Ok, so let's say you have rates at $45 / hour. Your studio get's full. You teach 25 hours and have 35 - 40 students. You now have a huge waiting list of 30 other people and you are advertising in all your local newspapers / websites / google adwords / you get word of mouth - You are basically getting calls every day now.

You run some numbers and you think you can get $60 / hour - but the catch is you will most likely alienate many of your current students. But the waiting list and the new calls / emails every day or so will easily replace the ones that leave if you raise the rates.

What do you do? Raise the rates and risk losing a good portion of your current students while getting new ones that will pay that much - raise them incrementally over a couple years - Or do you keep the rates the same for the current students , weed out some of the ones that are a total hassle and replace them with new students that pay the new rates?

Let's take it a step further. What if you are sure you can get $70/ hour while still having a full studio?

Is this your moral dilemma or a fictional case?

I'm pretty certain that it will become my moral dilemma - So yes, I would appreciate sincere input.

What would be the reason why you might consider raising your rates from $45ph to $70ph?

Because it's more in line with what other teachers in your area charge?
Because you don't want to undercut other teachers' fees?
Because you consider your qualifications merit it?
Or just because you can?

The impression I get from your post is that it's the latter reason. That may not be accurate, of course, but it would be interesting to hear your reasons.

(btw, $70ph is pretty standard where I am, but I don't know how it is where you are)

As a piano technician with the same dilema, I have no problem quoting my new price to new clients. My old clients are at the old rate.
I know that clients talk to each other and I have an old client who always asks' is that enough?, thrusting £20 notes into my hands knowing her friends are paying more (friends she recommended to me). I have no problem with this provided everybody knows the situation. Call it a loyalty discount, justify it however you like.

I charge according to what I have to do so I have another rationale to fall back on.

Some of your students are hard work. While the common perception is that a half hour lesson is a half hour lesson, just as a tuning is a tuning. You and I know that some half hours seem longer than others.

Do you keep the old price for students you want to keep? A resounding yes!

Do you charge the new rate for students that are hard work? Therein is the heart of the dilema. But what an incentive for parents to make their kids practice, a $20 discount per lesson!!!

Model your studio on larger institutions and offer bursaries for the better students who may not be able to afford you., for example.

Just a few thoughts.

One story. I went to visit a wind instrument repairer after 20 years. He welcomed me with open arms at the door of his huge music emporium. He told me that he owed all his success to me.

You said, he explained, you said, 20 years ago, if you get too much work, double your prices... You'll lose half your customers but you'll make the same money (I genuinely didn't remember saying that). 'did I say that!? Says I. 'you sure did' sez he. 'I never had the nerve to do it myself' sez me.

Well, I'm doing it now.

Are there students you really want to keep? It would be a shame to lose the good ones. I agree having a waiting list that long means you aren't charging enough. I think ti is better if you can justify raising your fees - like you finished a degree, or you haven't raised them in x years. Those that can't afford it will tell you, and then you can decide at that point if you want to "grandfather" them in or not. All new students are at the new rate.

I agree with this and if it's true, I find it a little disturbing. I currently am at the top of what local teachers charge here and have a short waiting list, but I certainly couldn't justify at $15/hr increase.

With a large studio, it gets too confusing to charge different rates. If you really want to raise your rates, do it, but do it incrementally.

The comparison with the piano technician's rate is a faulty one. He doesn't see the same client week to week or even month to month. He can set a new rate and it doesn't have that much of an effect on the customer.

I raised my rates substantially one year to new students, and left my old ones at a lower rate. They knew full well that I had done this and allowed them an extra year at the lower rate. This allowed a the older students to continue with me, knowing their rate would increase the next year and give them plenty of time to find a new teacher if need be.

What if your studio is full, and you raise your rates for only new students.... who will be paying the new rate? It could be another year before you see any income increase without over-scheduling yourself. I can see Dustin's dilemma. I am in a similar situation and have been hemming and hawing for a few months now... ??

Raise the rates.
If you offer a discount to kids you like, that seems a bit unfair to me.
If you can sell your car for $3000 why would you sell it for $2000.
You don't need to justify your increase. Just do it. As long as you will come out the same or better in the end then do it.
Use the extra time and/or money that you have and donate to needy children. There are plenty of those that could use your time talents and extra income.
No need to undercut yourself.

Go with incremental raises over time for everyone. Go too high too fast, and you'll join Netflix in losing your current clIents.

Why not raise the price incrementally? Go to $50 per hour for 2012, then $55 for 2013, and so on?

I like the idea of raising the rates for new students and grandfathering the current students in with a smaller rate increase. This way you will still increase your income, but your current students won't be taken off guard, and in fact will be grateful to you when you explain, e.g., "for new students who begin with me, I'll be charging $xxx, but since you've been a loyal student, I won't impose such a big increase at once and instead will raise you only to $xxx."

