Earlier this year, I decided to shift to monthly billing, charging my students a monthly, recurring flat-rate for their piano lessons.
Previously, like many teachers, I’d been charging on a lesson-by-lesson basis so, if a student had four lessons in a month at $50 per lesson, they’d be charged $200, etc. But if they missed one or there was a public holiday, they would be charged $150.
As you’ll see below there are a number of key disadvantages to this approach to charging, so in this article, I want to show you step-by-step how you too can simplify your billing process to the point of complete automation. In this post, you will also be able to find a video demonstration for how I charge my piano parents.
I guarantee you will never look back!
The Problem with Charging by the Lesson
The biggest issue with this system is that you don’t get any continuity of income, especially over summer months when you or your students might be on holiday.
I never considered it an option to charge for each individual lesson, because unlike plumbers, dentists and auto mechanics, we teachers must rely on very small group of clients each week for our livelihoods, which means empty slots can’t be filled by clients who call each week. If a student wishes for a teacher to commit a time slot to them each week, the student must commit to paying for it each week. Chat Twedt.
If you’ve found yourself struggling with continuity of income during certain parts of the year, then this could be a valuable solution for you.
Also check out how Summer Camps can help in this regard.
Charging by the lesson can also get complicated when:
- Students are ill or forget to show up
- There is a public holiday on their lesson days
- Students are away or on camp, etc.
The Advantages of Recurring Monthly Billing
There are so many advantages to recurring billing, both for parents and for you:
- You can automate the payments with software so you never have to worry about it (see video demonstration below)
- It’s transparent: parents know exactly what they’ll be charged each month so there are no surprises
- You’ll know exactly how much income you’ll generate each month
- You’ll get paid over summer, even if you’re not teaching (depending on how you want to set this up)
- No money exchanging hands during a lesson or talk about lesson costs in front of students
- You can include admin/personal development costs in the charges for students and split this over the year for parents
Here’s a comment I read on a blog post about this from Angela:
Aside from budgeting reasons, I made the switch because what we do is a course of study, not a doctor’s appointment. When you take a class at the park district or in college, you pay for the class as a whole, not for each individual session. You don’t get credit on your bill if you miss your Wednesday class. I think it helps convey the idea that music lessons are a long-term commitment and curriculum.
Setting up a Studio Policy
You need to be honest and clear with your students’ parents about monthly billing. A good way to do this is by setting up a studio policy.
One of the first things you’ll need to do in order to change your billing process is be very open with parents as to:
- what the changes are
- how it will impact them
- how they need to set things up
- what the policies are for missed lessons
When I moved to this system, I started talking to parents in lessons about this and followed-up with an email explaining things and linking to my policy in detail.
If you’d like to access my own full studio policy, it’s available to all members of TopMusicPro in our community forums. Otherwise, if you’d like to explore what other people add to their policies, feel free to Google “piano studio policy”.
Here’s a short version of what I say about monthly tuition:
Tuition is spread equally over the course of a year and charged each month in advance. The monthly payment amount is divided evenly between the 11 months from February to December. This means that whether there are 5 or 2 lessons in that month, the tuition fee is exactly the same. Weekly students are allocated 35 lessons per year, fortnightly students will be allocated 17 lessons per year. Eg. If hourly lessons are $100 each and a student is having lessons weekly, their monthly charge will be $100 x 35 lessons = $3500/11 months = $318.20 per month.
Related article: 5 Ways to Increase Your Guitar Lesson Prices Without Losing Students
Make-Up Lessons
Regardless of how you’re charging for lessons, it’s important to be clear about your make-up policy.
There is great conjecture about the best way to manage make-up lessons. I personally don’t offer make-up lessons but many teachers do. Ultimately, you’ll have to decide how you’d like to approach this.
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There are lots of articles around the web on this topic as well. Here are just three you might like to take a look at as you consider your own policy stance:
- Make-up Lessons from an Economist’s Point of View: This article went viral a few years ago, making the case for not offering make-up lessons. The author is both a university lecturer and a mother of a music student and she says:
In my ‘other life’ I am an economist and teach at our local university. Students pay good money to attend classes at the university; but if they don’t come to my lecture on a Monday morning, then I am not going to turn around and deliver them a private tutorial on Tuesday afternoon. When I go to the store and buy groceries, I may purchase something that doesn’t get used. Days or months later, I end up throwing it out. I don’t get a refund from the grocery store for the unused merchandise. If I sign my child up for swimming lessons at the local pool, and s/he refuses to return after the first lesson, I can’t get my money back….During May, my eldest son will be missing three lessons because he is going to accompany me on a trip to New Zealand to visit his great-grandparents. I do not expect my son’s teacher to refund me for those missed lessons, or to reschedule them by ‘doubling up’ lessons in the weeks before or after our departure.
