Episode Transcription

22: Increasing your prices in your tutoring business

 Welcome to another episode of Classroom to Business.

 Back in episode four, I covered what to charge for my tutoring services. So pricing is always a really hot topic and I thought that today I'd go one step further to a place that scares the heck out of so many people and makes most of us kind, caring educators feel quite uncomfortable. And that is, Raising prices now, often we don't raise our prices because we are scared.

We are worried that as soon as we raise prices, we are going to lose families. We're worried of the impact that we are going to make on the family's home lives and financial status. Okay? And if you have been listening to my previous episodes, you'll know that that is not our job. Our job is not to help people and their finances.

Our job is not to take on other family's worries and concerns. Our job is to provide amazing education, intervention support, counseling, speech therapy, whatever it is that you do for the students that you work with, and then support their families with that. So I wanna make that really clear because. We are nice people, right?

We do care. And unfortunately, sometimes that kind of, you know, impedes on us actually trying to create a profitable business and put our own families first. So when you are looking at raising your prices, there are some things that I want you to consider. If you think, no, I'm not gonna raise my prices.

I really wanna highlight today what can be happening for you behind the scenes if you don't raise your prices? So the first thing is, is that if we aren't raising our prices, then we aren't staying in touch with the industry. And that means we get left behind. Nobody in their right mind sets out to run a profitable business.

And then, Continues to run a profitable, sustainable business without putting their prices up. This is something that you are going to have to do at some stage. If you are in an industry and prices are increasing and you are not, you will get left behind. If you're not putting your prices up, that means you're not allowing your own business to grow.

That means you cannot be making more profits or maybe. Maintaining your profits, and that's a real problem because what that means then is that your business is going backwards and you are not making the money that you need to be or want to be making to support you and your own family. It also means that we aren't showing value and keeping up that expert status.

So we all know already if you've been listening and following along with me, You know that there is a whole pricing strategy around where you position yourself in the market, and if you put your prices too low, then people are going to value you as that lower service, and they're probably not going to see you as the expert in your industry or your niche within your industry.

If you've got the lowest prices going and that happens. Firstly, when we don't set our prices initially where they should be, but secondly, it happens when we actually don't increase our prices with the industry alongside the industry and our expenses and things like that. So you also might be like some other ladies that I work with.

That have got discounts for some people and not for others. And as I mentioned in episode 20, that's actually not been fair to those people who are paying the full price. Now, I'm not going to go into that because I, you know, you can go back and listen to that episode and there might be a scholarship.

There might be some sort of low income discount that maybe you're providing that. Your own personal call and, and decision to make, but what I want to talk about is when people are offering prices because they're your friends or because they started and they're the very first customers that you've ever had, and you've never put their prices up.

This will end up obviously impacting the bottom line of your business. And by that I mean the profits that you are making. And it will end up getting very, very messy inside your business. And it also creates another hurdle to jump. When you do decide you raise your prices, do you raise everyone's prices by the same amount?

Do you raise. You know your top people's prices by $5 and the people you've given a discount to by $3, which means you're actually increasing the gap between the two amounts that people are paying. It gets even more messy and it gets even more awkward and uncomfortable because you aren't charging fairly.

It's much better for your business overall to keep your prices the same for everyone, just like. All other businesses that provide services for children. You look at gymnastics, you look at swimming, you look at dancing. Yes, there might be different amounts for different ages or you know, for slightly different services, but overall it's the same price.

You don't get any sort of discount because you've been there longer or because you are friends or friends or friends of somebody else and this and that and whatever. The same price is for everyone because that's what's fair and that's what you're valuing yourself at. Some other things that happen when you don't increase your prices within your tutoring business is you actually hold the industry back.

We are working so, so hard, and I do believe that it's happening for people to actually value teachers and educators and tutors. Now I know that there. Is a group of tutors or there are a group of tutors out there who maybe aren't amazing, and obviously that's not who I'm talking about right now. I'm talking about the people who are passionate and dedicated and put in the work like you do to continue to grow as an educator and build your skills.

