- Raising rates.
These two words strike fear in the hearts
of the average music school owner.
How do you do it?
How do you do it without upsetting your families?
I came across a way to do it in my studio,
that was nurturing,
that didn't give me a heart attack,
and that parents found to be quite helpful.
And in this short video,
I'm gonna tell you the story
about what happened several years ago,
and how I discovered this simple method.
At a certain point I realized
that I needed to raise rates in my studio.
The typical way that this is done,
is you send out a letter, or you send out an email,
and you inform everyone that rates are going up,
and you sit back and you wait
for all the hate mail to come in.
Of course, everyone kind of clenches
and waits for the gut punch,
as families that you love,
children that you have worked with for years,
say, "Oh, we're going somewhere else,"
"We can't believe you're doing this."
This is just what I assumed that I would do.
And, like I usually do,
I Googled the problem.
I Googled, not necessarily for piano studios,
but just, I was looking for general business advice.
I just went and Googled the phrase,
"How do you raise prices?"
Google gave back millions of results.
I read a number of articles,
and one particular idea really stuck out for me,
and it stuck out for me, because it was advice
that was geared towards small businesses
that were in the service industry.
It basically said that,
the truth is, is that in most service businesses,
customers don't know each other.
By and large, customers don't really know
what you're charging other customers.
Then this is what really got me,
it said, for a lot of flat fee businesses,
they actually have real trepidation in raising their prices,
because they personally, the business owner,
is personally connected to the price.
They're really anchored to that price.
They can't get that price out of their own head.
In businesses where it's contract-based,
where no two customers pay the same price,
these businesses often have
a simpler time of raising their rates,
because they never charge two customers
the same thing, anyway.
That's when it hit me.
I knew psychologically
that I was reticent to raise rates,
because I was personally attached,
I was psychologically attached to the rate that I was in,
and this is the idea that I came up with.
I said to myself,
"Who said that I have to raise rates"
"On the current people that I'm seeing?"
"Let me test this new price"
"With new families that are coming in."
This idea came to me,
weeks before what I call my annual fall rush.
At that same time, it was actually
that same fall that I did this,
I just decided, I'm gonna just charge,
I'm just going to quote an outrageous price,
to the next family that comes in,
This was right before I had a whole slew
of introductory lessons scheduled.
The very first family that came in,
I said to myself, "I am going to charge,"
"I'm just gonna suggest an outrageous price to this person,"
"If they end up balking, then what I will do,"
"Is either let them go away, saying they're not gonna do it,"
"Or email them back a day later,"
"And offer a different price, because who cares?"
"Who cares if I do it with just one person?"
"It doesn't mean that I have to do it with every person."
So, that's exactly what I did.
They came in, I went through the trial lesson with the kid,
the kid was great, great student,
I was really looking forward to doing it,
and I got to the point where,
I began to talk with parents about policies.
It got to the point where they asked,
"How much does it cost?"
Almost as if I were a new teacher,
because this happened after I'd been teaching many years.
But almost as if I were a new teacher,
I felt my throat clenching up,
I felt my stomach starting to go into knots.
I thought to myself,
"I can't believe this is happening, like I'm,"
"I'm not the guy that this happens to."
I got to the point where I was gonna say the price,
I said the price,
and of course they didn't come across the room
and punch me in the face.
They didn't storm out in a huff.
You know what the dad did?
He looked at me and said, "That sounds good."
I got through that trial lesson.
Of course they signed up, they began the next week.
As I mentioned earlier,
I had multiple families coming in every single week,
during this fall rush period.
By the end of the month,
I think I had signed up 17 new students.
Not one single parent had ever balked at that price,
and they also didn't know that my current students
were at a price that was 21% lower,
than the one I had quoted to them.
Based on all the marketing that I had done,
and that year I had also really upgraded my marketing,
I had really made it a lot more persuasive.
I had gotten a lot tighter in my message.
Based on all that marketing,
there were even a few parents that said, "Oh great,
I was afraid it was going to be more,"
and I thought, "Huh, maybe I should be testing even higher."
Here's what happened, and here's how I ended up
changing rates for the rest of my studio.
I made a personal commitment, I thought to myself,
I will wait a while
before I raise rates on current students.
But by the end of that school year,
I had converted over 33% of my studio to the higher rate,
and at the beginning of the summer,
I sent out an email to everyone,
saying that when fall happened,
that we were going to a new rate.
I sent this to only
the students that were currently at the old rate.
Not one family quit.
Not one family quit, of all the old students.
There were a few people who said, "Wait a minute,"
"So everything is gonna be the same,"
"You're just charging us,"
"21% more?"
One parent actually wrote that.
That's how I know it was 21%,
because they calculated it.
I think they were a little peeved by it, I didn't care.
And, I said, "Yeah, absolutely."
And this is probably one thing I should say that
when I sent out that email informing of the rate change,
I also let people know,
that everyone else in the studio that had come in,
was paying this higher rate,
and that I had held current studios,
current studio families at this old rate
for an entire year.
I can't remember the exact verbiage,
but it was something to the effect of,
like as a show of support, or thank you,
or something like that,
I did it in a strong way,
I didn't do it in a weak, groveling way.
But, I simply delivered the news, that rates were going up,
and everyone went along with it.
If you are concerned about raising rates in your studio,
whether your studio has five kids, 50 kids, or 500 kids,
just all the work that I've done with
different studio owners, of different sizes,
this is a fear that
is in some ways, even more prevalent
for people who have much larger studios,
200 kids, 300 kids,
because they have rent to make,
and they have all these staff costs,
and the stakes are even higher,
because they have more overhead.
They're almost more afraid
that they're going to lose students based on a rate change.
I found that doing this soft rollout,
only with new families, has never once
come back and bitten me in the rear end, so to speak,
that families just kind of go along with it.
If you combine this with a great program,
with strong programming, with great content,
great education,
and persuasive marketing,
that really does a great job of communicating
the value of what your studio offers,
you add all these things together,
you will get through this process quite easily.
If you have questions,
of course there are lots of resources on my blog,
you can check in the corresponding note
that comes along with this video.
I will attach a link to another resource
that might help you, in terms of your marketing,
in terms of your creating good programming
in your music studio or music school,
and I think that you will get through a rate change
just fine if you have these three pillars
supporting your rate change.
Thanks for watching, I'll see you in the next video.
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