Paying For First Class?

[stonewall1350]

Wait. So the free gift is just bait?

lol. Exactly.


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[Gerry Seymour]

Ok. If you want to look at this in a vacuum of money...I will indulge you.

You know. I could understand the position if the guy running the gym had a select number of slots. That makes sense because of the market. That is called capitalism and you have to be able to sell a quality product which is a balance of supply, demand, and not killing your profits by letting the demand exceed your supply. Sometimes less is more.

But If you are operating on such razor thin margins that you are having to charge people for their first class to feed yourself? Then you need to reexamine your entire structure of your business. You aren't making enough money on your actual product that you are selling: memberships. You obviously don't have a steady enough income from the memberships to feed yourself.

The owner should be charging the cost of the first class into his product. That way it is spread out across time and thus...does not impact feeding himself when someone new comes in. It is called the cost of doing business and if you listen in to any insurance industry conversation...this is something they haggle over every day. Be it the shop supplies for a garage or doctor's office (aka the towels and soap and gloves and vacuum etc).

Again. These things are part of your fixed costs. You can't operate without them. You shouldn't be relying on your variable costs to pay for your fixed costs. You should be relying on your fixed costs to account for your fixed costs...that way your variable costs are profit.

And I know. I sound like a pompous jerk. I really am not TRYING to sound that way. I do feel strongly on the topic, but not enough to insult someone . I just enjoy discussing economics and business. I got my degree in history. So I suppose that the whole social studies thing is why. But I digress. I don't DISAGREE with charging someone for their first class, but only if it makes sense fiscally. If the justification is that the instructor needs it to survive...then that is bad fiscally on the part of the owner.

Let's face it, the first class is really a non-issue. Someone stepping into the training area to train can only pay attention to a small portion of what's going on. They can learn much more about the school by watching a class or two. I've never had anyone come for a trial class and not go beyond that. I've had plenty of people who watched part of a class and never came back, because that's the better way to evaluate whether a school is a fit for you or not.

So, those instructors who don't have a free trial class really aren't doing anything wrong. That free trial is entirely a marketing thing. Translation: those of us who offer a free trial class do it for the money.

 

[jks9199]

Local custom.

Practical issues against: Insurance may not cover someone who is not paying. Why give something away that you ordinarily expect payment for? What is the actual retention/conversion from trials to paying customer? Does your budget support the giveaway?

Practical arguments for: Might be expected based on local custom. It avoids the "buying unseen" feeling. It's a chance to hook them on the fun. You can soften them up a bit before hitting them with the contract...

Bottom line? Local custom, and individual practice.

 

[Tez3]

I don't know of any place here that does contracts or memberships. I've heard that there are some places who do them but not experienced them. Most places are pay and train with a fees for insurance and gradings.

 

[hoshin1600]

A test drive is a standard practice in sales. It is a required step in the process of making a sale. Although the test drive takes many forms. It allows the student to visualize themselves having purchased the product. It creates an emotional connection.
Watching a class may give the more experienced practitioner a better feel for the class and if it is a good match, this is not the purpose of a test drive. The point is to make a sale.
I am not advocating for the practice or particularly like contacts. I am only explaining the way professional sales work, in any business with any product.
Sales does not care if the product is a "good fit" as long as the sale is made. Turnover rates are a given. The concept is to have a higher sales rate then a turnover rate. In general human behavior is to purchase thru habit. If the business can establish the habit of using their product the likelihood of turnover decreases. It takes effort to shop around and do research. The most common turnover rate for a martial art school is under a year so a one year contract locks the student in and insures that one year commission. The rule of sales does not care if the student never shows up as long as the business has provided a reliable and worthwhile product. Some business actually rely on the failure of the purchaser to NOT USE the product, like an exercise gym. Contracts are sold but if everyone showed up there would be a problem of over crowding. Airlines purposely over book flights.
The test drive is a tool to make the sale and create revenue. This is a different concept than being a martial arts instructor and getting a student. The two are philosophically different.

 

[hoshin1600]

The test drive and the contract are usually used together. Whether to use them or not is determined by the business model that the company uses. The contract would work best in the Volume based model where the goal is to maximize sales. The opposite is the Quality based model. The goal here is selective membership which creates a feeling of excusivity. The quality of membership is the most important factor. An example would be a judo club that constantly turns out olympic medalists or an MMA gym that has champion world class members. Those top "names" bring in other potential champions and the cycle continues. This creates a reputation for quality and revenue can be based on demand.