I can see why one would raise rates for some but not all. Some students take much more energy to teach. You could call it a "loyalty discount" or "scholarship" for students that you really don't want to lose or think may not be able to handle the rate increase.

Uh, have you considered how the students will take that?

Especially the ones who find out they are getting charged more because they are "hard to teach" or maybe "losers?" (harsh word, but SOME will take it that way)

Not sure I'd want to go there.

Look, you give 100% of your best effort to every student for that hour, seems like you'd charge them all the same.

working in the food industry, I learned a lot about how restaurants hijack the customers demands and needs and exorbitantly overprice, let's say ... softdrinks. A softdrink at an average restaurant will charge about $2 - it takes about 10cents for them to make. But nobody can eat with a drink and most people don't like the taste of water with their meal.

So what I'm getting to is that I don't think it really matters for a business to charge 'what they think they are worth' - businesses are about profit - If a family doesn't think I'm worth what I charge, they are free to look elsewhere.

That's just my theory, though.

Just because your name is in green, I feel like I should listen to you.

Disturbing? In what way?

I live close to Baltimore but the only reason I had lower rates to begin with is because I was forced to live in the middle of nowhere - people have to drive a big distance usually to get to my studio - lots of backroads, etc. Plus I wanted to get a full studio quicker so I could move into a new location closer to people - then my plan was to jack up my rate to where I thin k they should be.

I don't see a moral issue in this question.

It's more of a business issue.
As a consumer (of anything), I would gasp at anything greater than 10% increase in price.
I'm not saying that doesn't happen in various services or products , just saying it seems (to me) too much.
A hike such as you mentioned above (from $45 to $70) would probably make me at least look around very seriously for another teacher- unless I thought you were God's gift to piano students....
In which case I would stay, and whine to my husband....

lol, I am not really considering raising it to $70 I don't think, probably to $60 though.

If you want to find out how families and students view me, you can view my testimonial page and check out the 5 different testimonials.

Gods Gift To Piano Students Or ... Something Else?

You don't have a question there, so of course there wouldn't be any moral issue.

Business and Moral Philosophy are somewhat intertwined - Any businessman who says otherwise is probably a pretty shitty businessman.

Running a business is not STRICTLY Demand / Profit / Mathematics. It is Customer Service, How should an ethical business be ran, Is it appropriate to take advantage of your Clients, Is It moral to suck in a full studio with low rates only to raise them later, etc ...

I do see a business question, a question of diplomacy, a question of how (diplomatically and in a businesslike way) to keep the students who are learning and send a message to those who aren't...

But morality? There's no moral issue. Sorry.

I guess that answers my question.

I seem to have a more general view of morality encompasses then. I feel a bit strange about jacking up the rates to a significantly higher level for my current students - a feeling that is not strictly about whether or not I'll keep the students, but how will the parents feel towards me ... or if it's an ethical decision.

If that isn't morality, then I don't know what your definition of morality would be.

I always believe everything I read on the Internet. Everything!

lol ...

I can assure you though, I didn't offer them free lessons for good testimonials or anything!

I mean, you'd have to think I wrote the testimonials myself - If you wanted to take the time and hire a linguist to deconstruct the syntax of the sentences to see if they correlate to my own way of writing, let me know what you find as a result.

I still think we piano teachers tend to err on the side of being overly altruistic, even if the result is that our own children can't participate in activities that their friends can afford, or will have trouble affording college (that's everyone now, though). Maybe I'm just being pessimistic tonight.

I think we can ameliorate any personal moral concerns we may harbor by participating as a volunteer with non-profit music schools, MusicLink, doing pro bono work, etc....

Can you imagine any other professional group having this discussion about rates? I'm trying to picture it and just can't see it. What's the matter with us? Have we been charging such low rates as a profession for so long, that we just can't change?

I'm saying this as someone who is a complete wimp about raising fees. I should probably stop now and go to bed.

hah, instead of going to bed, maybe you should raise your fees instead!

Really though, if you run the numbers ... 25 hours of teaching X $60 / hour comes out to be just a hair below 80k a year. Plug in performance money / side job at a church or two (and perhaps not paying your full share of taxes, not judging anyone who doesn't) , that really is in the top 25% of earners in the USA at least ... top 10% if you have two really nice church jobs (organists get paid pretty well I hear.)

How much people make in the US

Dustin, my tech told me I need to be more in the $60/hour range, too. But it still makes me nervous, mostly because my husband and I are both self-employed, and he is a contractor at that, so unless the phone rings, he isn't working. *I* have the stable, reliable income. We are rather odd, I suspect.

I have a family who take lessons on another instrument as well, and that teacher just raises rates on the spot, as in "oh, by the way, here's the new rate" and points to a sheet of paper on the wall. !! I can't imagine feeling secure enough to do that. Maybe after I finally finish this NCTM I will have some courage. Sheesh.