Tier Pricing Tuition and Add-On Packages

[dancingalone]

I vaguely remember having this discussion before, but since SteveBJJ mentioned he doesn't like this type of marketing in another thread, here goes.

How do you feel about the concept of variable pricing in martial arts instruction? Basically, it's the marketing realization that students have different levels of time and monetary commitment, and theoretically a school owner can match the student to an appropriate product that will keep student satisfaction and perceived value high while maximizing school revenue and space/per seat efficiency.

Many TKD schools in my area typically have a basic tier, a value added Leadership tier, and then a top-marketed (and priced) Master's Club. Say basic will run you $85 a month, Leadership is $110, and the Master's Club is $125. The basic class is structured so that only material up to green belt is taught, but on the other hand, there is where a good workout can usually be found with lots of hitting on pads and heavy bags. The Leadership class will include all material required for promotion up to black belt and it is marketed as good for children as there is a goodly amount of character promotion as well as anti-bullying training. The Master's Club includes weapons training, tournament preparation, and occasionally non-TKD material from other styles.

The idea is to let the student decide what they want to study along with a clear price point, much like letting a shopper decide between cars at a lot based on features and ticker price. Is this a win/win proposition for both the student and school owner or an inherently flawed proposition? Or like many other things, it depends on the implementation? Your thoughts?

 

[hungryninja]

I'm OK with variable pricing as long as both parties are clear as to what the different programs involved (especially if they're extracurricular). Some people want more, some people just want the core material. However, one thing I don't like is that if a basic tier only teaches material up to a certain rank (using the example above). If you reach that rank, then it means you can no longer progress unless you upgrade to the higher tiers (using the example above, then it would force a green belt to upgrade if the student wanted to advance higher in taekwondo). In essence, that would be better termed as a "beginner" tier/program. And I know that this may have been added because most students don't go beyond a certain level anyway. I believe additional tiers/upgrades should be reflective of extracurricular material. If I signed up for a basic tier, I would want to be taught all material required for all rank progression in Taekwondo as I progress in the art.

 

[miguksaram]

I agree that as long as it is laid out in the beginning then there shouldn't be any issues. We have 3 levels of programming. Basic, Black Belt Club and Leadership Program. We are bit different that our basic program is our core class of karate as we have always taught it. The BBC is the core program, but we also give you 1 free private lesson a month, two extra classes and the classes are ran a bit harder. Plus they get the perks of being able to participate in events that basic program members do not, such as the sword seminar I will be doing next week. The Leadership program gets 2 private lessons a week, an extra class, plus we teach them a bit more depth and culture in what they do.

 

[Steve]

My two cents.

If you advertise the base price to get people in the door and then "add on" after they're in, you're being dishonest.

"Free Introductory Lesson and a Free Uniform" (if you sign up for the Super Deluxe Leadership Black Belt Package).

I believe inherently that you know if you're being shady. It's a choice. If you're scamming parents, offering a basic price that's plastered on the glass window, but almost never sell that product, you're a scammer.

If the addon is actually a good deal, I'm all for it. For example, at my school, there's the basic tuition. Most people pay that. It's unlimited classes throughout the month. You have the option of paying, I think, $50 more each month. For that, you get a private lesson with the coach. He typically charges $100 for a private. So, if you want to get the privates in each month, that's a GREAT DEAL.

It's not a scam. He doesn't promote it. He doesn't try to add it on when kids or adults sign up. He doesn't bill is as something you "should" do if you really want to maximize your learning. He doesn't disqualify you from participating in other events.

Honestly guys, a lot of the business tactics used in MA are really sleazy, IMO. If done well, there's nothing wrong with it. But, IMO, it's seldom done well.

 

[msmitht]

So what you are saying is that a student can only train to green belt unless they pay more, right? I'm all for charging extra for more classes like comp training, demo class, weapons...etc. but not allowing them to advance without paying more is dishonest.

 

[dancingalone]

So what you are saying is that a student can only train to green belt unless they pay more, right? I'm all for charging extra for more classes like comp training, demo class, weapons...etc. but not allowing them to advance without paying more is dishonest.

