher, then they’re going to be willing to pay you more. The price: that’s going to be secondary. You know what I mean. As long as they make enough money and have enough discretionary income to pay it, they’re going to spend more money on someone that they know is going to help them reach their goals.

So, it’s a very simple equation. You want to charge more. You either need to add more value to what you’re doing right now as a guitar teacher, or sometimes you just have to communicate the value that you’re already bringing to the table more effectively. And once they understand what they’re getting for the extra money, then it’s a no-brainer. You can raise your prices and people will stay with you and pay it. You know? And honestly, fewer higher-paying students – having few students that pay more – is better than having more students who pay less. You know, that might sound kind of counterintuitive, but it’s the truth. It’s better to have a handful of students that are paying a lot more money than to have, you know, ten times as many that are just paying the bottom of the scale. Okay, because they’ll work you to death and you won’t make any more money. So, it’s way better to focus on the 20% and then let go of the 80%. You know, I talk about the 80-20 principle sometimes. It’s a perfect example of it.

And the more your students pay you, the better student they are likely to be. And what does this do for you? Well, it makes your job a heck of a lot easier as a teacher. But ultimately, all of this hesitation to raise your rates, to get paid what you’re really worth, to become one of the dominant teachers in the market – the reason that a lot of people hesitate is basically a self-esteem issue for a lot of people. Most teachers don’t charge more because, for some reason, they don’t think they deserve it. You know, maybe you’re listening to this right now and the thought of raising your rates significantly just is making you cringe. It’s putting a knot in your stomach, and you’re like: “Oh man, that sounds cool, but I just don’t know if I could ever do that.”

Well, the truth is there’s something that you’re believing about yourself that is holding you back from success. Okay, you deserve to get paid what you’re really worth. You do deserve to have the kind of teaching business that you dream about. You do deserve to be successful in your business, successful with your music, successful in your life. You deserve it. You deserve happiness. You deserve freedom. You deserve fulfillment from your business. Every single one of us does.

So, why is it that people think that they can’t have that or they’re afraid to reach out and take it? It comes down to self-esteem. Maybe you feel like you are not a good enough guitar player to justify charging what you’re really worth. Maybe you feel like you’re not a good enough teacher or you’re not a good enough businessperson or you’re not a good enough marketer or not a good enough people person to feel like you can charge what you’re really worth. Well, what I want to do right now in this episode is I want to write you a permission slip, and I want to say that I give you permission to raise you rates. I give you permission to charge what you are really worth. I give you permission to move from the bottom range of what people are paying for guitar lessons in your city to the top of the range of what people are paying for guitar lessons in your city.

I give you permission right now. If you need it, I’m giving it to you. I give you permission right now to become the teacher that dominates your local market and provides the most amazing guitar lessons that anyone can find anywhere in your area. I give you permission to rise to that greatness, and then to charge and get paid what you’re really worth. Set your feeling aside. Don’t let negativity hold you back. Don’t let fear hold you back. Don’t let intimidation hold you back. Don’t let any kind of negative thinking or any kind of poverty mentality hold you back from charging what you’re really worth for your lessons.

You’re not just a guitar teacher. You’re not just someone who shows people how to play chords and scales on the guitar, or how to play songs on the guitar. You are someone that has the power to make a positive impact on someone’s life. You’re a life-changer. That’s what you are. That’s the value that you bring to the table. You improve people’s lives through music. You make their lives better, more fulfilling, and more significant because of your relationship with them through the guitar. If you can find a way to communicate that, and it starts with believing it yourself. I want you to believe this. Gosh, believe it. If you have to pause this and think about it for five or ten minutes, and say it over and over and over again – I change people’s lives for the better -, say it. Do it. Keep repeating it until you believe it. And then, once you believe it, communicate that value that you bring to your existing students, to your potential students out there in the marketplace, and then charge what you are really worth.

That’s who you are. That’s what your business is all about. It’s not about trying to squeak by. It’s not about putting up with the bottom feeders that want to take up all of your time and don’t want to practice and don’t want to pay you, and all of that stuff. Leave those students for someone else. You be the guitar teacher that you were born to be and charge what you’re really worth. Okay, I’m getting off on a tangent, but all that stuff is true. Okay, it’s true.

