How can you stay competitive in a market where most teachers are charging less than you are? Should you lower your rates? How will you survive if you charge “too much?”
Be the Cream, Not the Milk
I recently posted something on Facebook about the prices some people charge for lessons and one of my friends responded with a question that I would like to answer here, on my blog, instead of directly on Facebook:
I’ve been teaching in C*** ISD for about six years. I raise my rates every couple of years, but I’ve found it difficult to find an area where I’m remaining competitive while not undercutting the other teachers in the area. I’ve been told on many occasions that my services are worth more than I’m charging, but I don’t want to scare away the clientele. Any thoughts? Great post, Eddie! Thanks!
Communicating Value – How to Remain Competitive
I never understood the association between low prices and the word “competitive.” People often say that a lower price is a “competitive” price, but does it really work that way? I believe that the people who are forced to lower their prices do so because they are NOT competitive. If they were competitive, they wouldn’t have needed to lower their prices.
Of course, the problem for them is that there are other people in the market who are charging a lower rate than they are. Rather than think of those rates as being more competitive, why not acknowledge to yourself that this is your opportunity to stand out above the crowd? When your competition lowers their rates, that is a sign that they have lost confidence in their products. Your job, at that point, is to let people know that you are worth the price you charge.
I call this “communicating value.”
Not Perceived Value, But Communicated Value
At this point I would like to stress that I am not suggesting that you should create a false image of your product in an effort to lure new students. Not at all.
What I am suggesting is that all of us start off in the red when it comes to communicating our worth or the value of our products to potential students. No one knows the value of our product (music lessons) until we communicate that value to them.
Instead of lying to our future customers, instead of trying to con them into paying a higher price, we need to learn how to better communicate the true value of our lessons so they know what they are getting for the money they pay.
I do not believe in making a sale at all costs. I believe in honesty and integrity in business. It is wrong and unethical to “rip people off” with high prices if you have nothing to offer. So this is not about pulling the wool over people’s eyes. This is about recognizing the value of your product and then communicating that value to your potential customers.
First Step – Stress What Makes You Different
One of the mistakes people make about music is that they assume all things musical can be measured on a linear scale. We have a tendency to thinking in terms of better or worse. But it really doesn’t work that way.There is no need to put others down in an effort to make yourself look better. No, you don’t need to be better. You need to be different.
Different strokes for different folks? Right? Not everyone wants the same thing from a teacher. In fact, it has been my experience that many potential students are so specific in what they are looking for in a teacher that they are willing to pay a more to have that need met.
The problem is, if you don’t tell them what makes you different, the chances of them ever finding you are slim to none. So it’s important to emphasize those things that set you apart from the other teachers on your instrument, in your area.
Second Step – Do Best at What You Do Best
It’s not good enough to only be different. You must deliver high quality for whatever it is you do. If what makes you different is that you like to have fun with the students (that’s not my thing, but I know a lot of teachers who enjoy having fun with their students), then do it right. Give them the highest quality fun that you have to offer. No slip shot, half committed attempts.
Whatever it is that you do differently, whatever it is that you are communicating to your potential students that makes your lessons different, do that thing to the best of your ability.
Third Step – Blow Your Horn
When you charge more, you can expect to turn away far more students than what you would when you were undercutting everyone else. That means you must reach more people in your advertising. The number of people who want specifically what you have to offer will be a fraction of those who contact you for lessons. The farther your advertising reaches, the more students you will attract to your studio.
When you advertise, once again, be certain to emphasize those qualities that make you different. I can’t stress this enough times.
Fourth Step – Offer Options
The worst thing you can do is offer one “product” for one price. Not everyone can justify paying $150 per lesson every week. It’s important to offer the students a variety of pricing options so they can match their costs with their needs.
We have found that people want varying degrees of commitment and perks. We have lesson options for people who have no desire to make a weekly commitment and they pay a different price from those who do want weekly lessons.
The tricky part here is in creating a pricing structure that works for you in a practical sense, paying you what you deserve for the work and time you invest, while at the same time creating value for the students. We have eight different pricing variations in two three different categories. Consider how much this can boost your confidence in your lessons when the student gets to choose his or her pricing plan. If the students only have one option, then they are more likely to feel as if your lessons are not worth it. And really, they would be right.
One other option that sort of falls outside of the other pricing options is scholarships. On a fundamental level, I am opposed to arbitrary scholarships for trumpet lessons. I have been disappointed so many times by students who I gave sort of informal scholarships to. They have all ended up with the worst attitudes and made the least progress.
What we are doing differently now is making the scholarships more formal with qualifications that we take very seriously. If the student falls short of those requirements, they loose the scholarship and their rates revert to the current full price. This is a new thing we are trying out but we are very excited about it.
I believe that most teachers who charge so little are actually worth more than they charge. But the problem with not communicating that value to the customers is that you end up with a teacher student mismatch in the end. Your lessons may be valuable to some students and not others. If you only arbitrarily raise your rates without communicating value, then you will most likely end up with a dissatisfied student.