How Often Should I Raise Teaching Rates?

Should I raise teaching rates this year? The practical guide to knowing when to raise piano teaching rates | composecreate.com

It’s that time of year when we all start updating our policies! I hope that you’ve had a chance to read about “How to Move to a No Makeups Policy.” You will be so glad you did!

So maybe you’ve already determined that you are charging a fair and competitive rate for piano lessons. We are going to talk about all of these things in the upcoming webinar: “The Best Stress-free Business Practices for Your Studio!” But for now, I hope you are asking the next question:

How often should I raise teaching rates now that I have a reasonable rate?

In general, the answer to that question is:

Music teachers should raise their rates every year!

Why should I raise teaching rates a little every year?

It’s important that you have a regularly scheduled time that families know they can expect a rate increase. No one likes surprise rate hikes and especially not big ones! So, it’s best to raise your rates consistently and at small increments than haphazardly in large chunks. Doing it in large chunks is painful, so getting in the habit of doing it regularly and in small increments is helpful for everyone.

In order to understand why it’s important to raise teaching rates a little every year, we have to review a general principle of economics. We all know this truism:

The value of the dollar tends to decrease over time.

Because of this, what we plan to purchase in 2014-2015 will cost us slightly more than the same purchases we made in 2013-2014.

How is choosing to NOT raise teaching rates affecting me?

Let’s do some math to see how NOT raising our rates affects us:

  • Let’s say that you have not increased your rates for 5 years.
  • Let’s say that you have 30 students.
  • Let’s just pull a number out of the hat and say that you charge $40 for a 30 minute lesson.

If we simply plug these numbers into the inflation calculator (nevermind the fact that there are other calculators and factors to consider), we find this:

Should I Raise Teaching Rates This Year? |composecreate.com

Here’s what this means:

  • In order to buy the same things in 2014, we would have to be charging EACH student $3.77 more per lesson. 
  • That means that in a studio of 40 students that take lessons 44 weeks of the year, you would need to make $6,635.20 more per year in order to buy the same things! (40 x $3.77 x 44 weeks)
  • So, you are never “holding steady” when you do not give yourself a pay raise.
  • You are actually giving your self a pay CUT when you do not raise your rates because you are asking you and your family to live on less $$ (in this case $6,635 less, nevermind the thousands of other dollars you lost in the other 5 years) than you did last year.
  • In essence, you are losing money every year that you do not at least keep up with inflation.

So how much should I raise my rates?

There is no one right answer to this question. How much you raise teaching rates will vary from year to year and from teacher to teacher to some extent. There are multiple indexes you can consult to help you decide including: The employee compensation index, housing costs, healthcare costs, etc. But, I would recommend that you at least consult an inflation calculation to determine a minimum price increase.

For example, if you charged $40 per lesson in 2013, then the Consumer Price Index inflation calculator would indicate that you need to charge $40.31 per lesson in 2014 to keep up with inflation:

Should I Raise Teaching Rates This Year? |composecreate.com

Remember, you are not technically charging by the lesson, but rather a tuition, so be sure to multiply this number by the number of lessons per year to get a “yearly tuition” and communicate that to families.

Here’s another way (a better way) to look at it. Remember that we should never be communicating a “per lesson” price to our families. They should know that their tuition pays for more than just a weekly 45 minute lesson (or 30 minutes or whatever). So, let’s skip the “per lesson” step and just do the math based on our yearly tuition. If you charge your student $1760 per year for 44, thirty minute lessons, then you would need to charge $1773.78 as your tuition in 2014 just to keep up:

Should I Raise Teaching Rates This Year? |composecreate.com

The most important thing to remember here is that you MUST start with a competitive and fair tuition in the top box before you calculate how much you should increase. If your number is too low to begin with, you’ll never catch up doing it this way!

Must I really increase teaching rates every year?  

Of course not! But…

If you don’t, just be honest with yourself.
Of course you can do whatever you want! But hopefully you can see why this only makes sense. However, if you are in the habit of increasing every year just a little, then there are definitely times that you might want to not do a price increase. There have been years that I know are economically hard on my families, so sometimes I opt not to do a price increase. But, when I don’t increase my rate, I have to at least acknowledge that I will be living on less for the next year. If you are okay with that, then you can certainly take an occasional break from increasing rates.

