Making Economic 'Cents' of it All

By Rhee Gold

How much does that class really make?

Playing the role of teacher/school owner is always a balancing act. Our focus moves from the curriculum for the day’s classes to the newsletter that should have been mailed yesterday. Then we’ve got the choreography, performances, competitions, and Nutcrackers; and those things are a miniscule sample of the daily school owner’s agenda. I would bet a large majority of us have never sat down to analyze what each class really makes.

To get the best results, consulting a professional accountant or financial advisor is your best bet, but here’s a simple example you can do on a napkin, while you have your morning coffee, to give you some ballpark idea of your classes’ finances.

[Insert ABC School of Dance Logo]

Examples below are based on the ABC School of Dance. Their statistics include:

1 classroom

1 office person

2 teachers

25 hours of classes per week

Simple formula to estimate the expense of a single one-hour class:

STEP #1 Estimate the expense per class

1) Start with the cost of the teacher per hour.

2) Determine office expense: The ABC School employs the school secretary for twenty hours per week @ $10 per hour for a total expense of $200 per week (20 x $10). At 25 classes/hours per week; office staff = $8 per class ($200 ÷ 25).

3) Determine rent/mortgage: ABC School’s rent is $2,000 per month, which is $500 per week. At 25 classes/hours per week, rent/mortgage = $20 per class ($500 ÷ 25).

4) Determine utilities: ABC School utilities include heat, air conditioning, water, electric, phone, etc. for a total of $400 per month, $100 per week. At 25 classes/hours, utility expense = $4 per class ($100 ÷ 25).

5) General expenses: ABC School’s general expenses include marketing, printing, office supplies, insurance, payroll taxes, accounting, postage, cleaning, etc. Monthly total is approximately $500; $125 per week. At 25 classes/hours per week, general expenses = $5 per class ($125 ÷ 25).

Your expense graph would look something like this:

ABC School’s “class expense” is $57.00.

Step #2 Estimate the revenue per class

1) How many paying students in the class

2) What is the per class rate/per student. ABC School’s base rate is $10 per week for one class. For students taking two classes per week, the second class is $8; for students taking three or more classes per week, the third (and over) class is $6 per week.

Your revenue graph could look something like one of these common scenarios:

Scenario A : The class is comprised of all students who only come once a week for class

Scenario B : Most of the students in the class take two classes per week (first class is $10 and second class is $8, so they’re paying an average of $9 per class per week).

Scenario C : Most of the students in this class take three classes per week (first class is $10, second is $8, and third is $6, so they’re paying an average of $8 per class per week).

Multiple class discounts

Remember that although the expense of running a class can be generally the same from one class to another, in most cases multiple class discounts are appropriate to remain competitive with other local schools, as well as to encourage students to take more classes (full classes are better than half-full ones!).

The “surplus of revenues over expenses” is the money that can be put toward supporting other less profitable activities of the school, such as solo lessons, additional rehearsal time with an instructor, and classes taken by students on an “unlimited” plan

Let’s Talk Intensive or Unlimited Programs

I grew up in a school that had what most people would consider an extremely successful “unlimited program.” The key word in that sentence is “successful” and its definition. If it was to produce excellent dancers, it was a success; if it was to create an enthusiastic group of young people who appreciate and respect the art of dance, it met all expectations. If it was to create a program to prepare young dancers for a college dance program or a professional career, again it was a success. BUT, if it was to make a profit; well that’s another story.

We still offer an unlimited program, profit or no profit. Not because it’s a money maker, but because it is a dancer maker. It is the artistic outlet we all seek when we open a school. It is the next generation who will carry on our art. And in many ways, it’s our obligation.

Have A Seat For This One!

The following is based on an actual unlimited program offered by one of our Goldrush readers.

We have an intensive program for my competitive students. The dancers take between 8

and 10 classes weekly. My program is $165.00/month.

The following formula is based on the minimum figure of eight classes per week.

Bottom Line

You can see that the $23 of “surplus over revenues” per class in our earlier example can be made available to help fund the unlimited or intensive programs “loss” of $5.50 per class.

For the ABC School of Dance and many other schools across North America, it’s the once-a-week recreational, pre-school, teen hip hop and adult classes that generate the most income. ABC’s priority is to maintain a flourishing recreational program to afford to be able to offer their more intensive dancers the training they need.

WHERE DO YOUR TUITION RATES STAND?

Goldrush recently sent a survey to school owners across North America. One of the questions: What is your average charge for a one- hour class?

Tuition rates vary throughout North America. Below are the Goldrush survey results.

US and Canadian Tuition Rates

National Average: Canada

$10.78 (based on 19 respondents)

Highest Rate: $16.00

Lowest Rate: $5.00

National Average: U.S.

$10.45

(based on  respondents from forty-one states)

Highest Rate: $15.00

Lowest rate: $5.00

State by state averages (included below are states with at least five respondents)

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