Pricing is one of the most mysterious parts of running a martial arts school, and owners often get themselves into trouble by pricing improperly. This subject also carries a deep, longstanding taboo in the martial arts community that can further complicate running a profitable school. In this article, we’ll help you move past martial arts cultural barriers and price your programs for success.
Local Market Research
Understanding what your local market is both able and willing to pay is your first step to pricing your services appropriately. Begin by researching the median household incomes of your town and the towns closest to it. Census.gov and datausa.io are good websites for finding this data easily. Most importantly, you need to understand the wealth in your immediate radius of 5-6 miles, and consider how easily your business can be accessed by those people.
If your goal is to make a living teaching martial arts, as a general rule you want to be in an area where the median household income is $70,000 a year or higher. Years ago, $50-60,000 a year was a safe range, but inflation and the aftermath of the coronavirus pandemic have made that less safe of an income range to bet on.
Next, do some investigating on what your competitor martial arts schools (if any) are charging in your area, and don’t forget to include boxing and MMA gyms here. The school with the highest tuition rate will be your indicator to what the market can handle. You don’t have to charge that much necessarily, nor do you have to charge more, but you should probably set your rates close to that number.
Finally, research what other, comparable sports and activities are charging. This will tell you what parents and adults are willing to pay for a hobby – and you might be surprised what people are paying on average. However, keep in mind that these activities are not necessarily directly comparable, so you can’t necessarily charge the same rates.
Similar activities might include but are not limited to:
- Ballet & Dance
- Travel Sports
- Boutique/Group Fitness
Pay careful attention to pricing differences between kids and adults, as well as special pricing structures such as family prices. You can offer these at your martial arts school, too, and use the different price points to help grow each program according to what you see in the local market. Family plans, in particular, can be really popular in middle class areas and have been used to great effect in taekwondo and karate school.
One thing to watch out for is pedigree or credentials. While you’re qualified to teach, some people are able to charge exorbitant fees because they’re champions at high level tournaments, professional fighters, or in some way privileged with uncommonly high caliber credentials. While you can certainly run a profitable business in the radius of people like this, you probably won’t be able to charge the same high tuition.
Once you have a view of the local pricing landscape, you know what’s possible for you to charge your members every month.
At the end of the day, you have a business to run, bills to pay, and a life to live. Your martial arts school should be profitable enough that it affords you a lifestyle that keeps you out of survival mode trying to stay afloat and pay your mortgage. The best way to do this is to design your business to support that profitability from the outset.
The two numbers you need to have for designing your school for profitability and setting your prices are these: your overhead operating expenses and your goal salary. Overhead operating expenses include rent, employee payroll, marketing budget, and any other consistent, ongoing expenses you have for running your business. If you’re doing your research right now to open a martial arts school for the first time, check out our article on martial arts school startup costs to get an idea of what some of your recurrent overhead costs will be.
Your goal salary is the ideal salary you want to make if your school is successful enough to support it. So I’m going to ask you to do something radical: decide what you want your salary to be ahead of time. If you want to make at least $60,000 a year, great. Or what about $75,000 a year? Awesome.
That said, you do need to have a realistic idea of what your constraints are with a martial arts school. You obviously can’t just decide you want to make $3 million a year with one small school location, and then charge a tuition fee the local market cannot support. Depending on your area, you might need to have a chain of school locations to support more than an $80,000 a year salary.
Now, take your overhead operating expenses and your goal salary and add them together. Then, inflate that number by 10-20% to help account for unexpected expenses. Finally, take this inflated number and divide that by 100.
Why? Because 100 is an attainable amount of students within one year with which to break even on your costs and begin to support a full time salary. Your upper limit should be to grow to 150 to 200 members. While it’s possible to have a school with more than 200 members, those numbers are hard to sustain due to average attrition rates in the martial arts industry and thus make it difficult to grow as well. 150-200 is also a very realistic number of students to serve in a modest storefront space, which helps keep your overhead rent and labor costs low.
