Which Billing Model is Right for Your Studio?

Mar 21, 2017

by Steve Treseler.

A clear billing policy is essential to run a thriving teaching business. The right model for you depends on how you choose to balance flexibility with consistent cash flow.

I’ve experimented with several billing models over the years, and I’d like to share the pros and cons of six such models:

1. Pay by the Lesson

Students pay for lessons individually.

Advantages:

Drawbacks:

The Fons app solves two additional pain points with this model:

2. Pay for the Month

Students commit to weekly lessons and pay at the beginning of the month. The amount they pay each month depends on the number of lessons on the calendar.

Advantages:

Drawbacks:

3. Punch Card

Students prepay for a package of lessons that aren’t attached to dates.

Advantages:

Drawbacks:

For example, my sax teacher in high school used this model. My parents and I could never remember when we were supposed to pay him, and he always seemed confused.

4. Flat Rate Tuition

Students pay a flat monthly rate for weekly lessons.

Advantages:

Disadvantages:

In the Flat Rate model, tuition isn’t adjusted for missed lessons. Families are used to playing flat rates for sports, dance, and other activities, and they don’t expect refunds for missed practices. We can frame music lessons the same way and eliminate the expectation to reschedule and make-up lessons.

However, having a no make-up policy feels too rigid for many teachers and students (see Emily Ann Peterson’s Teach Well article, Why I Abandoned a Tuition Payment Plan Forever). I solved this by building cancellations into my tuition.

I charge a flat rate during the school year, but I only factor 33 out of 38 lessons into the monthly tuition. This gives students the flexibility to cancel three lessons without penalty, and allows me to cancel two without offering make-ups or tuition adjustments. I also don’t schedule lessons during school vacations. This helps me to largely automate scheduling and billing, and families like the consistency. I also know another teacher who charges a flat rate for 11 months and doesn’t charge for lessons in December.

5. Pay for the Semester

Students pay for fall/spring lessons in a lump sum, like college tuition.

Advantages:

Drawbacks:

6. Hybrid

I’ve settled on an imperfect hybrid model for my studio. Here’s how it works:

This hybrid model has worked well for me for many years, but now I’m travelling more for gigs and workshops, this throws a big wrench into my Flat Rate billing.

It’s important to evolve to meet the needs of you and your students. Whatever model works for you, a clear, consistent, and well-communicated policy will keep your studio running smoothly and your clients happy.

If you use a different billing model, I’d love to hear about it. Please share the details, pros, and cons in the comments below.

Steve Treseler is a Seattle-based saxophonist, teaching artist, and author. He is on the faculty at Seattle Pacific University and teaches creative music workshops across the U.S.

Download a free digital copy of his book Creativity Triggers for Musicians at stevetres.com


< How To Find The Right Balance Between Fun And Strict Teaching Methods Natural Born Singers? How to Assess Your Students From the First Consultation >
Subscribe!