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 Ask Rhee Gold
Dance educators seek advice about teaching
issues
Q:
Hi Rhee,
I need some advice on where to go with my tuition next year. I
bought my school from my former teacher, but after listening
to everyone at [a Project Motivate] conference, I learned that
my “inherited” tuition is very high. I am charging the
following monthly rates (for one class per week) for 2006–07:
$50 for a 45- minute class; $60 for a 1-hour class; and $70
for a 1-plus-hour class. There is no discount for unlimited
classes, and I charge $2.50 per class for siblings.
When I bought the school, I didn’t think to research the local
market; after all, if the former owner was able to charge
those rates, why should I drop my prices? Instead, I offered
her former students 20 percent off, and all new students who
signed up through September received 10 percent off. With that
structure, my enrollment has more than tripled in my first
year, going from 40 to 130 students.
Here’s the problem. My office manager has been researching
local schools, and some charge as little as $23 per month for
class! Others charge up to $40, but no one’s rates are as high
as mine. I don’t want to drop my overall pricing structure,
but I don’t want to be so high that my school stops growing.
My father (and accountant) says, “Why change a thing? You’re
growing and getting a good income.” I tend to agree, but I
don’t want to rip people off. I’ve put a lot of money into the
studio this year—painting, a store, boys’ dressing area, study
area, renovated bathrooms—and I’m adding a third studio.
Thanks so much for everything. I know my first year would not
have been this successful if I hadn’t been reading Goldrush or
attended Project Motivate.
—Pam
A:
Hello Pam,
Thanks for
your kind words. Your tuition question is not easy to answer.
Part of me agrees with your father— why change a thing,
especially if you’ve tripled your enrollment with the tuition
you are currently charging? I wouldn’t consider you to be
ripping people off since the previous owner set the tuition
rates and it’s understandable that you would continue with
them.
The fact
that you have been investing in the school with the
improvements you’ve made sends a message to your clientele
that you’re committed to making it a better place for their
children, and that’s good for your reputation. It shows that
you care about your students and are more interested in
offering better service than merely making money. If you offer
the children more than other schools in the area do, you could
argue that your clients get what they pay for!
However, I
do wonder if the enrollment would be even higher if the
tuition costs were less. Maybe you should keep the tuition the
way it is and continue to offer discounts to current students
and those who register by a certain date (like you’re already
doing). The catch is that everyone will be paying a different
cost for the same product. If I were a parent who happened to
register later than the specified date for a discount, I might
be resentful. Would that be enough for me to register
somewhere else? Another thought is to keep the rates the same
but offer a big discount for taking multiple classes.
I know I
didn’t give you a specific answer, but I hope this helps you
with a decision. Good luck! —Rhee
Q:
Rhee,
I’m thinking of leasing a second space for another studio
across town, about 20 minutes from home. What are some pros
and cons of doing that? It’s a new structure on a very busy
intersection, like a sports complex with several
family-oriented businesses inside. My current location is five
minutes from my house and I’m up to 300 students.
—Maryann
A:
Hello Maryann,
The
national average for student enrollment in dance schools is
about 210, so you’re doing very well with 300 and that’s a
reflection that you are doing it the right way. These are some
of the considerations you should think about before opening a
second school:
·
Will it
reduce the number of students at your current location?
·
Could a
second school cause you to be less focused on your current
location?
·
Do you have
the faculty and staff to manage a second location?
·
Are there
any dance schools close to the potential location? If so, what
kind of enrollment do they have?
·
Do you have
the time to dedicate to a new business and still manage to
have a personal life?
I have met
many school owners who have a second or third location and
have had much success. One of them has twice the enrollment at
her second location that her original school does, so
financially it far sur- passes her first location. I have also
met school owners who had a second location for a while but
closed it because they found that it was too much to manage
or, because their focus on the first school wasn’t what it
should be, they lost students at that location.
It’s hard
to know what the right answer is, but I hope I have offered
you some food for thought. Bottom line: If you have the staff
and time to manage two locations, it’s worth a shot. But if
you already have a full plate with one location, you need to
think this through carefully to be sure that you won’t become
burned out. I wish you all the best. —Rhee
Q:
Hi Rhee,
I need your advice on how to sell a studio. We currently live
in Rhode Island, and my husband wants to move to Florida. The
only thing stopping us is my studio, which I started 10 years
ago. This is a decision that has consumed my thoughts for
several months. I’m literally at a crossroads and do not know
which way to go. How do you determine how much a studio is
worth? (I have about 250 students.) And what is the first step
in selling a studio? Whom do I contact? Any input you have
will be enlightening for me. Thank you.
—Amanda
A:
Hello Amanda,
The most
common way to determine the value of a business is to multiply
the gross income by 2 or the profit by 5. However, the value
of a dance school can be harder to determine. Often it is
worth less if the main teacher (personality) of the school
changes. If someone were to purchase the school yet lose a
considerable amount of the student base because your clientele
is loyal to you, then the value would be less. To avoid this,
try to sell it to someone your clientele already knows. A
teacher who is on your faculty often works best.
Another
point to keep in mind: Do not allow word that you are selling
to spread to your clientele or other studio owners. Someone
might consider opening a school because they know there will
be a void where you have established your business. You should
handle all matters regarding the sale with complete
confidentiality. Anyone you do speak to should either sign a
confidentiality agreement or be completely trustworthy. I hope
this helps, and I wish you all the best. —Rhee
Send
your questions and comments to
Goldrush,
P.O. Box 2150, Norton, MA 02766 or gold5678@aol.com.
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