And if we are keeping the price low, we are saying to the public, we are not a highly valued service, and this is a problem at the moment for teachers in general. We're not gonna go into that today. We could totally go into that and talk for days about it. But we want to do a really great job in this industry of holding it high, ensuring that people value the difference and the impact that we can make in the lives of the students that we work with.

And by having a price that reflects this, it's all part of the way that people perceive value. So by you not putting your prices up, you are not doing your part in helping the industry to grow. You're actually ho holding it back. If you're not increasing your prices, it positions you at the bottom of the scale.

Like I touched on before, there's the psychology of pricing and if everybody else is increasing and you are staying back here, what does that look like for you? It might look like you are desperate to try and. Keep or get clients while everyone else is confident and putting out their pricing. That's not what we want.

Okay. It also doesn't allow you to cover expenses as they increase, and we all know that expenses are increasing. Okay. Your in, sorry. Your wages. May increase. If you don't increase your prices to reflect that, then you are going to end up running at a loss and you will not have a profitable business anymore.

You will not be able to pay yourself eventually, you will not be able to pay staff. Your business will fall apart. And I'm not saying this to freak you out. I'm saying this to give you a really loving, caring shake and wake up call. So that you realize how important it is to increase your prices over time or as it's just as it's required.

And the other thing that I wanted to to touch on is basically it doesn't do you any favors to keep your prices low. It doesn't help you to increase your profits. It doesn't help you to get more students because obviously we know that the businesses that have increased their prices, they're still getting students.

It doesn't help you to pay your staff. There are no, there are no benefits that you're getting out of keeping your prices the same. Except you don't have to have a conversation with parents, and I know that that's what holds so many people back. And I want to touch on that because I've been here before.

I've done this before, I've had to put my prices up and I was scared. I was so nervous. I thought that I would lose families because I thought they can't afford $3 more a week, or they can't afford $5 more a week. Whatever it was that I put it up every single time, parents happily paid it. And every single lady that I work with, when I sit down, one of the first things we go through is your pricing.

And often we sit down and we figure out that they have priced themselves too low because their thought was, well, I'll price it here just to get into the market just to get a few students, and then I'll put my prices up. That's not a good strategy. Please don't try that strategy. But what's happened is that they've never put their prices up.

Okay? So their prices are still really low. So I've come along, big bad bully that I am, and I've encouraged them to look at their pricing, look at the industry, and see where they're sitting, and see if it really aligns with who they are and the actual transformation, the services that they're providing.

And 100% of the time it doesn't. But they've just never put their prices up because they've been scared. So what we've done is actually worked together to communicate with parents the change that's coming up. And you know what? Nine out of 10 families stay, I would say majority of the ladies that I work with, they might lose maybe one, one to no students when there's a price increase.

And so I want to share that with you because. You know, I'm not making this up. This is, these are the real statistics with the ladies that I work with to show you that it doesn't have to be scary. It's not something that you have to be afraid of. Putting your prices up is a part of business. Every single business does it, and if you don't, then you are not being true to yourself and your business.

But how do you know when to put your prices up? How do you know if it's the right time to be making these changes in your business? So here's a few things to consider. When did you last raise your prices? So have you raised your prices ever? Was it over 12 months ago? If it was between 12 to 18 months or more, then I would highly be encouraging you to look at your prices.

You also wanna consider how long have your customers been paying the price that they're currently paying? So maybe you've raised your prices, but you've got. A group of customers, families who are sitting on $70 an hour because that's what they started with, and you never raise their prices. So some of them have been paying that for five years whilst all of your new students are paying $90.

Okay, that's not cool. We need to go in and we need to change that with those $70 parents. Something else to consider. Do you have people paying different prices like I just touched on? And if you do, why? My goal for you would be to be getting those parents who are paying less incrementing if you need to, if it's a really big jump, putting the price changes in increments to get them to that, you know, whatever it is, $90, whatever it is, your, your top your actual, I'm not gonna say top anymore, I'm gonna say your actual price.

