Several teachers have emailed me since my workshop sessions: “Best Business Practices of 2012″ (see workshop topics) this summer to ask what to do about tuition when a student starts mid-term. These teachers have begun using the more efficient yearly tuition plan in which the yearly tuition is divided into equal monthly payments. They were concerned new students would either be paying too much or not enough if they start mid-year. Here’s one way you can handle this situation:
1. Determine how many lessons they have missed thus far. This means, how many lessons/weeks have you been available to teach? For example, if my teaching year is divided into 38 weeks, my term starts in September, and the student will begin in November, that student may have missed a total of 7 lessons.
2. Determine your “per lesson” price and multiply this by the number of missed lessons. Now, I would never talk about a per lesson price with any piano family because this encourages them to forget the scores of hours that you spend outside the lesson for their child. But, when it comes down to it, there really is a per lesson price that is useful in this context. For our example, let’s say that it is $35 and they have missed 7 lessons, bringing the total to $245 of tuition that they do not owe for lessons they have not received.
3. Calculate how much tuition they haven’t paid in the months that they have not been your student (in our example, it would be 2 months: September and October). E.g. 2 x $111 = $222 Remember that this formula depends on the fact that you are charging equal amounts of tuition every month (see “No More Charging By the Week”.)
5. Compare the price that you calculated in step 2 (the price of the missed lessons) to the price of what they haven’t paid (step 3). In our case, the student shouldn’t have to pay $245 of the yearly tuition (according to step 2), but by starting in November, they already haven’t paid $222 of that price, so by subtracting these 2 numbers, we can see that you will need to deduct an extra $23 for the month of November. That will make their payment for all the other months equal to everyone else’s payment who is getting those lessons for that price.
[NOTE: If the amount of tuition they shouldn't pay is greater than the amount of tuition they have missed, then you will subtract the amount from their starting month. If the amount of tuition they shouldn't pay is less than the amount of tuition they have missed, then you will add the amount to their starting month.]
6. Notify the parent that you have pro-rated the lessons and that given the number of weeks of teaching that are left, they will owe $88 in November and then an even $111 in all the following months.
Remember to make it easy for the paying party! Don’t try to explain how you came to this number unless they ask. They just want to know what they owe you, and if it seems unreasonable, they will certainly ask why. Trying to explain how you pro-rate tuition can be confusing for no good reason.
I hope this helps those of you who have wondered about this! There are other good ways of handling this situation. Do you have an alternative way that you use?