Years ago, a piano teaching colleague and friend of mine gave up teaching piano and switched careers. I could hardly believe this, because whenever we talked on the phone, he always brought as much excitement, curiosity, and fascination into our conversations about teaching as I did. What could make such an enthusiastic teacher suddenly decide to go nuclear and quit teaching altogether?
Payment policy, that’s what.
As a traveling teacher, he drove to his students’ homes, and if his students forgot about their lesson with him, he wouldn’t get paid. With a policy like that, one wonders why he didn’t switch careers sooner.
I persuaded him to take a look at my policy of flat tuition payments, and after a lot of discussion, he decided to copy my policy verbatim and go back to teaching. He has been teaching happily to many happy students ever since.
Here is how it works, and I’d recommend that every teacher in every country, everywhere, always forever, do this themselves:
- Figure out how many weeks per year you wish to teach. I teach 46 weeks per year, which gives me six no-lesson weeks.
- Multiply the number of weeks from step 1 by your hourly rate. This is how much money you’ll make each year from a one-hour time slot.
- Divide this total amount per year by 12. This is how much a student will pay you each month for a one-hour time slot.
- Important: be flexible with make-up lessons, or you will come across to some of your students as trying to score paid personal time at their expense. See Thinking Twice About Strict Make-Up Lesson Policies for my very detailed analysis of this.
Everyone wins with this payment structure:
- There is less talk about money and more focus on music since everyone always knows what they owe for that month’s payment.
- Paying the same predictable amount each month opens up the possibility for students to set up online automatic bill payments with their banks, which several of my students do. I receive hard copy checks in the mail, and those who send payments this way don’t even have to pay postage. You don’t have to be a major corporation or utility to receive bill payments through bank bill pay services, and no special setup is required on your end. It’s a simple matter of students entering your name, address, etc. into their account’s bill pay section.
- When teachers allow students to take “vacation weeks” of their own (choose when not to pay for lessons), the teacher will inevitably experience dramatic decreases in pay in summer months, especially June and August. Additionally, if students choose when to pay and not to pay, the teacher is effectively forced to take probably 3-6 weeks vacation each year, except that the vacation time is sprinkled throughout the year instead of taken in lumps as it should be (so it really isn’t vacation time). Imagine if high school teachers were told that their “free period” and lunch hour each day was now going to deduct from their salary since it now counts as “vacation time!” A teacher in this scenario will make less money from all of this sporadic vacation time, making it more difficult to take vacation time of their own.
When a teacher charges for each lesson rather than having up-front payments, inevitably students will cancel lessons and will experience reward for their cancellation (no lessons to pay for that week). I never considered it an option to charge for each individual lesson, because unlike plumbers, dentists and auto mechanics, we teachers must rely on very small group of clients each week for our livelihoods, which means empty slots can’t be filled by clients who call each week. If a student wishes for a teacher to commit a time slot to them each week, the student must commit to paying for it each week. Additionally, under a system of flat monthly payments, sometimes students do not request make-up lessons and instead just say, “See you next week,” even despite being offered alternate times.
This also gives the teacher the option to raise rates by increasing the number of weeks off per year rather than by increasing the monthly payment. For example, suppose you charge $50/hour, and you teach 48 weeks per year (so exactly 4 lessons per month), which means a student pays $200/month for a 1-hour time slot. You decide to keep monthly payments the same next year, but increase the number of weeks you take off from 4 to 6, meaning you teach 46 weeks per year instead of 48. You are still bringing in $2,400/year for a 1-hour time slot, but your rate effectively increases to $52.17/hour since the annual $2,400 income is now divided by 46 lessons per year instead of 48. Of course, this does not bring in more money per year, so it’s an indirect rate increase, but it can give teachers the very important intangible benefit of time off that they need to recharge themselves throughout the year.
