How to price classes and other offerings in your teaching business
Pricing your classes & offerings
In 2020, as the covid lockdowns shut down virtually all brick-and-mortar studios, gyms and schools, many teachers were pushed into "doing their own thing", i.e. to organize their classes in alternative venues or to teach online. Big changes are often very painful... but for every cloud there's always a silver lining!
Now, many instructors are finding themselves more in control, more able to teach exactly what they love and in the style they want, and also earning more income as a result of the changes they made. Because the market fundamentals haven't changed at all: there still are hundreds of millions of people out there who want to learn and practice a skill or passion with a good teacher. With fewer venues, the post-Covid19 era presents massive opportunities for independent teachers.
Maybe you've already been teaching for a while, but you're new to going it alone. In the past the venue handled class pricing, promotions, passes and memberships... and now it's all up to you. Or maybe you've just started on your teaching journey and you're making a go of things. Whatever the case, here's an unavoidable fact:
As independent teacher, you are an entrepreneur who's running a business.
This means that to be successful, you'll have to do a little more than just show up and teach. Some planning, organization and "business thinking" is required. Maybe not as fun as teaching... but really not so difficult. A pre-requisite however is that you must view yourself and what you're doing as a business. This is not to say that it's the only thing you think about. But when this forms part of your perspective, everything becomes so much easier.
In any business, one crucial element is pricing. Classes, private lessons, passes and memberships, content in general... what to charge? More often than not, newly independent teachers severely under-price their offerings. It's typically either because they're un-greedy people for whom "money & business" are uncomfortable topics, or they're just a little too desperate to find and retain clients, and worry too much about loosing a potential customers who might find cheaper options elsewhere.
But we all have to eat. And if your teaching is to be sustainable, then properly valuing what you do isn't only about money. It's also very important for your personal happiness and sense of self-worth.
As regards loosing potential clients who don't like to pay for things: these are generally not the sort of students that will make your teaching rewarding (in a non-financial sense). They are the kind of people who aren't very motivated and who tend not to stick with things... and that means they'll probably be lost to you anyway, even after they do a few classes with you — no matter how compelling your offer is.
With our mindset on track, here then are some thoughts about pricing your classes, videos, passes, memberships, and private lessons:
In-person group classes
Your pricing considerations should start with face-to-face group classes, which are the business backbone for most teachers. How to decide what to charge for single drop-ins?
A) You could simply look at what other teachers are charging, sure. But chances are, they are under-pricing their classes... and their client base and overall situation could be very different from yours, too.
B) You could just consider your own needs or desires: say you want to teach 20 classes a month and earn $2,000. That means you want to earn $100 per class. If you estimate you'll get an average of 10 people per class, it's seems straightforward: charge $10 for a drop-in.
The problem is that what you want or need to happen is not what's actually going to happen. The number of people you'll see in your classes will depend on a lot of things... including your pricing!
For example: say you have a list of 40 people that might like to regularly take classes with you... how many of them are super motivated? How many are relatively poor? How many want to do just once per week, and how many would love to attend every single class you teach? And what's the capacity of the classroom? Consider some scenarios:
From your list of 40, maybe you really only have 7 students who would pay $10 per class... so if you charge $10, you'd only earn $70.
Maybe you have 16 students who would definitely attend for $5.... so with $5 you make $80.
Perhaps you have 30 people who'd surely sign up for $3 classes... now you earn $90, and more people are getting your gift... that's awesome... but with 30 people you're too stressed. And maybe the room can only handle 20 people? (so now you earn only $60).
What if you could count on 5 serious students who adore your classes and would be happy pay $20 per class? With these 5 dedicated clients you will hit your $100 target — and you still have room for 15 more (and that can be quite important as you grow your business)!
C) The best way to find out what your students will pay for in-person classes with you is to ask them directly. It won't be as uncomfortable as you maybe imagine! You can sample just a few people, or everyone. The more people you talk to, the more clarity you will have about things. Your decision will then become much easier.
One way of asking people indirectly, especially if you're starting out as a teacher, is to price your classes "by donation". Many new teachers on Ubindi start off this way, and they're often surprised to find that people will pay more than what they would have set as a fixed price. It's also a good way to gauge individual students, as you can see who paid what. In the longer term however, you should probably move away from "donations" to a fixed price set up for your classes.