If it's just a small gap, I would be getting them there as soon as possible. Has the industry pri ha ha, sorry. Have the industry prices changed without you? So have the changes around happened, but you haven't implemented them. So everybody else has increasing their prices, but you haven't. So these are all signs.

These are all signs for you to be reviewing and increasing your pricing. Are you truly valuing yourself? Have you priced too low to begin with? And if that's the case, it's time for an increase. Do you have a wait list? If you have a wait list that is a sure sign that you can put your prices up. Okay.

Because that means that that should feel, help you to feel really confident in knowing that if I put my prices up to where they should be, I've got other people who are here sitting. Ready to come back in or ready to join for the first time? Have your overheads increased now? This happens to everyone, and when your overheads increase, that doesn't mean you put your prices up straight away, but you need to be on track and keeping an eye on your finances because if it's just one overhead that's increased, your prices might not increase.

But if you've got four or five all of a sudden that have increased and you are really seeing the impact on your profits, then you have to be looking at doing something different, and it might be increasing your prices. So all of those.

 So all of those things are basically little, not warning signals, but they're signs that it might be time for you to be reviewing your pricing and then increasing it. So let me give you an example. Maybe you've been running your classes for over 18 months and you've had no price increase, or maybe you started.

And your prices were too low in the beginning. So at the moment I'm going to assume that your costs are increasing because you know, look at the world that we're in at the moment and other tutors are increasing their prices. But you aret because you are worried you will lose customers. Like I said before, this is so common.

We have a real scarcity mindset and think that our prices will. You know, make someone join us or not. And so we have to keep our prices low to be more attractive. That is not a pricing strategy, guys. And I know I bang on about it all the time, but I'm going to keep banging on about it because I don't want you to get stuck in that situation.

Sure. There are some people who think like this and they only look for the cheapest thing, the cheapest option. But think about the whole value and pricing psychology behind things. Would you buy the cheapest option if you were looking for the best results? Your families are looking for the best results.

So are they gonna be looking for someone who's the cheapest or is the whole psychology in their head telling them, Nope. I need to pay for somebody who's clearly good at what they do and they're not gonna be the cheapest person. Like why would they be cheap if they're good? And I'm not saying why, that's why that mindset or that thought is right or wrong, but it is real.

Okay, so. Also the families that you have currently have been already working with you, which means they already know, like, and trust you. They know how good you are. They know the difference that you are making, and this means they really value you. Meaning the price increase isn't actually going to be an issue for them.

Because they already know that you're going to do a great job. There's not that risk there of, oh, I could pay this person $90 an hour, and they actually might be rubbish. They already know that you are great and that their child loves you and that they want to keep going. And again, I know this because of all of the ladies that I've worked with, because of myself and my own business, but also, I'm a mom going through this as well, and I'm sure some of you are.

When you have got your, you know, child in dance and the prices increase, you don't even bat an eyelid because your kid loves going to dance. You are not gonna be taking them out of that. Or when you know, you go to the shops and all of a sudden school shoes have increased, you are not going to say, mm. No, I'm gonna go back here for the really cheap ones because I don't wanna pay a little bit extra because we all know that the cheap shoes are gonna fall apart really quickly, so we don't even bother looking at them.

We're going for something that's going to last at least a term because we know how our kids treat their shoes, right? It's the same with tutoring businesses. People will look at your pricing and value it. And if they're already working with you, they already know, like and trust you. They're going to go back for those same school shoes that they know work.

They don't care if the price has changed a little bit because they don't want to go shopping firstly with their child and have to sit there and go through that. Punish of trying on all different shoes. Does that fit Come? Here you go. No, we're going straight back For the shoes that we know fit, that we know work, that we know are going to, you know, last us more than a term, and it's the same with you and your tutoring business.

Your parents aren't going to leave cuz they like you already. It's easier for them to stay with you where they know they're getting a really great service. So the million dollar question. How do you raise your prices? Well, I do have some specific examples of swipe copy emails inside my tutoring template toolkit that you can actually take.