- The Case Against Offering Make-up Lessons: Another article supporting a no make-up policy, this time from the Music Matters blog.
- Thinking Twice About Strict Make-up Lesson Policies: A completely opposite view that’s well thought-out and will provide more food for thought.
How to Set Up Flat-Rate Billing
If monthly recurring billing makes sense to you and you’d like to try it out, just follow this step-by-step plan:
- Work out how many lessons you want to teach each student in a year. If teaching weekly, then I offer my students 35 lessons each year (17 if having fortnightly lessons). You may well teach more than this, but with my speaking and travelling commitments, this suits my timetable.
- Multiply this number of lessons by your hourly rate to get the annual income from that student. Eg. 35 lessons x $100 per hour = $3500. This is how much money you’ll make from each hourly student during the year.
- Divide this figure by 12 to get the monthly payment they’ll need to make. Eg. $3500/12 = $291.67. This is the amount you’ll charge parents each month for a one-hour lesson time slot. If you only plan to teach 11 months of the year and say, take one month off, then you can divide this by 11 instead and only charge parents for the 11 months of the year.
- Set this up as a recurring charge in your studio software so that parents get billed this amount automatically at the start of each month without you having to do a thing.
I recommend MyMusicStaff as the simplest way to set this up automatically in your studio.
If you’re still using paper and pen or spreadsheets to track your income and sending invoices manually, then please stop wasting your time. There are much more clever ways to do this that don’t take a lot of learning or cost very much at all.
Here’s how you can set it up in MyMusicStaff:
If you’re interested in moving to MyMusicStaff, you’ll be able to access an exclusive discount as a member of TopMusicPro. Find out more here.
Important Reminders
Before you jump in and start making changes, please keep the following in mind:
- Make sure parents are aware that they will still be charged this amount each month, regardless of how many lessons are in the month. Eg. If the month has five weeks, they’ll still be charged the same. If you’re away for an entire month and there are no lessons, they’ll still be charged the same amount. Make this clear up front so parents don’t get any shocks.
- Also, make sure you keep clear attendance records so that you know how many lessons you’ve given.
- Make your calendar clear and open to everyone so they know when lessons are occurring. Again, using MyMusicStaff gives all students the ability to view your calendar.
- If you’re getting close to the end of the year and you haven’t offered your students the stated number of lessons, you may need to schedule extra lessons to catch up or you’ll need to reimburse parents. I recommend therefore aiming to hit half of your lesson numbers after 6 months to make sure you’re on top of that.
Download My Free Monthly Billing Template
I also recently did a live Facebook video on exactly how to use this template. You can see a replay of that below.
Do You Charge Monthly?
I hope you’ve found this guide helpful. It has made a huge impact in simplifying my studio policies and procedures and, so far, everyone is happy.
How do you charge for piano lessons? Do you charge on a monthly basis? Do you offer make-up lessons? Leave your view and any questions in the comments section below.
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35 Comments
Hi, I enjoyed your monthly billing video help as I just signed up for MMS this past month. My issue is that I have many teachers and I am stuggling how to get all of them on this system. Being overwhelmed, I decided to put one teacher and his 2 days of teaching on the system first.
Hoping to start my one teacher for October. Can you help me with setting the billing up and should I set it up until the end of the year? And by doing this, is my start date going forward for everyone going to be October? So moving ahead with holidays, and knowing he will be out one week he would teach 10 Thursdays and 11 Fridays for Oct through Dec and we are charging 35.00 per 1/2 hour, can you help me figure this out?
Hi L. Thanks for your question – I’ll do my best to help.
– Yes, set it up until the end of the year for now and then start again with everyone next year.
– So the start date will be, for example Oct 10 – Dec 10.
– Work out how many lessons each of his students will get over that period. I think you’re saying 10. Keep it the same for all students – I wouldn’t do 10 Thu and 11 if they have lessons on Fridays. Just settle on 10.