So, you might be thinking: “All right. So, if I want to raise my rates, that’s cool. How much should I increase my rates?” Well, it’s really up to you honestly. It depends on what people are charging in your area. It’s a good idea to kind of do a rate survey and figure out the whole range. Who’s charging the least? Who’s charging the most? So that you can kind of see right where the middle is, and then start moving up from there, because you definitely would want to be on the upper half of the range. But a good place to start is ten to fifteen percent at a time; is usually a safe bet because the smaller the increase, the less chance that people are going to get sticker shock and kind of balk at it.

But you don’t have to limit yourself to a ten or fifteen percent increase. You could do a larger percentage. You know, and the larger the percentage of the increase, the more likely you’re going to thin the herd. You know, like I talked about before, the price conscious students that usually cause the most problems, those are going to be the ones that you’re going to lose. So, that may not be a bad thing. You know, I’m not suggesting that you do that all at once and try to purge your student roster all in one setting if you’re not financially prepared for that, but that’s the way that you could do it.

So, you could start with ten to fifteen percent. And if you’re really below market, then you could go up maybe 25 percent. Maybe 50 percent. It totally depends on your situation, but you definitely want to position yourself well above average. You don’t necessarily want to be the most expensive teacher in the market right away, but increase your rate so that you’re above the average of what people are paying all the other teachers. It’s a good place to start.

And then you might be thinking: “Well, what if somebody leaves? What if I raise my rates and I try to do everything and somebody leaves anyway?” Well, if good students quit because you raises your rates, then it’s a good time to kind of assess the value that you’re providing in your lessons. So, ask yourself some questions. Do these students feel like I’m giving them their monies worth? Are they getting the value that they feel like they’re paying for? And maybe they are. Maybe they just don’t realize it, or maybe they aren’t. Maybe you need to deliver more value to justify the higher rates. So, you could ask yourself this: “How can I provide even more value so that I can raise my tuition rates even higher? What can I do to up the game even more so that I can provide an even better experience for them, even better results, and then be able to charge even more?”

Is there something that you could change or something that you can do better in your teaching business to justify the higher rates? Those are the kinds of questions you want to ask, because the answer is not to charge less. It’s not to stay at the bottom of the scale. It’s to figure out how you can justify raising your prices and move up to the higher end of the scale. So, that’s kind of what the whole raising your rates thing is all about.

How To Raise Your Rates

Now let’s talk about some specific tips on how to do it a little more effectively, a little more seamlessly, and a little more strategically. So, I’ve alluded to this already, but the first thing you have to do is you have to make sure that you are offering amazing value and service to your students already. This is square one. If the value isn’t there, then nobody is going to be willing to pay more money to study with you. You have to have the value in place. And you know, I use the word value kind of in a general sense, but it’s all about giving people what they want. Giving people what they expect. Giving them what they really need from their lessons, and removing as much possible friction from the process as possible, and giving the more than they expected and helping them to grow faster and easier, and engage with them at a deeper level than your average guitar teacher down the street, who just throws a sheet of tab in front of them and works on a song every once in a while or something like that.

Okay, I’m talking about taking it to a whole other level, where it’s not just guitar lessons anymore. What you’re doing is you’re helping them to make their dreams come true, come to pass, and become a reality. Okay, so you’ve got to start there. So, figure out how you can turn your teaching business into a dream factory for your students and give them what they’re really, really wanting deep down inside. If it’s to be a performer, give them performance opportunities. Mentor and coach them, and give them chances to perform in a safe environment so that they can develop those skills. If it’s songwriting, teach them how to write songs. Teach them how to collaborate with other songwriters. Teach them how to develop their ideas on the guitar into complete songs – lyrics, melodies, harmony, everything.

Whatever reason they want to take guitar lessons. Whatever is motivating them deep down inside. Then help them to get there in spades, and that’s an amazing amount of value that you can charge more for. So, once the value is there, once the customer service is there, the next thing you want to do is you want to put together a strategy for your rate increases. The worst thing you could do is just say, “Eh, I’m going to raise my rates today,” and then all of a sudden you start charging another extra twenty or thirty dollars a lesson, or something like that. That’s going to shock people. It’s going to make them feel a little bit betrayed, a little bit used. Okay, you don’t want to arbitrarily raise your rates anytime you feel like it.

