One of the most common questions I receive from instructors, and the one that seems to cause most new instructors to have sleepless nights is, "How much should I charge?”

This seemingly harmless question somehow ends up becoming an area of confusion and frustration for new instructors and seasoned studio owners alike. Mostly, the reasons for this boil down to the following reasons:

• Many instructors place too little value on what they have to offer
• And even those instructors who feel they are charging too little are often afraid to charge more, due to the possibility of losing current and future students to their competition

In Part One of this article, I'll deal with both of these issues in turn. Then in Part Two I'll give you a couple of approaches you can use to determine your tuition rates. Finally, in Part Three I'll talk about other considerations, such as scholarships and discounts.

Reality Dictates That You Should Value What You Offer

I am going to be honest with you and tell you that I used to feel like instructors shouldn’t charge “too much” for lessons. The thing is, that was back when I was operating from a limited perspective on how much it costs to run a full-time studio.

I changed my tune within the first few months of running a full-time location. After having to pay my rent, utilities, and insurance for a few months, I soon became a realist about how much I needed to charge to pay my bills and still make a decent income that I could comfortably live on.

I raised my rates soon after, and I’ve never regretted it.

Now, I realize that some of you may not have high overhead costs, and that’s great. My bills weren’t that high either, since I had started with almost nothing and had to start my studio on a shoestring budget. But even if you have zero overhead costs, there are other, very good reasons for charging adequately for your services.

Why Raising Your Rates Will Attract More Students

One reason is something that psychologists call social influence. Psychology professor Dr. Robert Cialdini of Arizona State University has done a great deal of research into what influences people to make certain buying decisions. One of the more interesting things he has discovered is that people have a tendency to believe that “expensive = good.”

Cialdini relates the story of Chivas Regal scotch whiskey as an illustration of this principle. At first, the manufacturers of Chivas were having a hard time selling their product, so they decided to price their product much higher than the competition. The brand became a great success shortly thereafter and sales went through the roof.

How do you explain this? Simple. Value is based on perception. Chivas already had a quality product, but by pricing it lower consumers subconsciously perceived it to be of lesser value. By raising their prices they eliminated that perception and also gave the message to consumers that they did indeed make a quality product.

So, when you price your services at the bottom of the market, you are giving consumers the impression that your services are lower in quality. And, whether you believe it or not the fact is you are driving potential students away by under-pricing your services. (This ends Part 1 of this article series).

Part 2 and 3 of this article series is available to site members only.

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Mike Massie is a long-time instructor of Japanese and Korean martial arts. He resides in Austin, Texas where he runs a studio and teaches full-time. You may reach Mike via our contact page.