– At $35 per 30 min lesson, that will be a charge of $35 x 10 lessons = $350 charge for the parents total.
– Divide that by the number of months = 2 months, so $350/2 = parents pay $175 on 10 Oct and the 10 Nov and finish on the 10 Dec.
Hope that helps!
Great Article!
I have been doing Monthly Installments for years now and will never look back.
I do not offer makeup lessons.
I bill using a slightly different method due to the fact that I teach 7 days a week and have 80 private students. (Not all days of the week receive the same amount of lessons due to breaks/festivals/ recitals).
For example, first, I calculate how many Mondays there are from June-May(For my Monday students). This does not include holidays or planned vacation break Mondays. Let’s just say that gives me 39 Mondays. I then deduct 3 more Mondays I call FLEX DAYS. These three flex days are used by me at anytime for illness or other.
So, I charge my Monday students 36x their weekly lesson rate to equal the full amount for those 11 months. I then divide that number by 11 to equal their monthly installment amount. Only a few families pay the full amount outright in May. Most choose the monthly installment.
I do this process for each day of the week.
This takes a small amount of planning each March/April for the next teaching year for me(June-May) but very much worth it. I have an extremely high retention rate and a waiting list a mile long.
This system works well for me and my families and is very predictable income.
I invoice my families mid-month to receive my installments a week prior to the first of each month.
This is in my policy. My Policy is everything to me. It is clear communication right from the start!
Families know that they are reserving a prime time on my studio roster and if they miss due to illness or other, it is a lost lesson.
This is similar the sports teams, dance academies and other.
If a student needs a short coaching video to assist them in their practice the week they missed, I make a short video during their lesson time.
I also charge each student an annual registration fee in May and recital fees.
Thanks for sharing this Julie – that’s a great system and I’m so glad it works so well for you.
Hello!
I just started using your system and have questions because my term started later than I originally planned. My term is from January- April 30th/May2nd (Last week of April). I was wondering if you could help?
Originally, I was doing the following calculation when I planned on starting my lessons on January 6th (excluding the week of 13th-18th).
22(lesson rate for 30 min) x 16 weeks
Plus $20 admin fee
Divided by 4 months
=Monthly price of $93.00
Due to several factors, I had to begin my term on January 21st, which added up to 15 weeks. What I am confused about now is the months- I divided it by 4, but was I supposed to divide it by 3?
22(lesson rate for 30 min) x 15
Plus $20 admin fee
Divided by 4 months
=Monthly price of 87.50
I do not want to change my rate again but have to even out families payment times and I am very confused. SOS? Thank you!!
Hi Amy, thanks for your question.
I see you’re trying to solve two problems: even billing but also getting in all the weeks promised in the term.
If Jan has already been billed to parents, then I’d stick with the original plan of 4 payments and advise you to add an extra week at early May so you will be delivering all 16 lessons promised. This will mean no surprise changes for parents, and you’ll have honored your agreement.
Jan $93
Feb $93
Mar $93
Apr $93
However, as it’s the end of Jan already, if you’ve already missed billing in this month, then you’ll need to rework the payment plan.
15 lessons x reg. rate $22 each, plus admin $20 = $350 total, or $117/mo. To parents, it might seem objectionable since the monthly amount is higher, but you could remind them they’ve got fewer payments and no charge for the missed first week.
$117 Feb
$117 Mar
$117 Apr
I’d still prefer the first as it’s simpler. But now you’ve a plan B in case you missed the boat with Jan. invoices! Best wishes!
Thank you, Emily!
I have already billed for January, but it was for the 87.50 (and will be that amount for every month). Will it even out if I add the “extra” week? (Totaling 16 weeks).
Also, does that mean I will bill every 4 weeks?
I do not want to lose income but I want to as your said honor the original agreement. I will take the loss if necessary.
Ah, I see! You’ve billed Jan already and omitted the missed week, so it’s pro-rated down for 15 weeks.
Jan $87.50
Feb $87.50
Mar $87.50
Apr $87.50.
It’s a good practice generally to invoice up front on monthly payers, so I’d suggest sending the invoices out today for February.
For lost income, that’s unfortunate! I, too, err on the side of consistency and stability with billing — it creates client trust.
An alternate idea would be to add an ala carte weekend workshop in May or a 2-3 day group class to make up some revenue.
This helped me out a great deal today. Thank you for your help Emily!
Amy, I’m so glad! Let us know how your studio progresses along. Best wishes!