Yep, that's the case. I don't know that dishonesty is the right term so long as it is up front. It's an obvious attempt to drive students to the higher packages however. I understand they get a few signups this way at the lower price and then if they like the training the students eventually upgrade.

 

[NSRTKD]

I disagree so strongly with this type of pricing. Flat rate, every month, every student, unlimited classes, is what I believe in. Extra charge for non-grading based classes such as fitness boot camps, weapons, etc, on a voluntary basis without affecting rank. Student instructors get a discount once they are leading classes consistently.Signing people up and only allowing them to advance past a certain level without an increase in price is, imho, vastly unfair to the students. It commits parents to paying more because they aren't going to crush their green belt by saying oh, I can't afford for you to advance... and once again puts social pressure on the less financiAlly well off kids because their wealthier friends can make black belt in half the time because they are paying more.I feel this system fosters unhealthy attitudes, unhealthy relationships between students and social classes, and unhealthy patterns for future behavior. I also think it is similar to the attitude that you should test as soon as you have mastered material without having a minimum amount of time put in. *shrug* just my two cents...

 

[dancingalone]

I disagree so strongly with this type of pricing. Flat rate, every month, every student, unlimited classes, is what I believe in. Extra charge for non-grading based classes such as fitness boot camps, weapons, etc, on a voluntary basis without affecting rank. Student instructors get a discount once they are leading classes consistently.Signing people up and only allowing them to advance past a certain level without an increase in price is, imho, vastly unfair to the students. It commits parents to paying more because they aren't going to crush their green belt by saying oh, I can't afford for you to advance... and once again puts social pressure on the less financiAlly well off kids because their wealthier friends can make black belt in half the time because they are paying more.I feel this system fosters unhealthy attitudes, unhealthy relationships between students and social classes, and unhealthy patterns for future behavior. I also think it is similar to the attitude that you should test as soon as you have mastered material without having a minimum amount of time put in. *shrug* just my two cents...

I generally agree with your opinion, but do you believe in charging a testing fee? If so, then belt promotion and money are definitely linked and you could very well have students that are ready to test (and want to) but the $30-$60 might be more than they can swing at the moment. To me if we don't let students promote without a testing fee, we're actually not too far away from a school owner who has structured his classes such that the lower fee payers don't get to learn more advanced material.

I've expressed before the opinion that I would rather eliminate testing fees altogether and build any needed revenue into the tuition instead.

 

[Steve]

I generally agree with your opinion, but do you believe in charging a testing fee? If so, then belt promotion and money are definitely linked and you could very well have students that are ready to test (and want to) but the $30-$60 might be more than they can swing at the moment. To me if we don't let students promote without a testing fee, we're actually not too far away from a school owner who has structured his classes such that the lower fee payers don't get to learn more advanced material.

I've expressed before the opinion that I would rather eliminate testing fees altogether and build any needed revenue into the tuition instead.

The keys for me with regards to testing fees are the answers to a couple of questions.

First, are the fees nominal? In other words, do they cover basically the cost of the testing process or is it a money maker for the school?

Second, are the testings compulsory and regular? In other words, are people required to test every 3 or 4 months, whether you or they feel ready or not?

Once again, I believe entirely that you know it if you're a used car salesman. You just know. Everything you do at your school has a dollar sign attached to it, from your "pro shop" where all of your students are required to purchase their gear, to the mandatory "seminars," to the compulsory testing, to the leadership classes, the weapons classes, the competition classes, the "I'll charge you for the honor of teaching my lower belt classes"... classes. Come on, people. You know it if you're doing it.

If your fee schedule is more complicated than the bank's. If you can compare your operations philosophy to a car lot's. If, like shareware, you limit your "regular" students to only the first 2 levels before you jack the price up. If bait and switch comes to mind. If you spend a significant portion of your day talking or reading about other ways to compel people to spend more money. If you're more interested in recruiting new students than keeping the ones you have. Chances are, if any of these apply, you're more salesman than martial artist. Any one of these, regardless of the quality of your instruction, would give me serious pause before wanting to do business with you.