Increase your value.
Rhythm Cup Explorations | composecreate.comIf you feel like your families are beginning to question your increases, then consider giving your families more value (or just reminding them of the value they are getting)! One teacher told me that adding Rhythm Menagerie, Rhythm Manipulations, and now Rhythm Cup Explorations to her studio is a way of distinguishing her teaching from others in her area since her students are much more rhythmically strong using this reproducible curriculum. The year she added these things to her teaching, she had no qualms about increasing prices even when she was the top of her price point, because she knew she had added value to student’s lessons in the year.

Add a flex week.
Another option is to give yourself an extra “flex week” (week off) without changing your price. So you would be technically making the same amount of money, but working one less week in the year.

I’m going to ignore your advice anyway – it scares me!

I know it’s hard for some people to be firm and proactive about business decisions. But this makes perfect economic sense, so at least consider it. If you don’t raise your rates every year (or do some of those options above), I’m afraid this will happen to you (I’ve heard countless stories like this, so I decided to make it into a limerick):

Should I Raise Tuition Rates This Year?

Just to clarify…

Just a few last things because sometimes these articles lead to misunderstanding when talking about whether or not to raise teaching rates!

  1. Do what is best for your studio! There are all kinds of variables in every studio (Do you even have enough students to begin with? Do you have a waiting list?  Is your mission to underserved communities?) so if you do have to make a large price increase, do it wisely.There is no right answer for everyone on how to do this.
  2. I do NOT always increase my rates every single year. Read the article carefully and you’ll see that b usually raise my rates, then that allows me flexibility and I can choose to do an additional week off some years, give more value other years, or even NOT raise my rates (but acknowledge that I’m living on less).
  3. Make certain that you are starting with reasonable rate before you do any of the inflation math!!!!! Look at your competitors (check other piano teachers, but know that they many times are not in the right ballpark either) like dance and sports to get an idea of what parents pay for extra activities.
  4. You can do whatever you want! This is just generally a good idea.

So give it some thought for this coming year. In five, ten, and especially twenty years time, you’ll be so glad you have kept up with inflation!

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12 Comments

  1. Kristen April 17, 2014 at 9:28 am

    Hi
    I really enjoy reading your posts they are very insightful and helpful when making business decisions. Here is my question. I raised my rates for only new students in Jan by $5 “to see what the market could bear”. And most teachers only raise their rates in my area every 2 years creating a larger jump. But I only raised it for new students not existing ones. So currently my studio is half and half. (I moved last year so wasn’t full in Dec) I am of course planning to raise rates for all current students but I really feel I need to raise the newer families by a dollar or 2 for inflation. Is that a bad idea to raise old people by $7 and then raise newer ones by $2. I really want everyone at the same rate!
    Thanks for any help. You seem to have a lot of experience and wisdom when it come to business since.
    Kristen

  2. Milla April 17, 2014 at 11:05 am

    How do you determine what is a going rate in your area? I can’t bring myself to ask other teachers what they charge. I know what the nearby store charges for 30 min. lessons, but they have overhead that I don’t have, since I teach in my home. From the other hand they have only one recital a year, whili I have 2, plus “piano parties ” for which I don’ charge. Thanks

  3. Wendy Stevens April 17, 2014 at 11:05 am

    Hi Kristin!
    So, here’s a question to help you answer your question: Are you giving both groups of people the same, high quality instruction in piano? If so, then yes yes, you should probably make everyone be on the same page. When you make the rate change, just do it matter of factly and say something like: “This new rate reflects a fair market value for the quality of music education and opportunities your children receive in my studio.” Here is what your tuition pays for: [then list a bunch of things from https://composecreate.com/students/wendys-piano-studio/studio-info/where-does-my-tuition-go/ and other things you offer like specific events, etc.]

    If you are offer your new students more than your old students, then of course charging different prices is appropriate. 😉 But I’m guessing that’s not the case.