Hi, I am a bit confused.
So I want my rate to be $20.5/ 30 min lesson or $41/hour –
most of my lessons are half hour, so do i do $20.5 x 30 lessons = X divided by 9 months that I teach over?
I am a bit confused by the monthly rate/hour lessons – so if you are doing 30 minute lessons, you would divide that by 2?
How would I advertise this? As some years I teach 30 lessons, sometimes I teach 33, I want to do $82/month for 30 minute lessons. However, seems like when i take my hourly rate and use the equation, I end up charging only 68-70ish / month when i divide it out.
Is this correct?
Thanks,
V
Hi Vii. Yes, that calculation in your first paragraph is correct. Are you using the calculation sheet that you can download?
You’ll need to work out separate calculations for the different lesson lengths you offer. Ie. your monthly 30 min rate will be calculated separately to your monthly 1 hr rate. Actually now that I look at it, your 30m rate is just half your hourly rate so you could just divide that by 2 – yes.
I set my rates each year, once I’ve calculated the number of lessons I’ll offer. So you’ll just need to update and advertise it for each year.
If you want to charge 82/month the just do a reverse calculation depending on the number of lessons you teach. That will bring you back to the hourly rate.
ie. $82*9 months = $801 per year.
801/30 lessons = $26.70 per 30 minute lesson.
So if you want to charge $82 per month, assuming 9 months teaching and 30 lessons, you’re charging 26.70 per 30 min or $53.40 per hour.
Hope that helps.
Hi,
Have been teaching for 19 years now and I have always struggled with last minute cancellations, any number of excuses, sicknesses, and a huge number of holidays (live in Spain). I lose on average about half my income because of this and have always wanted to switch to monthly payments rather than per lesson fees. The problem is that I am a performing musician. Which means that occasionally I have to miss lessons. Not usually more than 1 or two per month for performances, but there it is. How can I combine this without having a double standard (I can miss and you don’t pay, but if you miss you pay). Granted I generally know several months in advance of when I have concerts, but still I haven’t figured out how to have a fairer policy for me so I don’t get cheated half the time. I offer makeups generously but because everyone is so booked up or always on holiday, no one ever makes up a class. Any thoughts??? Thanks!!!
Hi Katy – glad you’re considering this change. Trust me, you’ll never look back and wonder why you waited so long to make the decision!
So when you’re calculating the number of lessons a student will get in the year, just take off 5-8 of those lessons to cover absenses (you or the student).
So if you predict you’ll normally offer 40 weekly lessons over the year (in an ideal world), set your rate for 35 lessons. That’s what they’re paying for. That way, you don’t have to worry about missing 5 lessons due to you being away or your student being on camp, because they haven’t paid for them.
If you need extra buffer, go for 8-10 – whatever works in your studio. I’d go back and check the last year’s schedule and find out how many lessons the average student ended up getting but keep in mind that there is more of a sense of commitment when parents are paying monthly. So if they were just paying cash per lesson, they will likely attend more regularly under this model.
Hope that helps and good luck!
Hello,
I’m so glad I came across this article! I have just started writing up a policy for my home studio (first time!). I think monthly billing is a great idea but I’m confused how it all adds up if a student starts in later months? I’m sure I will get students at different times of the year.
For example, right now my term is down to 8 months due to travelling, and I calculated students monthly payment on that. But what if someone starts mid year and only has 4 months of lessons? Does that mean I have to recalculate from the beginning, or just divide my final amount plus the admin fee by the amount of months they have left?
Thanks!
You’re welcome Amy – glad it’s been helpful. For students that start mid-way thru the year, I tend to start them on the auto billing from the start of the next month and just get cash payments for the first lessons if they start mid-month. If they start mid year, the monthly rate will generally be the same, it’s just that they’ll only pay say 4 months of that rate instead of 8.
Hi Tim,
love the monthly billing system. I started doing this at the start of 2017. Some families love it and others just don’t get it. They don’t understand why they have to pay for the month when there are no lessons. And I am generous with my make up lessons and have added extra workshops and recitals for free too! Can you please kindly help me with the right wording? My fees are simply $99/month for 12 months for a 30 minute lesson. I am on the beautiful central coast, nsw area. The monthly system (if everyone actually followed it) would mean that I could start leasing a commercial space to expand my school. I am also using My Music Staff for scheduling but can’t get the monthly payments to sync with the calendar? How do you do that?