 

[Gerry Seymour]

A test drive is a standard practice in sales. It is a required step in the process of making a sale. Although the test drive takes many forms. It allows the student to visualize themselves having purchased the product. It creates an emotional connection.
Watching a class may give the more experienced practitioner a better feel for the class and if it is a good match, this is not the purpose of a test drive. The point is to make a sale.
I am not advocating for the practice or particularly like contacts. I am only explaining the way professional sales work, in any business with any product.
Sales does not care if the product is a "good fit" as long as the sale is made. Turnover rates are a given. The concept is to have a higher sales rate then a turnover rate. In general human behavior is to purchase thru habit. If the business can establish the habit of using their product the likelihood of turnover decreases. It takes effort to shop around and do research. The most common turnover rate for a martial art school is under a year so a one year contract locks the student in and insures that one year commission. The rule of sales does not care if the student never shows up as long as the business has provided a reliable and worthwhile product. Some business actually rely on the failure of the purchaser to NOT USE the product, like an exercise gym. Contracts are sold but if everyone showed up there would be a problem of over crowding. Airlines purposely over book flights.
The test drive is a tool to make the sale and create revenue. This is a different concept than being a martial arts instructor and getting a student. The two are philosophically different.

The difficulty with the comparison is that a first class is seriously unlike what they'll experience after the first few weeks. My first class involves a safety lecture, discussion of risk management, and then some very simple techniques and introduction to elbow strikes. They will feel awkward and inept - and a little foolish if they decide to put on a dogi for the first time. They'll get a better view of what class is like by watching, where they can see students at various stages and of various abilities. I imagine it's a similar problem in any school. I'm not saying the trial class is worthless - as I said earlier, it's a marketing thing. I know if they step on the mats, they'll almost certainly sign up. I'm considering having a requirement that they watch at least part of a class before being able to take the trial class, though, because a student's first day sucks up a lot of my time. I'd rather they watched a class and made their decision that it looks right to them before I spend that time.

 

[hoshin1600]

The difficulty with the comparison is that a first class is seriously unlike what they'll experience after the first few weeks. My first class involves a safety lecture, discussion of risk management, and then some very simple techniques and introduction to elbow strikes. They will feel awkward and inept - and a little foolish if they decide to put on a dogi for the first time. They'll get a better view of what class is like by watching, where they can see students at various stages and of various abilities. I imagine it's a similar problem in any school. I'm not saying the trial class is worthless - as I said earlier, it's a marketing thing. I know if they step on the mats, they'll almost certainly sign up. I'm considering having a requirement that they watch at least part of a class before being able to take the trial class, though, because a student's first day sucks up a lot of my time. I'd rather they watched a class and made their decision that it looks right to them before I spend that time.

The issue is the use of the "first class". Your not using it the way I described. From the little I know about your School through your posts you run the quality based model.
In the Volume based model there are very specific sales points to be covered in the trail class.
The trail class is designed as one long sales pitch..or very specific steps that lead up to sitting down and getting that contract signed and a commission collected.

 

[Gerry Seymour]

The issue is the use of the "first class". Your not using it the way I described. From the little I know about your School through your posts you run the quality based model.
In the Volume based model there are very specific sales points to be covered in the trail class.
The trail class is designed as one long sales pitch..or very specific steps that lead up to sitting down and getting that contract signed and a commission collected.

Interesting. I haven't run into that with any school yet. Possibly I'm just not visiting the type of school that does that.

 

[hoshin1600]

Interesting. I haven't run into that with any school yet. Possibly I'm just not visiting the type of school that does that.

It's common if you find schools that use a marketing company that also deal with the actual collection of tuition. But my descriptions are based more on business across the board rather than only martial arts schools. How a karate school uses the test drive techniques may not be based on sales techniques but rather "everyone else is doing it, so I will too" thus the purpose is lost.

 

[msmitht]

In BJJ we give a free class. if they are no other sure then we offer a second for $35 or a private lesson for $100- $250 depending on who they are going to do it with.