How do single lessons and refunds work? When it comes to refunding, always refund the true amount based on your hourly rate, so in the above scenario, a single lesson refund would be $52.17. But when people pay you for a single lesson, if they make the error of assuming your hourly rate is $50 (because your payment table still has round numbers and people tend to think of lessons as being “four per month”), just let it go. It really doesn’t happen often enough to matter. I don’t explain these mathematics to my students, but many of them have clearly taken time to figure it out, because they always seem to pay the correct amount when paying for single lessons.
One reader asked, “How would you advise switching from a billing-by-the-lesson method (I send out invoices the end of the month for the lessons had) to a flat rate method? I wouldn’t feel comfortable making students pay two large sums at one time.”
To switch from pay for lessons already given to lessons already received without inflicting too much pain on students, I recommend moving up the payment due date by an average 2.5 days each month, for 12 months. If one starts doing this in February, just having payment due on the last day (the 28th) would be enough since that moves payment up by 3 days (January 31 to February 28). In March, payment is due on the 26th, in April, the 23rd, in May, the 21st, and so on. By the time you make it to next January, you will have collected 13 payments, and payments will again be due on the 1st of the month.
I also have the following points in my policy:
- If the teacher cancels a lesson for any reason, a) it will count as one of the teacher’s 6 no-lesson weeks, b) the teacher will reschedule the lesson, or c) the student will be credited the next month for the missed lesson. If the client cancels a lesson, the teacher will reschedule it upon request if it can be scheduled during normal teaching hours (i.e. taking the time slot of another student who cancelled).
- If a student wishes to have a rescheduled lesson that creates two lessons in one week, the student must also commit to extra practicing to make the extra lesson worthwhile.
Additional policy recommendations:
- Increase your payment every year by a very small amount – anywhere between $0.50 and $3.00 per hour, depending on what happened that year with your education, what your students did, the SSA’s annual COLA, etc. This is far better than waiting 5-10 years and increasing by a lot, which can result in several students dropping. Once in a while I’ve been known to skip the annual rate increase, such as 2013, when I was still a “new” teacher in my area after relocating.
- One of the best things you can do for your studio: Go to somewhere like Lowe’s or Home Depot and buy a wall-mounting (and locking) mailbox with a drop slot, and use it as a payment drop box. Mount it to the wall of your studio, wherever people sit down to wait for their child’s lesson. Post your late fee policy on the box. This virtually eliminates all discussion of payments during lessons, people forget to pay less often when it’s there, and most importantly, it virtually eliminates recordkeeping errors on your part since you’re not having to handle or process checks between or during lessons – you can calmly and systematically process all of them at once during your non-teaching hours.
- Payments are due on the 1st of the month, paying for the month in advance, and if someone pays on the 4th, then they owe a $4 late fee (the late fee corresponds to the date). Since I do not mail invoices and it’s so easy to forget to pay bills when you don’t get a monthly reminder, I typically don’t enforce my late fee policy except in cases when someone is late all the time (although some students insist on paying it as a form of penance).
- Print out and laminate a payment table and tape it to the payment drop box. Below is an example using a $50/hour rate. This may seem trivial with this rate, but when your rate is something like $48.50 or $53.50/hour, you and your students will very much appreciate having this handy.
- When a student wishes to take more than 2-3 weeks off (e.g., to visit China during the summer), offer them three options: 1) pay 100% for their time slot and make up all lessons when they get back with no time limit on when they are made up (a great option for the musical development of students: requires extra practicing for all those 2-lesson weeks), 2) pay 50% to reserve the time slot (no make-up lessons), or 3) pay nothing but risk someone else taking the time slot. There should be no hard feelings on either side regardless of which option is selected. If I were a student, I may very well be one of those who opts to “risk losing the time slot”, and I tell people this so they know I empathize with them no matter what they choose. These choices respect the fact that it hurts a teacher just as much to reserve a time slot without pay as it does for a student or parent to pay for lessons not received. Variations are possible of course too, such as pay 75% and make up half of the missed lessons, or pay 25% to hold a smaller time slot.
May the ideas in this article restore sanity and bring happiness to many teachers!
(c) 2015 Cerebroom