Edit: To add, these are just off the top of my head. I'm sure I can come up with an entire list of shifty business practices I've seen or heard about from "martial arts" schools. And, it seems that some styles endorse or encourage these practices more than others.

 

[dancingalone]

Edit: To add, these are just off the top of my head. I'm sure I can come up with an entire list of shifty business practices I've seen or heard about from "martial arts" schools. And, it seems that some styles endorse or encourage these practices more than others.

It sounds like you object to the idea of the McDojo is what I get out of your posts, Steve, and I share many of the same feelings. I don't know that I would bring style into the discussion though. Surely we could take any martial art and structure it so that it becomes more of a revenue generating business than a school that teaches martial arts. We could take a grappling style for example and simplify its techniques so that children might be able to learn tepid versions of them. You come up with a hundred or so techniques and spread them across 10 color belts along with their corresponding basics and voila we've got a McDojo grappling school once we add in our $60 belt exams and pro shop.

Now why don't we have McDojo BJJ schools (yet)? My thought is that a big part of that is people just don't think of grappling when they want to enroll their kiddos into a martial arts program. It's karotty all the way which means they generally pick the local TKD school which mets the expectations of seeing the kid kick and punch and yelling 'hi-yah' in their cute uniform.

We do have McDojo kickboxing/MMA chains and even Krav Maga is starting to see some watered down training centers, so the danger may yet come.

 

[harlan]

If I thought someone was comparing me to a car purchase I'd show them the door. 'FEATURES? I'll show you some 'features'....'

'Niche partitioning' makes it possible for a variety of options in schools, quality and pricing. As long as it's up front, and people like it, go for it. I don't believe that price imbues value to education, but it does tend to ruin it for others that offer everything they have at a marginal cost.

I vaguely remember having this discussion before, but since SteveBJJ mentioned he doesn't like this type of marketing in another thread, here goes.

How do you feel about the concept of variable pricing in martial arts instruction? Basically, it's the marketing realization that students have different levels of time and monetary commitment, and theoretically a school owner can match the student to an appropriate product that will keep student satisfaction and perceived value high while maximizing school revenue and space/per seat efficiency.

Many TKD schools in my area typically have a basic tier, a value added Leadership tier, and then a top-marketed (and priced) Master's Club. Say basic will run you $85 a month, Leadership is $110, and the Master's Club is $125. The basic class is structured so that only material up to green belt is taught, but on the other hand, there is where a good workout can usually be found with lots of hitting on pads and heavy bags. The Leadership class will include all material required for promotion up to black belt and it is marketed as good for children as there is a goodly amount of character promotion as well as anti-bullying training. The Master's Club includes weapons training, tournament preparation, and occasionally non-TKD material from other styles.

The idea is to let the student decide what they want to study along with a clear price point, much like letting a shopper decide between cars at a lot based on features and ticker price. Is this a win/win proposition for both the student and school owner or an inherently flawed proposition? Or like many other things, it depends on the implementation? Your thoughts?

 

[NSRTKD]

I generally agree with your opinion, but do you believe in charging a testing fee? If so, then belt promotion and money are definitely linked and you could very well have students that are ready to test (and want to) but the $30-$60 might be more than they can swing at the moment. To me if we don't let students promote without a testing fee, we're actually not too far away from a school owner who has structured his classes such that the lower fee payers don't get to learn more advanced material.I've expressed before the opinion that I would rather eliminate testing fees altogether and build any needed revenue into the tuition instead.

I do believe in testing fees as long as they are not required at certain time increments, and as long as the instructor is willing to be flexible on the timing of such payments - as in, making arrangements to pay over time. Though I don't object to the idea of building it into the tuition, that might make it unfair to students who only care to year once a year.

 

[dancingalone]

I do believe in testing fees as long as they are not required at certain time increments, and as long as the instructor is willing to be flexible on the timing of such payments - as in, making arrangements to pay over time. Though I don't object to the idea of building it into the tuition, that might make it unfair to students who only care to year once a year.