Can’t get simpler to understand that $99 per month. If they aren’t understanding why they are being charged when there are no lessons on, then definitely more parent education is required. I simply lay out all the benefits (as above) but remind them that there will be some months (eg for me in July when I was in the USA all month) that there are no lessons, however the charge will still come out. Perhaps if they think of it like a gym membership – what happens to your monthly charge when you go on holiday? Does it stop? No – it just continues along even though you haven’t used the gym!
Alternatively, you can choose to not charge them for the 1-2 months that you don’t teach. ie. I stop the monthly billing system in MMS when it’s summer holidays here and then restart for the next year. Could be another option for you.
For any support issues with the setup of the monthly billing, please contact MMS support. Todd and the team are excellent at handling enquiries and offering timely support (and he’s a member of the expert panel in my Inner Circle if you ever want to hang out 🙂
Don’t give up. You’re right on the money with how this will enable to you to plan for your future.
Ps. great website 🙂
Hello,
I give the option to pay per lesson or monthly. I charge for a missed lesson only if they have not given me 24 hour notice or illness or emergency. Otherwise, we try to schedule a makeup or just miss that lesson. I do use a spreadsheet; works for me!
Thanks for this great article!
I have some clarifying questions:
Does My Music Staff only allow automatic billing or also automatic/recurring payments? If both, do all your students pay that way? Does a student have to pay with a credit card or could they also pay with a bank account? Do they have to have a Stripe account?
Also, what is the cost of billing for you? After looking at the My Music Staff website and the Stripe website, My Music Staff charges about $13 a month and Stripe charges $.029 + $.30 per transaction. Are those the only charges for a teacher or am I missing something?
Thanks!
Hi Melissa!
Lots of great questions that need some answers.
1. First, it may be helpful to understand how My Music Staff works. My Music Staff uses calendar-based billing. This means that the system will combine the student’s default billing rate (flat monthly rate or per lesson rate) with their scheduled events to automatically generate the correct charge in their Family Account. Invoicing would be collecting on these charges. This can be done at any interval you wish (i.e. weekly, monthly, semesterly, etc).
Another optional feature is Auto Pay. This feature will automatically pay emailed invoices. The system will charge the invoice total to the card on file. Any My Music Staff member using Stripe or PayPal Pro (not PayPal Standard) to accept credit card payments can use Auto Pay.
2. You can accept a variety of payment types. If some families wish to take advantage of online and credit card payments, they can. This doesn’t prevent you from continuing to accept cash and check payments (or any other form of payment) from other families.
If you decide to use Stripe or PayPal, when a family makes a payment, the payment is automatically recorded in the Family Account for you. Other payments must be recorded manually.
3. If you decide to use Stripe to accept credit card payments, your families do not need to create their own Stripe account. They simply use the “Click Here to Pay Online” button that appears on their invoice or log into the Student Portal and use the “Make a Payment” button. The process doesn’t differ much from a typical online purchase.
Stripe users in the US can also accept ACH payments (bank transfers). Families will need to log into the Student Portal to enter their banking info and verify the account.
4. My Music Staff is $12.95/month USD and includes unlimited students. For multi-teacher studios, each additional user (teacher, admin, scheduler, etc) would be $3.95/month.
The rates for Stripe and PayPal vary by region. If you are located in the US or Canada, you can expect 2.9% + $0.30 per transaction. If you are a Stripe user in the US, ACH payments are 0.8% per transaction. I would recommend taking a look at their site for the most up-to-date pricing.
Simplified summary:
-Yes, billing can be automated.
-Yes, invoicing can be automated.
-Yes, payments can be automated.
We offer a 30-day unrestricted free trial so you can test out everything we have to offer! If you happen to be an Inner Circle member (log in for details), you will receive a 90-day free trial.
If any questions pop up during your trial, please reach out to our support team. Click “Help” in the top-right corner of your account and select “Contact Us”.
We look forward to working with you!
I just had a question on billing. If a parent pays by card where is it deposited? Does it go straight to my bank account or is it similar to a paypal system???
Thank you!!
Hi Renee. Yes, Stripe (who take the CC payments), is a little like Paypal in that it holds your funds and then pays into your nominated bank account automatically each month.
