Sunday, May 19, 2013

How Much Should I Charge?

This is one of the most important questions you'll need to answer.  In order to figure this out, we'll need to look at a few things:

1. What is the income level of your target demographic?  Are you catering to the working class?  Is your target market upper class families?  Once you know this, you can get a good idea of how much disposable income they have and how much they spend on related goods and services.  If you don't have a good idea already, just ask!  Start asking people how much they spend on dance classes/gymnastics/music lessons/sports/art classes. etc  If you are trying to get the most profit, I suggest going for upper middle income bracket and pricing higher than your competition (more on this below)

2. Where are others pricing themselves? I have started a few programs in rec centers and other martial arts studios.  When they ask me how much I want to charge, or how much I want to be paid per hour, I ALWAYS counter with "I would like to be priced in line with other similar programs that you offer"  This will ensure that you aren't overcharging or selling yourself short.  If there is a range, I insist that I am placed at the high end of that range.

3. Here is a big one that is often overlooked in martial arts.. read closely now... The value you place on your classes is the value that others will place.  If you charge 50 bucks a month, people will value your classes as such.  If you charge $150, 200, or more per month, your customers will perceive a higher value.

4. Supply and demand.  If you get a chance, I highly recommend taking a basic economics course.  The short of it is, if there is more demand you can charge more.  If there is more supply, the price is driven down.  This can be looked at a lot of different ways - number of classes you teach, number of schools in the area, number of teachers you have, etc.

5. Teach FREE classes.  Especially in the beginning.  I use free classes to generate interest in my programs.  I often have had "feeder" programs for both youth and adults.  Also, teaching free classes in underprivileged areas comes with its own rewards.

6. Lastly, you can just do some simple math.  If you want to bring in 5,000 month and you are planning on teaching 50 students, you'll need to charge $100 per student!

Happy Pricing!

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