On Ubindi, the data is pretty clear: teachers who charge more, earn more. This is independent of the number of students a teacher has on their list. With rare exceptions, the teachers who are charging $5 or even $3 for their in-person classes as a rule barely earn enough money to pay for groceries, let alone rent!
Finally: to attract new clients, it's a common strategy to offer the first class free to first-timers. This is a good idea, and you can go even one step further by offering a referral bonus to your existing students to bring you new clients. Rewarding an existing student with a free class for bringing a friend can really grow your business in the long run.
Online group classes (live) ('zoom classes')
You might feel that the quality of classes taught through a screen is not as good as a real-life, face-to-face interaction. That's maybe partially true...no touching... more of a 3-D environment... but many teachers say that the online format is actually working great for them. Every student can clearly be observed on their own little screen, you can "zoom in" on individuals and thus make sure that everyone is getting the attention they need and deserve. With in-person classes, very often the people at the back of the room are not getting that.
It's also true that your overhead is much lower when you're teaching from your living room. You don't have to travel anywhere, and you don't have to pay rent for any facility. You can also accommodate more people in class (20 people is perfectly reasonable for an online format, which may be higher that what you can do in a small studio or community center). In short, you can probably afford to give people a break and charge less for online classes than for in-person ones.
However: you're still putting a value on your time, energy and expertise! A common mistake for teachers is to make their online classes ridiculously cheap. Some still see it as a temporary "crisis" thing related to Covid19... but that time is over. Online classes are not temporary and, according to a number of surveys, the majority of people out there really do like the convenience and prefer attending class from home.
So you should regard online classes as something permanent that needs to be sustainable for you. In fact, teaching online is probably the biggest opportunity for yoga teachers today, since you can connect with millions of potential clients all over the world and specialize on exactly the topics and styles that you want, without worrying about how much demand there is for that in your local area.... but that's another topic.
Whether you're doing hybrid classes (streaming an in-person class out over the internet, with some people in front of you, some remote) or you're doing a 100% online thing, a rule of thumb is that your virtual class should not cost less than half of what you charge for an in-person class.
Here's another bit of data from Ubindi: the more successful teachers barely make any price distinction between virtual and in-person classes.
Just as for in-person classes, it's best to directly ask your clients what they feel a virtual class with you is worth and how much they are willing to pay. Armed with that knowledge, the same kind of calculations as outlined above apply.
Recordings & on-demand videos
Teaching virtual classes online has the added advantage that you can easily record them and build yourself a nice video library. You can then offer access to videos to the people who may have missed the live class, to your general client base, or to everyone on the internet. Be aware there are lots of people out there who just like to "watch & follow along", who don't need or even want anyone looking at them or interacting with them while they do the class.
With a bit of editing, you can create wonderful "evergreen" content that can help you attract new clients while also producing steady income long after you did the work to put the video(s) together.
Because you're not actually present when people watch your videos, and because there are literally hundreds of thousands of free videos on YouTube and other places, you won't be able to charge much money for access to your videos (unless you've spent months creating a "masterpiece" course where the secret to life is finally revealed).
So it's a good idea to post some class videos (or perhaps just parts of a class) to YouTube, where people can discover you, watch some videos for free and hopefully get interested in taking live classes with you.
But making all your videos freely available is not a good idea. Charging some money for videos sets the right expectations (that what you offer has value), and as you build up a sizeable client base, it can provide a good fraction of your overall income, without costing you any extra time and effort.
When deciding on pricing, also remember that for your students, your class recordings are not just "some videos", lost in a sea of millions of other videos on YouTube. They are unique, and they are specifically geared towards students who already know you and love what you teach, and for whom a familiar face teaching them just the right things in the right kind of class is very valuable!
Specifically, when pricing recorded classes, a good rule of thumb is to charge 50% of what your live (online) class costs.