Then we're really talking about doing things case by case, rather than following the letter of the law and the same could be applied to the example above with nominally not teaching > green material to people only paying the lower fee. If we connect revenue to promotion, the linkage is the same regardless whether it comes from belt exams or from a tiered tuition plan.

Honestly, we could even take that to the extreme. Would we let Johnny train with us if he couldn't pay us money? How about Johnny, Sally, Peter, AND George? If we ONLY teach people who will pay us money, then we're ultimately in the same boat as the profit takers we seem to object to. It's a curious line of conscience to have (not talking about you in particular by the way) - I don't see where labels like unfair or dishonest come into play, so long as all facts are known to both sides ahead of time.

 

[NSRTKD]

You are misunderstanding what I said. I'm not talking about reducing testing fees for different students, but rather allowing them to make payments leading up to the testing, and keeping the exact dollar amount for each student equal. Just being flexible, and being understanding about timing and having good communication with your students about their financial capabilities. Offer testing at whatever increment, but don't require everyone to test at each increment, and be compassionate and understanding when students are having difficulties. I do not think that richer students should be able to buy their black belts quicker than poorer students, rather offer testing and arrangements to pay for testing at regular intervals with plenty of notice, communication and flexibility with the family. If the student is likewise, not going to be flexible and says "no I cannot pay for testing whatsoever and I will not fund raise or work off the difference that I owe" well they don't particularly deserve flexibility and tooooo bad for them if they cannot rank up. Communication, equal opportunity and flexibility with all students. I don't think many masters would object to their wealthier students paying for testing in advance, either, so long as they understand that ranking up is not guaranteed.

 

[NSRTKD]

Ps... I realize my typing is hard to read sometimes - I honestly put in proper paragraphing and spacing, but this is a phone browser and it seems to skip that when I send a post. Sorry for that.

 

[Dirty Dog]

I'm not a fan of the idea that training progress is limited by budget. If you have a fee schedule that says "base fee - x classes/week, higher fee - x + extra/week, highest fee - x + extra + backrubs/weeks" then fine. They're getting extra training for their extra fees. However, I truely feel that a person who can only afford the base fee, but who works hard on their own time, should still be able to progress (although it would probably be at a slower pace) to the limit of their ability.

As far as testing fees, I think they're justifiable, assuming they're not exorbitant or mandatory. In our program, test fees are pretty minimal, and you're never required to test. Nor are you invited to test if you're not expected to pass. We have a lady who is quite content to remain a white belt. She has three kids in the program who are advancing (two working hard, one coasting along) and she just trains for the exercise. I'm sure that the cummulative fees also play a part. (I have myself, my wife, and two children in the program. Last October, we all tested together. That cost a bit...) As Sabumnim says, if you never wash your belt, it'll eventually turn black without testing...

We also have a scholarship program for those in need, although this is something that's probably not practical in a commercial school (we're a YMCA-based program).

 

[dancingalone]

You are misunderstanding what I said. I'm not talking about reducing testing fees for different students, but rather allowing them to make payments leading up to the testing, and keeping the exact dollar amount for each student equal. Just being flexible, and being understanding about timing and having good communication with your students about their financial capabilities. Offer testing at whatever increment, but don't require everyone to test at each increment, and be compassionate and understanding when students are having difficulties. I do not think that richer students should be able to buy their black belts quicker than poorer students, rather offer testing and arrangements to pay for testing at regular intervals with plenty of notice, communication and flexibility with the family. If the student is likewise, not going to be flexible and says "no I cannot pay for testing whatsoever and I will not fund raise or work off the difference that I owe" well they don't particularly deserve flexibility and tooooo bad for them if they cannot rank up. Communication, equal opportunity and flexibility with all students. I don't think many masters would object to their wealthier students paying for testing in advance, either, so long as they understand that ranking up is not guaranteed.

No, I understood what you were saying. It's still a case-by-case approach which could likewise be applied to any tuition scheme we come up with, is it not? We can always cut individual students some slack and work with them if they need extra time.