Hi Tim, thanks for sharing this! You really got the gears spinning. I currently use mymusicstaff for our vocal teaching studio. I’ve been reluctant, as I’m sure many of us find ourselves, not wanting to scare off current students. Can you speak to whether you lost any students over the transition? I know you mentioned clear, open communication being the key and I truly believe that. I’m just wondering if and what objections came up and how you handled them.
A few other questions…
We work primarily with adult students (the youngest being 17). What would you say needs to be modified in your process of charging from a per-lesson basis to a flat rate?
Not only are we charging on a per-lesson basis, but we have found ourselves operating on a post-lesson payment plan. I feel the jump from the pay-after-you-have-a-lesson plan to pay-before-an-entire-month plan might be difficult for some to swallow. Are there other steps you recommend to make it easier on the students to stick through the transition?
Another interesting factor: many of the students have variable schedules usually due to work, so not only are they paying one-offs, they are scheduling one-offs and I have to constantly keep on them to keep our calendar full. I know, by this point, you’re thinking “What a mess!” What could we do to remedy this?
Finally the students are at two different price points. How does this effect the monthly billing? Would it be different for different students. Is there a way to set that up in mymusicstaff?
On a similar note we’re thinking of raising our rates how would this coincide with implementing flat-rate payments?
I’m thinking of starting this in September, but I don’t want to have a significant price jump at the beginning of the new year. Thoughts on how to do this?
Well, I think if you answer all my questions, you have enough content for part two of your article! Thanks again! I’m looking forward to the progress.
-Nadine | Marketing & Client Support | Rock Singing Lessons
Hi Nadine. Thanks for your questions.
Firstly, I didn’t get any pushback. I think if you frame it properly, there shouldn’t be issues as it’s a win-win for everyone. Parents are so busy these days, if you can take one more thing off their plates, I can’t image how they’d see any negatives as long as they understand the system.
I don’t feel there’s any difference in the system whether parents or adults are paying. At least half my students are adults and they are all on the same system. Just remember to keep pushing the benefits for the student to make clear why you’re changing.
This makes things harder: “Another interesting factor: many of the students have variable schedules usually due to work, so not only are they paying one-offs, they are scheduling one-offs and I have to constantly keep on them to keep our calendar full. I know, by this point, you’re thinking “What a mess!” What could we do to remedy this?”
If you don’t have a clear calendar of regular lessons, this might not be the best move. If people are just organising ad-hoc lessons at all different times your only alternative (although it’s still a pain for scheduling) is to charge them monthly for “x” number of lessons that they have to book with you or lose them. So effectively, they’re paying for access to you and a guaranteed couple of slots of month (or whatever), but they have to book it with you. Chasing them sounds like a nightmare!
I would increase the rate when you implement, however you might need to do it in two stages – so one increase when you first change and then another after 6 months or whatever suits you.
Sounds like you could do with the help of our community: https://members.topmusic.co/inner-circle/join-the-community/
I mention it because I can only provided limited responses here, but in the community, you’ve got hundreds of people who can help you out (including the MMS team!).
I have 35-40 students that are already “in the system”. Can they (most likely the parents) go to the Student Registration or Sign Up area of my website to update any information? Every fall, I like to make sure addresses, phones, etc. are current.
Also, I charge a flat tuition each month. I have discounts for more than 1 student in a family household. EG: $100 for one student, $96 for two, $92 for three, etc. How would be the best way schedule these? For instance if three children in the family are taking lessons, should I put them in a group (say,The Andersons) and enter $92 per student? Or should I list each student individually which probably send out 3 reminders each week. I don’t think it is an option to have the monthly default as “$276” for the group. Or is it?
HI Karen. Yes, if you use MMS, parents can login anytime to update their details, check on their account, what they owe, see payments and check the lesson calendar. It’s great because you don’t need to worry about it!
If the charges for multiple students for “The Andersons” is $276 for all three children, keeping in mind the discounts, then I’d keep it simple and charge the parents that amount each month. One charge = less paperwork = everyone’s happy. You can make it clear to them that you’ve taken the discount into account.
Sounds like you’re on the right track!
Hi Tim,
Thanks for the great post. I already use this system, but struggle to figure out the best way to charge students who start or discontinue mid-term, since the monthly payment may change. Would love your thoughts on this.