Lastly, another great strategy also is to include access to your video recordings as part of your bundles and packages. This dramatically raises their perceived value and will increase the number of buyers and subscribers! And that leads to one of the most important pricing topics:
Packages, passes & subscriptions
Offering package deals to your students will provide a huge boost to your bottom line. All the studios, schools and gyms do it... and in fact, almost every business in the world offers bulk discounts and deals to their customers, for very good reasons.
For one thing, passes and memberships are highly effective loyalty programs that create strong incentives for students to commit emotionally and financially, to attend more classes, and to stick with you rather than go around sampling classes with other teachers or in other places.
Secondly, subscriptions and memberships provide you with more revenue of the kind that's recurring and predictable. This may sound harsh, but when a student pays you for a month of classes in advance, you don't have to worry so much about whether or not they show up to class. Similarly, passes that have an expiry date create a "use it or loose it" mindset for your students, so they are more motivated to come to class. But if they don't (and sometimes they won't)... well, you got paid anyway.
Packages are a convenience for your students (they don't have to whip out a credit card to sign up for each class individually), but for you they are a truly massive time saver. When people are automatically billed, you don't have to send out annoying reminders to get people to sign up for class or purchase a new package.
Lastly, if you accept credit cards, (and you certainly should!), packages will save you considerable money in processing fees. The card processors all charge a small percentage PLUS a small fixed fee (around 30¢ cents in the US, €0.25 in the EU, 20p in the UK). These fixed fees can actually be very expensive for low priced items (like for a $10 class: 30¢ is an additional 3%)! But when you're selling packages that cost around $100 or more, those small fixed fees really are negligible.
So the question isn't whether or not you should offer packages to clients, that's a no-brainer. The real question is "how to price them?"
You want to offer an attractive discount for class passes. On Ubindi, for the more experienced teachers, we see:
5x Class Passes typically have a ~10% per class discount compared to drop-in pricing. For example, if your drop-in is $10, then your 5x pass would cost $45
10x Class Passes typically have a ~15% per class discount, so for example, if a drop-in is $10 then your 10x pack would cost $85
These are usually "unlimited" deals, meaning that a subscriber gets to do unlimited classes with you (and probably gets unlimited access to class recordings).
You can do things where a certain kind of membership gets the client into certain kinds of classes, or a certain number of classes... but it's probably best to keep things simple.
Memberships are subscriptions with automatic billing, and they are the most powerful tool to help you earn revenue. Some studios and independent teachers have seen a 50% revenue increase after they started offering memberships. With the same number of classes happening per month, and slightly higher attendance numbers!
The most common membership plan is a monthly auto-pay (client is billed automatically every month), but you can also be creative and offer a weekly plan, which feels like less of a commitment as a smaller amount is being charged to the subscriber each week. Annual (client pays for the whole year) is more rare, but you might as well offer one of these too — with a large discount.
Up to this point, you've read a lot of "don't under-price yourself" stuff. So it might be surprising to learn that the most common mistake teachers tend to make with pricing memberships is to make them too expensive. Counter intuitive?
One reason is that teachers imagine that students will take advantage and come to every possible class, and so they calculate what all the classes would cost via drop-in payments, and then just add a small discount. But this is the wrong approach. Firstly, no student will come to every single class, even with a membership that allows them to do so. Secondly, by making your subscription plan expensive, you will only get your most dedicated students buying it.. so you won't earn any extra money since these people come to class religiously anyway and are happy to pay your drop-in prices.
Let's look at an overview of your student base. Broadly speaking, you will have three kinds of clients:
"high user": comes to class three times (or more) per week
"medium user": comes to class once or twice a week
"low user": this person is seen only twice a month, or even less
To get the most out of your membership program(s), you should target the "medium users" and provide them with a compelling offer (of course your "high users" will also subscribe). One simple approach is the following:
Count the number of classes you teach in a month and multiply by the cost of a drop-in. For example, say you teach 20 classes per month, where a drop-in costs $10, that's $200. But a "medium user" only comes 8 times a month, so appeal to them with a membership where they could come to some additional classes for the same price (i.e., create a $80 monthly membership).
Yes, "high users" (those fanatics) are getting a great deal — you might even loose a little money with them. However, some "medium users" will be turned into "high users"... and many people who were coming less than twice per week will grab your $80/mo offer and pay a little more for more access to classes. Some will show up for class more often (nice!), but many actually won't... which doesn't matter, you are still being paid. At the end of the month, you will come out ahead.
