How to Increase Hourly Earnings without Raising Rates
Sometimes we get so caught up in doing more to grow our studios (More students! More classes! More new stuff!) that we miss the potential in what we are already doing.
In my coaching programs, we talk a lot about “effective hourly rates.” That’s the hourly rate you earn when you take into account the time spent teaching plus all the administrative work you do to maintain your studio and prepare lessons.
If you earn $800/week teaching 20 hours, you teaching rate is $40/hour. However, if you spend 5 hours a week preparing for those lessons, your effective hourly rate $800/25 hours, which is $32/hr.
If you are spending 20 hours a week preparing for 20 hours of teaching, you effective rate is only $20/hr. It’s important to keep this in mind so you can run an efficient business.
If you are trying to make the most of your time without adding a lot more to your plate, try these six strategies to help increase your effective hourly rate.
1. Quit offering makeup lessons
Have you experienced this: You’ve been building your studio for a couple of years and you have a finely-tuned schedule. Thursdays are full days with seven students in a row, but Friday is your day off.
Well, it was a day off, until a student whose lesson falls right in the middle of your Thursday roster asks if you could reschedule and, oh, by the way, he’s only available on Friday. You agree (“just this once”)…
But now, not only do you have an unused time slot on Thursday (30 min), you have to spend extra time preparing the studio again on Friday (10 min), waiting around for the student to arrive (5 min), chatting when his mom picks him up because his little brother needs to use the bathroom (15 min)…
What should have been a 30-minute lesson on during teaching hours has now claimed at least 1.5 hours of your time and your effective hourly rate is one third of what it should be.
2. Collect what is due, when it is due
Imagine this. It’s the first week of the month and Parent forgets their wallet. No worries, they’ll bring it next week. Week 2 comes and Student is sick. Parent will put the payment in the mail because they’re traveling next week. Week 3 comes (but the check doesn’t) and there’s no lesson since Student is on vacation. Week 4 comes and Parent informs announces that since they only made two lessons that month they’ll just pay for those.
Not OK. Make it clear that payment for lessons reserves their time in your schedule. Even if a student doesn’t attend their lesson it still costs you time to keep the lesson slot open for them.
3. Charge by month or semester instead of by lesson
I started, as many teachers do, charging by lesson. I tracked the number of cancellations and reschedules for several years and it was shockingly consistent at about 20% of all lessons. Twenty percent! Every week one out of five students would have a reason they needed to reschedule their lesson.
It made my schedule unpredictable and my income (while consistent) was 20% less than what it should have been.
After switching to a monthly tuition pricing model (and not allowing makeups) the issue of cancellations mysteriously disappeared! Somehow those events that were so unavoidable before can now fit in times of the week outside the scheduled lesson time.
4. Offer additional services
Many teachers are moving from the traditional 30-min private lesson to a multi-part, hour-long lessons where half the time spent one-on-one with the teacher at the instrument and the other half is spent working independently on pre-planned activities in a theory or music lab.
If your rate for a 30-min lesson is $20 and you can see two students in an hour, your hourly rate is $40. With this alternative lesson model, students are coming for an hour so you can charge more for the additional service (say, $10 for the theory lab, which equates to $30 for the hour lesson). Students are getting longer lessons, but paying a lower hourly rate ($30/hr instead of $40). You still have two students coming every hour, but you are earning $60/teaching hour.
This model requires additional prep work, but the that can be done in the daytime hours that are harder to fill with students and you will be compensated for it with increased income during the peak teaching hours.
5. Teach in groups
Similar to the model above, group lessons allow you to spread the cost of your time among more students. If your hourly rate for private lessons is $40/hr, you can discount the group rate slightly (maybe $30/hr per student). If your group classes have 3-4 students in each, you can make $90-120/teaching hour.
If you are a piano teacher, this model requires an investment in keyboards, but you can see how quickly the investment would pay off if you are make 2-3 times your regular rate.
6. Set up systems
Reduce the amount of time you spend on planning and administrative tasks by getting organized and setting up systems. You can start with this email hack.