 

[Gerry Seymour]

It's common if you find schools that use a marketing company that also deal with the actual collection of tuition. But my descriptions are based more on business across the board rather than only martial arts schools. How a karate school uses the test drive techniques may not be based on sales techniques but rather "everyone else is doing it, so I will too" thus the purpose is lost.

That makes sense.

 

[Andrew Green]

I don't know of any place here that does contracts or memberships. I've heard that there are some places who do them but not experienced them. Most places are pay and train with a fees for insurance and gradings.

If I take your money in exchange for a service it benefits us both to have it in writing what service is being offered for what price. We agree on those things and that is a contract.

Whether the contract has a term length (6/12 months) or auto-renews monthly, whether it has a requirement for cancellation or simply non-payment = cancelled. It is a contract.

Anyone that is not using a contract is making a serious mistake when it comes to running a business, I'm pretty sure here we are required to have those things in writing when taking payment for services (i.e. a contract)

 

[oaktree]

I always give a free class to someone interested. I don't do martial arts to make money, and I do not consider myself a martial art teacher so for me it is not a business but a hobby. I ask students to donate whatever they want to show thanks, one of my teachers use to like getting fruit as a payment and another would say $100 pays the year. Still I understand some teachers are in it for business too.

To the OP paying for an intro class isn't unheard of, I would personally avoid schools that charge for an intro and find a teacher who truly loves to teach the art for the art in my experience they tend to be the better teachers in the long run.

 

[Gerry Seymour]

If I take your money in exchange for a service it benefits us both to have it in writing what service is being offered for what price. We agree on those things and that is a contract.

Whether the contract has a term length (6/12 months) or auto-renews monthly, whether it has a requirement for cancellation or simply non-payment = cancelled. It is a contract.

Anyone that is not using a contract is making a serious mistake when it comes to running a business, I'm pretty sure here we are required to have those things in writing when taking payment for services (i.e. a contract)

Ah. The term is commonly used in MA to refer to contracts over a term - usually a year - that commits the buyer to that term. Any program that accepts payment has a contract (commitments and consideration are both present).

 

[hoshin1600]

I will second what Gpseymore says. While technically a contract should he used in business the common nomenclature for a contract in martial arts has the meaning of a binding contract for a term (one year) that payment is made to a third party billing company. Non use of services would not release one from the fiduciary commitment. A penalty would be applied upon request from the student to cancel the contract. Often the contract has few if any legal reasons for termination.
I.E. Contracts are seen as a bad thing.

 

[marques]

Contracts are seen as a bad thing.

The good side of contracts, in the martial arts case, is that the prices/hour can be really low (our really lower than other options) for the ones that train all year.

The bad thing is no option between 1 trial class and a 1-year contract.

 

[Gerry Seymour]

The good side, in the martial arts case, is that the prices/hour can be really low with contracts (our really lower than other options) for the ones that train all year.

True enough. I've considered offering a long-pay option (same thing as a contract, really) for those students who have been training a while and want to keep costs down but can afford to pay 6 or 12 months in advance.

 

[JowGaWolf]

The rule of sales does not care if the student never shows up as long as the business has provided a reliable and worthwhile product. Some business actually rely on the failure of the purchaser to NOT USE the product, like an exercise gym.

I talk about this all the time with my wife. Some instructors will get mad when students don't show up for kung fu practice. Yes it would be nice if that student would show up more, but if they are paying for the class and not showing up then it's still a sale. From a business perspective the customer is literally just giving the business money. From the customers perspective, the customer is wasting money and will probably make a decision to either not renew the contract or to try to show up to more classes.

It's like paying for services like Netflix. The money side could care less if a customer watches only one movie every 2 months or if a customer watches movies all the time. The bottom line is that both are paying customers.

With that said the marketing side of a martial art school would care greatly about students not showing up as one of the most depressing things to do is to practice alone or with very few people as a student. We are social animals, so the more people in a class the happier and more likely a person will show up for another class (within limits). My most difficult sales days is when a potential customer drops by and there are only 3 people training that day and 2 of them are instructors.. When we have at least 5 other people training, it creates a different energy and feel to the room.

 

[JowGaWolf]

True enough. I've considered offering a long-pay option (same thing as a contract, really) for those students who have been training a while and want to keep costs down but can afford to pay 6 or 12 months in advance.

I'll be adding a long pay option as well. I'll probably end up doing monthly, 3 months and 6 months payment options.