The packages you set up might just sell themselves... but doing some leg work is guaranteed to help a lot. Naturally, you should make sure that all your people know about the various packages you offer, and simply reminding them from time to time is a good idea. But running specials (like having reduced prices for your passes for a limited time, or doing "introductory memberships" which cost less for the 1st month and then go up to the normal rate) work wonders. Specials also provide a good excuse to send out an announcement.
This last one is straight forward: what is an hour of your time worth to you? Plus the time spent preparing, and perhaps travelling? Keep in mind that while yoga teachers generally are struggling financially, the folks who do private lessons for yoga (or tennis or personal training) are usually not struggling. They won't have a problem paying $100 for a private, and it can even be the case that they prefer to pay more, rather than less, to make them feel they're getting something "exclusive".
Offering "semi privates" is also a good idea (lessons for couples or very small groups). A common strategy is to reduce the cost for the 2nd (or 3rd or 4th) person, so $100 for a 1:1 can turn into $150 for two, $175 for three, or $200 for four people.
Of course you can also create packages for private classes (e.g. create a bundle of six private sessions for the price of five).
Of course you could run your teaching business completely manually by getting paid in cash from clients, and keeping detailed spreadsheets to track all your payments, class passes and credits, registrations, attendance... but with just a few students that becomes overwhelming. You'll spend as many hours doing admin as you're actually teaching! Just by using Ubindi, you're already saving yourself silly amounts of time.
But there's one more thing to be mindful of: how you take payments.
Some clients will tell you they'd prefer not to use their credit card and pay you in other ways. You might be tempted to accommodate them, and at the same time save on credit card fees. Yes, Ubindi works pretty well even if you let your people pay with cash, bank transfer, Venmo, PayPal, cheque, etc. — so when you set up your classes and on demand videos, you could just make "payments optional". Just let people register without paying and sort it out later, right? Wrong.
Students might say they prefer something, but they will be perfectly happy to accommodate you when you tell them "this is my system". The same people have no problem paying Netflix or Amazon with credit cards... and you're the teacher, you're in charge — don't let students tell you how to run your business. "Payment optional" will not only make it difficult for you to streamline your business — you'll also loose money:
Firstly, time IS money. Chasing people up for payments is not just tedious and time consuming, it can be downright awkward, and you avoid all of that by requiring online payments in advance for all of your offerings. This will also ensure that your bookkeeping is simple, clean, and fully automated (which is especially useful come tax time).
Secondly, how you take payments is actually related to pricing and will directly impact revenue:
Did Johnny pay you for yesterdays class, or not? In the bustle of teaching, it's difficult to keep track sometimes. Or, when a student shows up for a $10 class but says they'll "pay you later", how much money did you actually earn? Do you really want to write down somewhere that Johnny (and Emily and maybe Cynthia, too) owe you money for todays session? By requiring everyone to pay in advance with a credit card, you'll definitely earn more money (even after any fees) simply by virtue of the fact that nothing falls through the cracks.
In addition, only by accepting credit cards will you be able to offer recurring memberships (where clients are billed automatically every week, month, or year). The statistics show that teachers who offer subscriptions/memberships see their bottom line boosted by 14% on average (and in some cases, by more than 50%)!
Lastly, when you have a system for payments, and are not fiddling with change at the door, you also look more professional. You're a business, and you take payments like a business.
More info for yoga teachers
The Yoga Alliance has produced a very good video workshop about pricing your yoga offerings. So if you're a yoga teacher or have a yoga studio and want some extra insight and inspiration on how to price your yoga classes, watch this:
If you're new to Ubindi (welcome), and you want to easily implement a variety of different pricing options (drop-ins, donations, passes and memberships, etc.) and payment methods, save many hours of time and completely eliminate the awkward hassle of chasing your people up for payments, sign up here.
All teachers and instructors are welcome (yoga, pilates, cooking, languages, fitness... everyone!!)
Ubindi is simple for you and your clients, and it's free for teachers who manage fewer than 50 students. (The unlimited version is only $10/month).
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