I'm coming from a purist approach. If we accept money for teaching, really what difference is there between any arrangement other than agreeing to what services are provided at what price? I understand a flat fee, all-you-can-eat structure can seem more 'fair' for students, but I am challenging that there's anything unethical if a school owner elects to price his services differently, so long as he is upfront about his fees. This coming from a guy that teaches a free TKD class at his church...

 

[Steve]

It sounds like you object to the idea of the McDojo is what I get out of your posts, Steve, and I share many of the same feelings. I don't know that I would bring style into the discussion though. Surely we could take any martial art and structure it so that it becomes more of a revenue generating business than a school that teaches martial arts. We could take a grappling style for example and simplify its techniques so that children might be able to learn tepid versions of them. You come up with a hundred or so techniques and spread them across 10 color belts along with their corresponding basics and voila we've got a McDojo grappling school once we add in our $60 belt exams and pro shop.

Now why don't we have McDojo BJJ schools (yet)? My thought is that a big part of that is people just don't think of grappling when they want to enroll their kiddos into a martial arts program. It's karotty all the way which means they generally pick the local TKD school which mets the expectations of seeing the kid kick and punch and yelling 'hi-yah' in their cute uniform.

We do have McDojo kickboxing/MMA chains and even Krav Maga is starting to see some watered down training centers, so the danger may yet come.

There are many BJJ schools that teach kids and kids love it. Grappling, particularly for boys, is natural and fun. They love it. And it is absolutely run differently for kids than for adults. The expectations are different. Classes are run differently and the emphasis is different, focusing more on fun and character building than on technique (although it's certainly there.) I get all of this, and I have zero issues with it. I expect from youth martial arts programs exactly what I would expect from a youth football league, a youth music program or even the chess club.

Just to be very, very clear. I'm not calling out the inherent value of any martial arts style. I don't know enough about the technical aspects of TKD to do so, and I wouldn't do that anyway. I'm calling out the business practices. And some styles encourage them more than others. They are more prevalent, to the point of becoming the rule and not the exception, within some styles. I feel comfortable doing this because I have seen it. I see it every day in my community, I read about it in the papers, and I hear about it from you guys, people in the business of running TKD schools.

I also want to be very clear that I'm not talking about making a buck. Of course, a business should be successful. What I'm suggesting is simply this. You know when you've crossed the line. It's a decision. A business decision. A conscious decision where you effectively say to yourself, "Today I am going to sell out and fleece the parents in my community."

 

[Steve]

If I thought someone was comparing me to a car purchase I'd show them the door. 'FEATURES? I'll show you some 'features'....'

'Niche partitioning' makes it possible for a variety of options in schools, quality and pricing. As long as it's up front, and people like it, go for it. I don't believe that price imbues value to education, but it does tend to ruin it for others that offer everything they have at a marginal cost.

Would you like the standard courses or the deluxe? Your kid? He looks well coordinated... smart. I see him getting bored in the standard classes. If you sign up for the deluxe package, which includes a free uniform, we'll push him harder. He'll have access to additional classes throughout the week and he becomes eligible (for an additional fee) to participate in the weapons seminars.

Come on, guys.

 

[Steve]

Then we're really talking about doing things case by case, rather than following the letter of the law and the same could be applied to the example above with nominally not teaching > green material to people only paying the lower fee. If we connect revenue to promotion, the linkage is the same regardless whether it comes from belt exams or from a tiered tuition plan.

Honestly, we could even take that to the extreme. Would we let Johnny train with us if he couldn't pay us money? How about Johnny, Sally, Peter, AND George? If we ONLY teach people who will pay us money, then we're ultimately in the same boat as the profit takers we seem to object to. It's a curious line of conscience to have (not talking about you in particular by the way) - I don't see where labels like unfair or dishonest come into play, so long as all facts are known to both sides ahead of time.

I'm not sure I follow you. I don't believe anyone is talking about teaching anyone and everyone. You deserve to be compensated for your time and expertise. Once again, I come back to you know it when you've crossed the line. It may not be a clear distinction outside of your brain, but when squeezing more dollars from parents becomes more important than delivering a solid product at a fair price, you've crossed over to the dark side.

This doesn't mean you have to open a charity, taking in all comers.