How much should I charge?
More than any other start up question, this is the one that will determine how you feel about yourself at the end of each month teaching English in Japan.
Whenever I see happy student faces handing over anywhere between 6,000 and 13,000 Japanese Yen for one private lesson within my system, I know I am doing something right. I gather my self-esteem as a coach and provider of English language tuition and keep going through all that may come.
I can’t help but read sadly adverts for teachers selling their services for a third of what I charge as a minimum. With this short note I want to empower you all. You are professionals. Do as I do. Charge what you are truly worth!
The correct place to start when trying to figure out your price is not at the beginning as most do.
Don’t do as many before have done and start by asking friends teaching privates what they think is fair or what they think you should charge.
Don’t make the mistake of asking your prospective client/student base.
By starting out this way you can be pretty sure you will be doing too much and being paid too little for your professional services.
The correct place to start is at the end. Begin with the end in mind and you will be paid what you are worth.
So, you ask, “What is my end?”
Well initially that’s how much money you need at the end of each month to pay the bills!
When I first started out I calculated how much money I wanted to make each month. I called it my Level of Initial Financial Expectation. Actually I didn’t have to decide this amount, it came naturally. I knew I never wanted to go back to a teaching job again. You know J.O.B as in Just Over Broke! I also knew I had to live and knew how much I needed. So I called this my first school’s Level of Initial Financial Expectation. My L.I.F.E.
Of course I knew I would face some basic expenses and so I added them on top of my LIFE.
Then I said to my wife, “Well honey, all I need now is one wealthy student that is willing to pay for my LIFE and expenses!” It was never to be. I never did find that single student willing to pay for my LIFE and so I had to make a couple more decisions.
These decisions are things we already know usually:
How many hours do you want to teach English each week (schedule)?
How many students do you feel you can handle in each class?
Will you offer both small group and private one-on-one lessons?
What will be the duration of each class?
How many classes can we fit into our scheduled hours?
What number of proficiency levels do you wish to split the student base into?
How many holidays do you wish to take per year?
The answers to these questions will determine the numbers of students we can see in an average week. The number of students we can see in a week will be the figure we divide into our LIFE plus expenses. The result is our price point per student. It’s that simple.
It’s a simple science; let’s check it back. Shall we say we have a LIFE of 270,000 per month? Now let’s say we have rent, electricity, local promotion and administration expense that total 180,000-yen per month. We are looking for 270,000 plus 180,000, or 450,000 a month from our students. If we wish to be open 20 hours per week, with maximum 3 students in each class, we should expect to build to a 66% efficiency on class time, therefore we will see 39.6 students per week. Yuck! That’s weird; let’s say 40 students. We need to charge each student 450,000/40 or 11,250 per month to meet our costs plus LIFE.
How do we determine if we can get the calculated price point per student? We must take it to research. Make a clear memo of your offer. Be sure you are very honest about what you are offering the students. Then make a list of as many other schools as you can find that are offering the same or similar benefits. Check the price of the biggest schools in the country. Check the price of the small professional schools. If you are within the bounds of what these groups are charging you will be fine.
Remember, deciding the right price point to suit your LIFE before you set out is probably your most important set up decision.
Of course each of the components of the business is important; however for the most part they can be adjusted if you make a mistake. If we wish to adjust the number of students in a class we can. If we wish to open more hours or perhaps trim a few back, no real problem. We could even get away with reducing our price quite easily. Who would complain?
However it will take a great deal of careful planning and timing to make an increase in the price we charge our students for our English teaching services once the school is running and students are in place. It is this difficulty regarding a price increase that makes getting the price point right the first time essential.
I have shown you here that determining a price point is not a hit and miss exercise. It is a simple science. Take the time to get it right. The key is to get the LIFE figure right.
LIFE, where do we find the number? Within yourself. You are the one who knows better than any other what price you need for your services. Charge it and join the ranks of profitable Coaches of Communicative Confidence.
Charge what you are worth and enjoy an ever growing sense of self esteem. You are a professional!
Chairman, Smith’s School of English