For example, most of my students are paying $120/month. However one student began part way through the year, and her monthly payments are $112.50 to account for a lower total number of lessons. I feel this is not ideal because psychologically, even though per lesson their rate is the same, when I roll out my rate increase to monthly tuition (up to $130) it will seem to them like their rate is increasing by a lot more than it really is. Is it better to give them a lower initial monthly payment and then keep the rest the same? (Most students sign up for 10 months at a time following the Canadian school calendar.)
Or, when a student quits with one month notice, how do you deal with the difference that may occur in the # of lessons actually paid for vs. lessons given up to that point? Depending on the situation, either I or my student could be shortchanged. Looking forward to hearing your thoughts!
Hi Torey – great questions. The best way to manage cancellations is to say that the only way to cancel is to give 1 month’s notice (or more as suits your policy) and to align the end of lessons to the end of a month.
If starting mid-month, I’d recommend invoicing for a 1-off payment from the parents to cover the part month and then you can set the agreed start of next month for the automated billing. So you might manually invoice them for $100 to cover lessons from the 20th – 31st of the month, and then they start their monthly $255 (or whatever it is) from the 1st of the next month. Does that make sense?
Regarding kids starting mid year and being charged a lower amount because they have fewer lessons left, as long as the parents are aware that this is like a “discounted” rate because they are starting mid-year and I’d tell them up front what the monthly charge is for a full year, so they know what to expect when the billing cycle restarts at the beginning of the next year. If you’re also putting up your rates, then include that figure. Open communication is key.
Re the shortchanging issue. Let’s say a student has weekly lessons (40 per year @ $50 each) = $167 per month and quits after 1 month (let’s assume 4 lessons). You are owed $200 but have only received $167, so you lose $33. That’s not ideal, but doesn’t break the bank.
But if they quit after 6 months, you’re owed 20 lessons x $50 = $1000 (again, assuming you’ve provided exactly half) and they’ve paid $1002. Break even. And it’s similar thereafter. So I wouldn’t worry about this. If anything, it will make them think longer-term about lessons and see it as an annual commitment, at the shortest.
Does that help?
Hi Tim-thanks for your reply. Very helpful! I feel more confident about doing it this way after reading your response. So, if the student starts partway through a month, would you invoice them for half of the *monthly* tuition fee or charge them for two lessons at your base hourly rate? I know the numbers are similar, but I’m wondering which is the best option that in your experience has made the most sense to clients (sometimes I find something that makes perfect sense to me is confusing for families.) Thanks again!
It’s really up to you. I’d just charge them for the individual lessons for the part-month. And then start properly at the start of the following, but you could do it either way. Mind you, it’s easier in the software to just start at the beginning of a month!
Thanks Tim! I appreciate you taking the time to respond to my questions 🙂
But what if they decide to quit at the end of April when they have had 33 of their annual 42 lessons but have only paid for 8 months? The difference in what they have paid and what they owe for those lessons is greater then! This is the second time this has happened to me. In this instance, I am losing $184.75 on this one student for the difference in what she has paid and what she owes for 8 months plus four months of tuition for the missing months!
I’ve considered switching to this system before – one of the biggest advantages is moving away from the mindset that pupils pay ‘x’ amount for a lesson of a certain length and don’t realise that the fee covers much more than that time.
I’m interested to know whether at the beginning of the year, you make pupils aware of all the weeks you’ll be available to teach, or can this be flexible depending on your other commitments? I generally know which weeks I’ll be teaching, but occasionally need to be somewhere else on a particular day and can’t teach.
I think this system would work well for the pupils I teach on a weekly or fortnightly basis. I’d have to consider how I would include ‘ad-hoc’ pupils – I have quite a few adult pupils who come on this basis for various reasons. Possibly a system where they could also be billed monthly which entitled them to ‘x’ number of lessons per year?
One of the things which stresses me out (especially at the moment) is simply not knowing from one day to the next what my income will be!
Hey David. Great questions and thanks for your comment.
Yes, at the start of the year, I go through and block out the calendar to work out the total number of lessons each student will receive. This takes in to account holidays and I leave some room for the inevitable public holidays, etc. That gives me X number of lessons for weekly students, half that for fortnightly, etc.
I use this for weekly, fortnightly and I even have one monthly student – works well. Ad-hoc is harder, so for those, I still work on lesson-by-lesson, however I think your suggestion could work quite well. They are effectively paying you for “access” to you a little like having a Netflix membership gives you access to their films.
Sounds like you’re primed for trying something new – you’ve hit the nail on the head in your last sentence.