Pricing a service such as dance education can be tricky. And as costs and the market change, you’ll need to raise them occasionally to stay profitable. Here’s how two veteran studio owners handle it.
Pricing is a slippery slope for dance studio owners to navigate. How do my rates compare to other studios in town? How much should I be marking up my costume fee to pay for the time I spend ordering and organizing? I really need to raise my rates this year—but what will my students’ parents think? If you find yourself asking these questions as each new studio year looms, take comfort in the fact that you’re not alone. Pricing a service such as dance education is more difficult than pricing a product. Instead of just calculating how much it costs you to make something, you need to determine the worth of your expertise and the value of your time as a studio owner.
When setting prices, a savvy business owner will keep the following factors in mind: First, what are all your costs—not just what you pay staff for teaching a class or the cost of a costume, but all direct, indirect, fixed and variable costs involved in delivering that service? Don’t forget overhead, such as rent, insurance, taxes, advertising and administrative help, plus a profit margin to fuel growth (more classes, better teachers), which should all be factored into the price you set for every service you offer.
Next, in establishing prices you need to look at the marketplace: What are your competitors charging and what is the perceived value of your service—that is, how much do you think your customers are willing to pay for your studio-owner know-how? “You should always keep an eye on the competition, but don’t dictate your prices based on what they’re doing,” says Michael Campbell, director of North Florida operations at The Jim Moran Institute for Global Entrepreneurship. “It’s OK to charge a higher rate to show value.”
Setting a reasonable—and profitable—price for your services is only the first step. From time to time, you’ll need to raise prices, something many studio owners seem loath to do. But “dance teachers are no different from any other business,” Campbell says. “They’re providing a service.” Building in a profit margin is, in fact, what defines you as a business and not a charity. “People have prices raised on them every day—blueberries, strawberries, milk,” says business and sales expert Grant Cardone. “But these same people are unable to ask for more money for their own product.”
Lose the guilt, and concentrate on offering a great product. The clients who value your service will stick with you, regardless of a periodic price hike or a recital fee that tops your competitor’s. Read on for two studio owners’ pricing examples and to learn how they’ve gained confidence in their rates and the need to occasionally raise them. Use this knowledge both as a gauge of your own rates and a motivation to be more transparent—and assertive—about your business’ prices.
Kathalene Taylor-White, co-owner with Vera Dantzler
Location: Memphis, TN
Years in business: 11
Studio type: Good mix of recreational and competition students; biggest age group is 2- to 6-year-olds
Since 2008, when DanzHouse opened, the owners have raised prices twice. “We sent an e-mail at the end of the year, saying that tuition prices would be increasing in the fall,” says Taylor-White. “We’d been way below everybody else. When parents asked, we told them to research what other studios in the community were charging.” Taylor-White isn’t worried about losing clientele. “Parents might complain about the price to the person sitting next to them in the lobby,” she says, “but in the end they’ll do it anyway.”
Private lessons: $55 per hour, though most of the time these clients are outsiders and not her students
Renting out studio space: $40 per hour; $200 for a two-hour birthday party
Registration fee: $60 per family
Recital fee: $80 per dancer
Tuition: As advertised on the DanzHouse website, one class a week is for 40 minutes is $55 per month; one-hour classes are $70; 75-minute classes are $85; ballet classes are held two days per week and have a monthly tuition of $145.
Burns Dance Studio
Corey Burns, director
Location: Aiken, SC
Years in business: 37
Studio type: The competition company makes up about 15 percent of the total enrollment. The studio’s target enrollment is preschool and elementary-age kids.
Burns is the son of studio owner Rhoda Burns and serves as the studio’s full-time director. The studio last raised its tuition (by $5 a month) in 2018. (Before that, there was a $5 raise in 2016 and a $2 raise in 2014.) To prepare parents, the studio increases the summer program’s tuition. When it comes time to enroll for a new dance year, Burns uses social media to drive attention to enrollment details on the studio’s website. “They can make their own deductions about a change in price,” he says. He’s not worried about potentially losing a handful of students: “There will always be some families who will go anywhere for a dollar cheaper,” Burns says, “but most understand the quality of the programs.”
Choreography fee: The studio negotiates an instructor’s self-named choreography fee and splits costs among participants. Burns has no qualms about it. “I get things together,” he says. “I find the rehearsal time, deal with parents, adjust payroll and get up and turn on the power on the day of the session.”
Private lessons: One-hour private sessions are $50 per hour; if you purchase in bulk, the rate goes down to $48 per hour (for 10 or more) or $46 per hour (20 or more). The teachers conducting the private lessons take 75 percent of the hourly fee.
Renting out studio space: $50 per hour, for birthday parties, garage sales and karate tournaments
Registration fee: $25 per family
Instructor fee: Burns pays the studio faculty from $20 to $50 per hour.
Rachel Rizzuto writes the Business column for Dance Teacher and is a second-year MFA student at the University of Illinois at Urbana-Champaign.
Last updated December 20, 2019