Referral Fees

Found in: About Business, Fees Rates & Cost

Dear Simply Musicians,

Last week I posted on the forum a request for a Perth, W.A. teacher who would like to take on a small group of young children.

I’m sure there are plenty of teachers out there who would still like to grow their studios, and teaching a group is a particularly enjoyable and beneficial way to do so. Seeing as most of us appear to be struggling with time constraints, surely teaching several students simultaneously has its advantages. If you’re daunted by the prospect of doing something you might not have done before, the only way to overcome this is by doing it anyway. You might remember being daunted by taking on your first private student(s)…

Alternatively, I have wondered at times if people are not responding because they don’t want to pay a referral fee. Of course, I respect anyone’s prerogative to pay or not to pay, to charge or not to charge a referral fee, but there are several considerations I think are worth contemplating.

We all know that for businesses to grow they need advertising. Simply Music has grown considerably over the last few years, and all of that is directly related to advertising: whether that would be through the Yellow Pages, through ads in papers, through the Website or through word of mouth. The investment made in advertising, whether in monetary terms or in time spent promoting the method helps growing Simply Music, the reputation of our method, and our individual studios. We are pioneers in this field; surely there will be a time when Simply Music is the standard in piano education, like Coca Cola in soft drinks, but at this stage, I believe we need to promote our businesses, our method and the Simply Music vision as much as we can. I remember Neil at a training two years ago, in support of the $100 referral fee, suggesting that in the future there might be people who instead of teaching students spend their time generating them!

I have been teaching Simply Music for less than three years. In this time I have benefited much from the referral fee, both in acquiring students and in accommodating students that I could not place, and currently I have one of the largest Simply Music studios in the world. This year I’m proud to say that I can now support my family with my earnings. I have commonly seen that other teachers who didn’t shy away from paying referral fees also grew their businesses faster than those who were hesitant to invest and I believe they became better and more experienced teachers quicker. I believe that in the long term the cost of not investing in your business is much higher than the cost of investing in your business (a bit like when you play monopoly, whether you buy streets / houses / hotels or not).

I believe the referral fee is a useful tool that encourages business growth and allows clear boundaries around the movement from students from one studio to another. It also is a fair reimbursement for time and resources spent. The revenue I have made from referral fees is a fraction of the costs both in time and in money I have made promoting Simply Music. My husband and I created and maintain a website, I have advertised in papers, I have run many introduction sessions and promotional workshops and I encourage my students to keep spreading the word (including giving them a $25 lesson discount for every new student who starts).

Please consider that if you intend to keep growing your business there will be a time when you won’t be able to accommodate everybody who might be interested, and it will be to your benefit and to the benefit of inquiring students (because you’re investing to help them to a teacher) if you get compensated for your time placing them. By having the referral fee in place as a standard practice we ensure that existing teachers continue to maintain an interest in generating students that can help out teachers who are newly starting off.

From a financial perspective, I never charge a fee until the student is a sure starter and has made their first payment, which always amply covers the fee. At any time I would much rather pay for students or exchange students to fill up my groups, earning the money that the student continues to generate (which is about 10 times the referral fee, just in the first year), than pass students on.

Indeed, if anyone would like to teach this potential group of 6 year olds and exchange some private students to fill up my groups and free up your time I would much prefer that to receiving the referral fee. In addition, if anyone else has private students past Level 1 who they can’t any longer accommodate, or who might want the benefit of group lessons or my piano experience, I would be very pleased to pay a referral fee any time if I can fit them in!

Here are some things to think about. Although the choice not to charge a referral fee is of course up to each individual teacher, I believe Simply Music and teachers individually will benefit if a standard referral fee becomes a more accepted practice. I look forward to some forum discussion about this.

Kind regards,

Anneka S.