Instead, I want you to put together a long-term strategy, like something for the next five or ten years. Okay, and then you want to plan those rate increases ahead of time, and then you want to schedule them and you want to do them intentionally. Okay, so think long-term. What do you want to be charging in the future? What should you be making right now? What do you want to be making for your lessons a year from now? How about three years? How about in five years? And what you want to do is you want to factor in inflation, because there’s a rate of inflation that goes up every year, which means your dollar is worth a little bit less every year. So, you want to make sure you adjust your rates for inflation. And if there are increases in the general cost of living in your area, you want to make sure you increase your rates by that percentage to cover that for you so that, at the very least, you’re staying ahead of inflation. You’re staying ahead of the cost of living in your area.

But figure it out. Figure out the percentages for that, and then say, “Okay. Right now I’m going to raise my rates twenty percent, and then every twelve months, I’m going to raise them another 25 percent to keep track with inflation and cost of living.” And put that strategy on paper so that you know exactly when you’re going to raise your tuition rates, you know exactly by how much, and you know exactly how that’s going to happen and why. Okay, put all of that down on one sheet of paper and that’s your pricing strategy.

So, once you have that strategy in place, this is also a good time. Before you actually implement it, it’s a good time to do something I talked about back in Episode 70 of the podcast. The title of that was Three Simple Sales Techniques to Improve Your Teaching Profits. And I talk about up-sells and cross-sells and down-sells, and things like that. It’s a great episode. You should go back and listen to it, but one of the things I mention in there was to give your students options to choose from for tuition packages.

So, for example, you could have a low, a medium, and a high package. Each a different price, right? So, you can have the lowest package, you can have the medium one that most people would take, and then have a premium package where they get more benefits and more value and more access to you, and things like that. And then let them choose the one that fits their desires, their goals, and their pocketbook. And if you have that in place when you introduce your rate increase, then they’re going to feel a little bit less cornered, for example, if they have a say in the matter. So, if you raise your rates, you can say, “Yeah, I’m raising my rates. You know, this is why I’m doing it. It’s not because I’m greedy, but you know, this is the value that I’m offering and this is what it’s really worth, so these are what my new rates are going to be.” You give them a less expensive option to fall back on if it’s something that they can’t afford.

And that’s kind of optional. You may not want to do that because, like I mentioned before, you may want to weed out a certain segment of your students. The bottom ten percent or the bottom twenty percent or something like that. But if you want to keep all of those people, then you could give them a less expensive option to fall back on that has less value, less access to you, and things like that. So, give them some options: low, medium, and high. It’s a great thing to do, and it really helps give them some framework for the value that you offer in your lessons if they can see it in terms of three different levels with three different prices and a list of features and benefits under each thing. It really helps them understand what you’re offering for the money. So, it’s a good thing to do. You should go back and listen to Episode 70 to find out more about how to do that.

But first you’ve got your value. Then you’ve got your strategy. Now you’ve got your options, your packages that they can choose from. Then it all comes down to communication. You have to communicate with your students about your rates and you’ve got to make sure you communicate the value that justifies them. So, with new students, the perfect time to do that is when you have their initial meeting with them, whenever you’re talking about lessons and policies, and they’re at the place where they’re going to sign up. So, that’s a perfect time to just explain the options. These are the packages that I offer. These are the three different options: low, medium, and high. And then let them know at that time that your tuition rates are not static. Okay, that they’re going to change over time based on your strategy, your plan that we just talked about.

So, it’s not like they’re going to assume: “Okay, this is what I’m paying now. This is what I’m going to pay forever.” No, let them know that your rates increase over time, and this sets the expectation that there are going to be future increases in their mind, so they won’t be surprised when it happens six months from now or a year from now, according to your pricing strategy. So, just let them know. Communicate that to them and say, “Yeah, my rates go up over time. This is what I’m charging right now,” and you know, communicate the value that they get for that money.

