Another thing that might help is to have different "contract options." The longer the sign up, the better the cost advantage is in the long run.
Here is an example of a payment structure that allows different options:
#1 Pay per class, upfront each class, $15 per class.
#2 Pay per month, with 1st and last month upfront, $100 per month.
#3 Pay for 3 months, $255. That equals out to be $85 per month.
#4 Pay for 6 months, $450. Equals $75 per month.
#5 Pay for year, $720. Equals $60 per month.
#6 Pay to black belt. 3 year time limit, unlimited lessons until black belt, or three year time period. $1,800 (not including testing fees). This equals out to be $50 per month if they use the full three years.
This is just one example, but if you are doing contracts you can make it advantagious to get into longer contracts. And...who cares if they don't? This just puts more $$ in your pocket. If a student only wants to pay per class, they will have spent $90 by their 6th class. If they only want to pay per month, then it costs them 1,200 a year if you don't include "last months rent".
Customers like options. They don't like to feel like they are being conned or forced into a "contract." By giving them differen't options, they feel better because they are choosing how they want to pay and for how long, rather then you "backing them into a corner" with contract requirements. Not everyone is the same, so differen't payment contracts will suit different people. And, it will be cost effective for you to do it this way.
I would only give a student a week of a trial run before they have to choose how they want to pay, especially if they have the option to pay per class.
For fun...here is a hypothetical. Here is a student/payment outline for a school for 1 year.
My proposed fee structure:
A. 15 students pay for 3 classes and drop out - total: $675
B. 4 students show up for 4 classes per month, and pay per class - total: $2,880
C. 30 students pay per month, but drop out in 6 months: $18,000
D. 20 Students pay per month, and stick with it for the year: 24,000
E. 10 students pay for 3 months, and drop out: $2,550
F. 10 students pay for 3 months 3 different times, and drop out: $7650
G. 10 students pay for 6 months, and drop out: $4,500
H. 15 students pay 6 mo. twice (don't drop out): $13,500
I. 20 students pay for the year: $14,400
J. 3 students pay for the 3 yr: 5,400
Total students: 137 Annual school Income: 93,555
Same Hypo with a manditory yearly contract of $800 per year.
A. Out of the 15 students who would have dropped, only 1 signed up for a year and is very unhappy and taking you to small claims court: $800
B. Out of the 4 students who would have paid per class, You must figure that they have schedules that only allow them to average once a week for training. So, none of them wanted to commit for a year: $0
C. Out of the 30 students who would have paid per month and dropped out in 6, you gotta figure that only about have of these would actually commit to a year. So 15 year commitments, 8 unhappy after 6 months: $12,000
D. Out of the 20 that payed for per month and stuck with it, You gotta figure that only about 60% would actually commit for a year. They wouldn't have paid per month if they knew they would have been in for a year in the 1st place. They'd rather pay 100 per month with the option of quiting anytime, then pay 800 for a year. So about 8 went to the neighboring school w/o the year long contract. This leaves 12 year long contracts: $9,600
E. Out of the 10 students who paid for 3 months and dropped, most of these only did it because they realized that 255 for 3 months is better then 200 upfront for 1st and last month, plus 100 per month. Considering this you gotta figure that only about 3 of these would be convinced enough to do a year contract, and that they'd be unhappy after 3 months. 3 contracts: $2,400
F. Out of the 10 who paid at 3 mo. intervals at 3 different times, probably about 6 of these might have done a year. You gotta figure that they were only on the fence in the beginning, otherwise they would have signed up for a year. The other 4 went down the street. 6 contracts: $4,800
G. Out of 10 who paid for 6 and dropped, the odds are better that they would have paid for a year. so, lets figure 8 do a year: 6,400
H. The odds are also better that out of the 15 who paid for 6 mo. twice, they'd do a year in the beginning. So figure 13 out of 15 contracts: $10,400
I. All 20 payed for a year: 16,000
J. The three that would have paid for 3 yrs paid for a year: 2,400
Total students actually commiting to a year: 81
Gross income for the school: $64,800
Also, notice with year long contract hypo, there are a lot of unhappy people for whom the year long contract wasn't suited for them. These will all be former students who will be going around town talking about how big of scam artists your school is for forcing people into unfair contract agreements. So, which school do you wanna be? The figures don't lie; and I don't think I was unrealistic in my numbers. If anything I was modest in the # of students who actually attended, and generous in the amount who would actually commit for the year.
PAUL
Disclaimer: Please keep in mind that I typed this a lot faster then you might think. So, Arnisador can check my math (lol, I know he will anyways, even if I didn't say that). If I was wrong in something, which I son;t think I was, please understand that this was only a hypo, and that I have a real job to attend to with little time to check spelling or #'s on my martialtalk posts!
We need Mentors at times.. hmmm striking an idea here..
Go figure! 