To help illustrate this point, let’s say your estimated yearly overhead costs total $60,000. Your target salary is $70,000 a year. These two numbers, inflated by 20% to be conservative, come to $156,000 a year. Divide this number by 100 to gain the total yearly tuition cost of a member, then divide by 12 to gain the minimum monthly price per member: $130.
Remember that these numbers are simulated. You might need to hire an employee or contractor for more hours, tax laws might change, a hurricane might hit, utility prices are higher than expected, more expensive marketing becomes necessary, or cost of goods inflates rapidly. There are a lot of ways costs can inflate, so you should try to find ways to account for those costs and represent them in your tuition rates – and shoot to grow past that first 100 students.
All of these numbers should be represented in detail in your business plan. If you don’t have one, learn how to write a martial arts business plan here.
Here’s a peek into average numbers we see here internally at Gymdesk:
|Member Numbers||Gymdesk Gyms w/||Avg Revenue|
On average, gyms who start using Gymdesk grow 125% after just one year.
That said, marketing will be a critical determining factor of reaching and exceeding that first 100 students. To learn how to market your martial arts school, check out our Ultimate Guide to Martial Arts Marketing.
Supplementary Income Streams
Tuitions will be the bulk of your income as a martial arts school, but it’s not the only income stream you have at your disposal. You can really push the envelope of profitability in your dojo if you have a strong pro shop, sign up fees, and a schedule of paid events.
Bear in mind that you have to be consistently hosting paid events each month to be within these number ranges. The same goes for the signup fees: your marketing systems need to be dialed in, and you need to be selling 10-15 new memberships a month – or at least selling trials at a similar price point.
- Events: $300-$1000
- Paid Trial or Signup Fees: $900-$1500
- Pro Shop Sales: $1,000-$3,000
With a well-oiled machine of a school and a decent location, you can blow these numbers out of the water, even bringing in as much as $10,000 extra a month.
Charge What You’re Worth
There’s an old theme in the martial arts community that if you teach martial arts, you shouldn’t profit from it. This idea probably stems from the ethos of old kung fu movies and memories of how things were back in Okinawa or Japan in the 20th century. For many of them, teaching martial arts was to be done for free or at a nominal cost, not to become wealthy or as a full-time vocation.
The fact is, you’ve got to get rid of this notion. It is not wrong to profit from martial arts instruction. In fact, there is no reason why you can’t make a comfortable living teaching martial arts, so long as you run your school legitimately and ethically.
The unfortunate byproduct of this “poverty” mindset among many martial arts instructors is that they have no concept of what their services are truly worth. Medical doctors and lawyers will spend 6-10 years to become fully credentialed, and then they go on to practice for hundreds of thousands of dollars every year in earnings. Average martial arts school owners have ten years or more of training and study in their styles – their skill level and knowledge is much, much deeper than they think.
It’s for this reason that it’s not “McDojo” to charge what most instructors would perceive as “high” rates. Rather, it’s because you’re deeply qualified and you are entitled to fair compensation on those grounds.
Of course, that old nagging idea presents itself: “Nobody will pay that.”
If you’re in the right area, residents absolutely will pay a premium membership fee. The idea that charging more than $100 per month is “too expensive” for most people is simply not true – but more detrimental to you, it is limiting belief about what you can achieve.
Think about it. McDojos charge exorbitant fees for an inferior service. Why can’t you charge a similar rate to provide a superior service?
Setting the right prices for your martial arts services can be tough. There’s the community belief that profiting on martial arts is wrong, there’s the limiting belief that nobody will pay premium rates, and the general mystery surrounding exactly how to price a service. But with a shift in mindset, setting prices for your martial arts classes becomes much easier.
Follow this process:
- Figure out your overhead operating costs and goal salary amount and inflate that by 10-20% to be on the safe side.
- Do the math to figure out how much per month each of 100 students needs to pay to meet that amount.
- Decide if that rate is sufficient or if it needs to be higher to account for other potential expenses. Adjust as necessary.
From here, get to that first 100 students as fast as you can. Then, grow your student base to 150-200 students. This will allow you to create a lifestyle you love, making a comfortable living, from your martial arts school.