    Hope that helps!

    Wendy

  4. Wendy Stevens April 17, 2014 at 11:07 am

    Hi Milla,

    Here are some good ways of getting in the ballpark for the going rate: https://composecreate.com/how-do-i-find-out-going-rates/

  5. […] your rates (here’s a great article at Compose Create about the importance of regular rate […]

  6. piano parent August 12, 2017 at 6:39 am

    Hi — I know this is an older thread but I landed here from google and thought that the community here might be a good independent source of advice; I hope it might be helpful to hear from a parent’s perspective as well.

    My kids have been taking lessons from a great teacher since she was first starting out in 2011. Her rate was initially $25 for a half hour lesson. Shortly after that the rate jumped a bit as she organized into a fuller tuition format and studio format, which has now expanded into a larger music school, and grew modestly after that to the equivalent of about $68/hour this past year. I couldn’t have been happier with this situation and made a number of efforts to support her business (volunteering my own skills for the benefit of the music school, arranging with my kids’ regular schools for lessons during the school day to free up her afternoon slots for other students, referring friends and colleagues, etc.). This is in a rural area where a lot of the clientele works for a small college, so earning good salaries but not at the scale of major urban areas.

    On Thursday she sent us a note that her rates were jumping by more than 30%, to the equivalent of about $90/hour. She requires a yearly commitment for which the first payment is due on Tuesday. She explained that she had been keeping her rates lower to bring more students in to the school, but was now ending that practice, and offered to hand us off to another teacher who is part of the same school. How should I react to this? I would not blink at reasonable increases reflecting cost of living and professional growth, but this starts to feel like shady sales tactics. Do I scramble to find another teacher and explain to my kids why they have to switch? If I switch to another teacher at the same school (and I don’t know what other choices are available in this area, especially at this late date), will I have the same experience with that teacher in another year or two? If just I accept the increase am I signing a blank check for the future? Should I raise these concerns with the teacher or just take it or leave it? Do I go online to warn others about my experience? At the very least I will be scaling back on the total quantity/length of lessons.

    Any advice is welcome, thanks!

  7. Wendy Stevens August 13, 2017 at 8:02 pm

    Hi!

    This is a great question and I’m glad you are wrestling with what to do. I imagine that, assuming this is a reasonable teacher, that they probably struggled with the entire decision too!

    I think it’s important to think about a few things. I’m not telling you that there is only one right way to handle this, because there is not. But here are some things to consider:

    1. Can you afford this teacher’s new rates? If not, then it’s an easy decision and you approaching her about it isn’t probably going to change her mind, so I wouldn’t.

    2. I’d keep in mind that the price of owning and operating a music school that has real estate is much, much more expensive than running a private studio out of the home. So, it may be that this teacher has indeed been operating at a loss. With that said, it’s important to ask if what he/she offers is worth the price. Does she do special recitals, competitions, festivals, super-relevant things to 21st century kids? Does she have a way with children that is much more effective than others? If so, and if you have a good connection with her/him, then staying with her another year is probably a good idea if you can afford it. Your kids may lose some traction moving to another teacher.

    3. If you do decide to approach her, it should be with the approach of…”I’m really struggling with this big increase in tuition and I wondered if you could tell me more about it so that I can understand your situation and make a good decision for my family.” Then, be sure to talk to her/him in person and ask your questions in a non-judgmental way. Seek to understand her business situation and then she should in turn show an interest in your situation as well. If you are both able to share freely but kindly, then the relationship will be better in the end, even if you don’t continue with her.

    4. I would not “warn” others about it until you seek to understand her position. If there’s really something unethical going on, then you can decide what to do when you find out. But right now, just seek to understand so YOU can make the best decision for your family.

    5. You might want to also read through this “What Does My Tuition Pay For?” brochure before you talk to her so that she can feel that you appreciate what she really does (too many parents just think that they are just paying for a 30 minute time slot). https://composecreate.com/students/wendys-piano-studio/studio-info/where-does-my-tuition-go/

    Of course, these are not the only things to consider, but I hope this helps. I sense that you are not vindictive and that you are just trying to figure out the best thing for your family. So, I think that if you approach it in that way, she’ll respond in kind and both of you will walk away feeling better about having more knowledge about this decision.