And use email out to your families. And I'll share the link in the show notes so that you can go and check that out. But today I thought I would share just a really simple example of what you can say to your parents and, and how you can sort of play it out to ensure you have. Minimal to no student dropouts.

So an example might be something along the lines of, now I would send this out in an email. That's how I would do it. I would send it out in an email, and then I would actually have it printed out and give it to parents so that it's double whammy. And if you're working online with your families, it might just be.

That at the beginning of a session you say, Hey, can I have a chat to your mom and just say, look, I've just sent you, we've got some changes coming up. I've sent you an email. Can you make sure you jump on and check it out please? So that you know, parents have seen it. All right. So a quick example might be something like, hi, such and such.

We always aim to keep our families informed and up to date on every aspect of our business as soon as possible. We consider our families important to us and we feel that we need to share in advance with you our intention to increase some of our prices as at the date. These increases are unavoidable because of the recent increases in overheads.

We have tried to keep the old prices, but we can dis, we cannot afford to any longer. This increase means that we are able to continue to run our, and whatever it is you run. So it might be individualized or high quality tutoring sessions with. And you might put here, you know, your qualified and experienced teachers and tutors who provide quality teaching in a prime learning environment.

So we do hope you understand. We thoroughly enjoy working with all our students and hope that these changes do not affect our ability to continue in helping your child with their academic success, progress, schoolwork, whatever it is that you do. If you have any questions or concerns regarding these upcoming changes, please feel free to get in touch.

Then you pop your new prices in underneath. Like I said, I would send that out as an email. I would print it out as well, and I would make sure that there's at least two ways that you are communicating these changes with parents. And then if you have been following me along, you will know that I encourage you to confirm students for the following term.

By like week nine of the term that you are in. So invoices and things would be going out already while they're still working with you. So it's not something that you're trying to chase up over the holidays. Okay? Honestly, it's as easy as that. So if you think about a lot of other businesses, they don't even tell you that they're putting their prices up.

They just do it all right. Kohl's do not give you any warning. All of the places that you shop on a, you know, day-to-day basis, don't give you any warning that the prices are going up. You just look at your grocery bill or you look at your you know, statement when you get home and you're like, wow, I spent a lot more than I usually do.

I got an email, for example, I got an email from my daughter's swim school the other day, and all it said was, prices are increasing. Next term, please see the new price list attached. That was it. Now, I didn't care because my daughter loves swimming. She's going, no matter what the $3 that my price, you know, my price increased to.

Even if I had a moment where I was like, oh my gosh, it's increasing. I, in the scheme of things, it's $3 and I don't care because my daughter loves swimming and she's good at it, and I want her to continue going so, It really doesn't matter. You know, if you think a short, sharp, simple email like that, your parents will work, go for it.

It really comes down to your branding, your business personality, the customers and families that you work with. But at the end of the day, a $3 or a $5 increase to that parent is only $5, $3. Right. But to you, it's. Let's use $5 for the example. So say you're putting your prices up by $5. So for that family it's only $5 over the week, but for you it's $5 times the number of students you have.

So for example, if you have 10 students, that's an extra $50 a week or $2,000 over a a 40 week year. Yes, sure. You might, and I say, might lose one or two students, but that is much, much better than running your business into the ground and working for $25 an hour, which is actually what most tutors are doing.

Even without realizing that is definitely a podcast for another day, I will sit down and show you how to figure out what you are actually working for. But my point is, is that for this moment of being uncomfortable, it is something that I really highly encourage you to step into, lean into, embrace it, because it will make such an impact on your business.

And once you've done it once, you can see that it's really not that scary and the results. So good. So to wrap it up today, review your prices and review the industry prices regularly. Ensure you know where your finances are sitting to see if you need to raise your prices. Are you actually starting to go backwards?

You know, that's a big warning sign. If your pri if, if your profits are going backwards, something is going wrong. Ensure you're always valuing yourself and pricing accordingly. Believe in yourself and the impact that you make. Don't be afraid to ask for what you are worth. Finally, those who love you and know you and know what you do is amazing.

We'll value you and be happy to pay the price change, and they are the people that you want to work with.