And then also, whenever you’re making changes to your tuition rates, you want to give your students a least a month’s notice before you pull the trigger on a price increase. So, make sure. Give them even six weeks is even better. A month and a half. At least a month though, where they know ahead of time that your rates are going to go up so that they can adjust their budgets, so that they can change the things they need to in their personal finances to accommodate that. And then you always, always, always, when you do this, want to demonstrate why the increases are justified. And there are different ways you can do that. Maybe you could show them the results that you provide to them and your other students. You could take your best students and make some case studies out of them, and do like a video interview or something like that, or just type up even a few paragraphs explaining where they were when they got started, how long they’ve been taking lessons with you, what their goals were, and what they can do today.

And then you take a picture of them, put all of that together, and send it to all of your students and say, “This is why my rates are going up, because of the value that I provide, because of what I’m able to do with someone who wants to learn the guitar.” Maybe you could explain that you were charging way less than the other teachers in town before and that you need to get more in line with the market tuition rates, or something like that, but you’re demonstrating to them why the increases are justified and it’s not that you’re just a money-grubber and that you’re trying to be greedy and take as much money from them as you can, but it’s so that you can be in a financial situation where you can provide even more value to them. Okay, that’s why the increases are justified.

And a lot of them, if they do balk at the price and they go and find another teacher, they’re going to realize pretty quick that they were getting a lot more value for the money when they stayed with you and they’ll probably come back, a lot of them if they’re serious. So, what I’m going to do is I’m going to give you a link to a video. It’s on IWillTeachYouToBeRich.com, by Ramit Sethi, and basically it’s a ten-minute video where he talks about how to raise your rates and how to communicate a rate increase to your clients in the case of the video, but your students in your case. So, you want to check that video out. I’ll put a link in the show notes to it so that you can click and watch it. And he gives you some great examples of how to communicate a rate increase in the context of value and benefits to your students. Okay, so you definitely want to watch that to hear someone do it in real time there.

So, those are a couple of other things you can do. If you’re not feeling too comfortable with this whole strategy thing, where you raise your rates automatically, you can do a couple things to help a little bit. You know, you could throw in a bonus whenever you raise your rates. So, whenever you’re about to announce your rate increase, you could also giveaway something free and you can announce that first so that people get the impression that: “Wow, okay, they’re going to give me a seat in this free master class that’s going to happen this month. That’s awesome. You know, that’s more value for me,” and then you say, “Also, there’s going to be a tuition increase of X amount.” So, you kind of sweeten the deal for them a little bit and throw in a bonus when you do it, and that kind of helps it go down a little bit too, if that’s something that you want to do.

So, give your existing students some extra value when you announce that rate increase. It could be a free video. A free lesson. A master class. Something to kind of sweeten the deal for them. That’s not a bad thing to do. You don’t always have to do that, but if you would feel like it would make it more well received for them, then by all means do it. And then another thing you could do is you could grandfather in your existing students at the old rate for a period of time if you think that would be more effective. You know, I don’t know your students. I don’t know your teaching business. So, that may be something that you could try and that basically means that you start the higher rates for new students only, for everyone coming in, and then you let your existing students know that you’re going to let them stay at the old rates for the next three months or the next six months. You know, and that communicates some extra value to them in the short-term and also positions your rate increase for a time in the future, whenever they may be a little more receptive to it. So, that’s another strategy that you could think about doing too.

So, there are different ways to skin it, but ultimately if you communicate that extra value and then let them know that it’s coming and why, then you typically won’t have problems losing good students as a result of raising your rates. And then you get all the benefits I talked about before of doing it. Okay, I highly recommend doing it.

Conclusion

So, to wrap it up today, raising your tuition rates actually could be one of the smartest things you do for your business. It doesn’t have to be scary or it doesn’t have to cost you your current students. You don’t have to lose people as a result of it. Just plan your strategy, communicate it well, and then you can make more money, you can teach higher quality students, and you can get the respect you deserve at a guitar teacher.

Thank You For Listening!

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STG 076: Why You Need To Raise Your Tuition Rates was last modified: May 12th, 2014 by Donnie Schexnayder

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