    Please let me know how it goes!

  8. piano parent August 14, 2017 at 9:54 am

    Thank you so much for this very thoughtful and helpful reply. Just to add a little more information…our teacher has always offered lessons in the same place; she used to rent one room just for herself but the school now rents the entire building (owned by a community nonprofit) for many teachers. She offered to switch us to another teacher there who would not have this rate increase (because of the short notice, it would be someone we’ve never met), which could either be viewed as a helpful solution or a bait and switch tactic, but in any case I don’t think it’s strictly an issue of overhead costs.

    I totally agree with the important points in your document about where tuition goes; and indeed, most of the increase from the straight $50/hour 5 years ago to the equivalent of $68 per lesson hour last year was when she set up a full studio including more events like those you listed above. I should add that along with the current rate increase, she also assumed that we would move to a longer lesson time, meaning that the actual cost would go up by about 80%, which is not likely to be sustainable for us. I sent a simple inquiry about the price at the current format as soon as I got her message, but haven’t gotten a reply, even though the nominal deadline is tomorrow. So it’s hard to know how to communicate further (I’m not likely to have a chance to talk to her in person before the payment is due).

    Since probably most people finding this (great) site are mostly teachers, I might just throw in my perspective as a parent. I have NO problem with teachers raising rates, as you describe above. My expectations about how they will do so are pretty much exactly the same as the expectations I have about my own salary increases: they should cover cost of living and, assuming things are going well, an increment reflecting my progress as a professional; occasionally I might have advanced in a more major way and get a larger increase (but more than 10% would be extremely rare); and some years there might be financial pressures that require a freeze. And all of this should be communicated openly well ahead of time.

    If that’s how things work, then I make the decision to build the cost into my household budget when signing on, and the two grow together from there, without my giving it a second thought. But surprises like I’m experiencing now suddenly put me on guard to start shopping around in order to improve my negotiating position.

    Again thanks for your thoughtful response, and I will follow up on how things turn out. And I hope it is helpful for your readers to hear the view from the other end of the piano bench!

  9. Jeannette Wilson December 28, 2017 at 2:36 am

    I charge a monthly fee. My problem is how to charge when I get sick or when there is a holiday. What do you do about these two situations?

  10. Wendy Stevens December 28, 2017 at 10:30 am

    Hi Jeannette,

    You’ll want to factor your holidays in when you calculate how many weeks you will schedule yourself to teach when you figure out tuition. The sick days can be handled as flex days which you can read about here:
    https://composecreate.com/snow-days-jury-duty-illness-oh-my/
    https://composecreate.com/more-on-unscheduled-time-off/

    Also, you would probably greatly benefit from the “Best Stress-free Business Practices for Your Studio” which goes through all of this thoroughly and gives you both a detailed as well as a big picture view of these concepts: https://composecreate.com/product/best-stress-free-business-practices-for-your-studio/

    I hope that helps!

    Wendy

  11. Sonia Tressler March 27, 2018 at 11:06 am

    Would you recommend putting a statement in our Studio Policies about annual rate increases? If so, could you give an example of how to word it? I usually raise my monthly rates every spring by $1.00-$2.00, but I have never put this in my Studio Policy. I’m raising it by $2 this year based on the inflation calculator. Also, when explaining to parents that there will be a rate increase, should I mention that I am basing it on the inflation calculator?

    Thanks so much!

  12. Wendy Stevens March 27, 2018 at 4:09 pm

    Yes, I always recommend this! I think it’s talked about more in the “Best Stress-free Business Practices for Your Studio” workshop that you can take online: https://composecreate.com/product/best-stress-free-business-practices-for-your-studio/

    But I just looked on my policies to see what wording I use and you can feel free to use this:

    “Families should expect a yearly increase in tuition appropriate to cost of living increases and services offered.
”

    I hope that helps!

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