How to Raise Tuition
Charging the right price for martial arts lessons should reflect the value you believe your services offer. If you think your benefits are worth a high price, set your rates accordingly. Conversely, if you feel they aren't as valuable, then lower prices might be more appropriate.
Avoid Raising Prices for Existing Students
One key strategy is to avoid increasing tuition for current students. Natural attrition will soon replace older students with new ones who are paying higher rates. Raising prices on existing students can sometimes prompt them to drop out, so it’s best to avoid this if possible.
Communication is Crucial
If you must raise prices for existing students, always explain the reasons behind the increase, such as rising rent or insurance costs. Sending a detailed letter explaining the rationale can help retain about 95% of your students. Simply raising rates without explanation can lead to significant losses, as students might assume you are being greedy. Remember, it’s cheaper to keep existing students than to recruit new ones.
Timing the Increase
January is an ideal time to raise tuition since people often expect price increases at the beginning of a new year. Ensure all increases are communicated with care. Offer students the option to renew or pay in advance before the new rates take effect.
Annual Tuition Increase Strategy
It’s wise to implement a small annual tuition increase. Start by raising rates for new students as of January 1st. This way, higher-paying new students gradually replace lower-paying existing students.
For your current student body, you can inform them that due to increased expenses, tuition will rise on January 1st. For example, if the new rate for new students is $100 per month, offer existing students a rate of $90 as a gesture of appreciation. This approach can make the increase more palatable.
Here’s a detailed example:
- If the current students are paying $79 per month and the new rate for incoming students will be $99 per month, you can set the new rate for existing students at $89. This shows appreciation for their loyalty while also increasing your revenue.
By following these strategies, you can implement tuition increases effectively and maintain a satisfied student base.