Requiring Recurring Payment for Tuition and Materials
Rebecca G., Colorado
I am considering implementing credit/debit card payments for all my students’ monthly tuition and materials fees and have a few questions for those who are already doing this. I only have a few students right now and have had no problems with payment by check thus far, but I’ve been reading the email thread about discontinuation policies and am considering credit cards in light of that discussion and in anticipation of growing my studio over the next year. Here are my questions.
1. What companies to do people use to process recurring payments? I’m considering PaySimple, which allows for all forms of payment. The fees are $34.95/month plus EITHER 2.39% and $.29 per transaction OR a flat $.55 per ACH payment. I might offer a $5/month discount to people who choose the ACH option because it doesn’t cost me as much. The other alternative I’ve found is called Moonclerk, but they would get more expensive than PaySimple once I get above about $3,000/month in revenue (or immediately if I could sign most people up for the ACH option via PaySimple).
2. I’m wondering in general what people think about this strategy – namely, does it help enough with money management and discontinuation issues to warrant the expense, even in a (currently) small studio? I’m wanting to implement a 30-day cancellation policy but feel uncomfortable asking people to pay first and last months’ tuition up front to make sure I get paid for the final month of lessons. I think that’s a totally legitimate strategy, btw, but it doesn’t feel like the approach I want to take. If I require recurring payments, I take on some additional expense but it completely solves my problem of last month’s payment (of course, the human ramifications of that can be a separate issue, which I understand).
Page S., California
I have made some changes in my business that have really improved my money flow and simplified my life and stress around the end of the month blues when collecting tuition from 30 to 40 students.
Firstly tuition is now due every 3 months for the upcoming 3 months. I told existing students that this will save them money because instead of paying me $135 at the end of each month that they would now be paying ONLY $350 for three months tuition and if anyone had a problem with that to please talk to me and we would work it out. Only 2 of 35 had a problem with it so they pay me monthly $135.
When students are at the end of their 2nd month I will check with them to see if they will be continuing. This gives me a good bead on the future of the class and how to make adjustments. My 30 day cancellation policy is request based because as you know it is a difficult thing to enforce unless you have them on an auto pay structure. Which some teachers who are very successful do.
Secondly I cleaned up my policies and procedures so they are simple and clear and my boundaries are clearly stated. What a relief that Is! No more explaining myself to the person who missed the “Requirements” memo.
Thirdly, no more starting a class unless I have a minimum of 5 students. 6 to 7 student per class is my goal. No More doing an FIS for just One or Two (the closing rate is drastically diminished when only a few are at an FIS Vs. 7 to 10) I run only a few FIS’s per 6 week cycle, two weeks before I start a new class. and I start a new class every 6 weeks unless my numbers are not there. So when someone wants to enroll they give a $100 non-refundable deposit and are on the waiting list for the next upcoming class and they understand I need 6. This give them an opportunity to bring a friend to lessons.
I am now in my 2nd cycle of doing this and the results are very good. My numbers overall have not increased that much but I have gotten rid of a lot of ‘Dead Wood’ (students I’ve wanted to fire for some time but didn’t have the courage cause I needed the money. I know shameful HUH. Last month I brought in ten new students and I lost 7, but I was happy to see those seven go. I have 3 students and their deposit money ready to go for the end of July class, striving for three more.
What has been working for me is setting my booth up at the local farmers market and meeting people face to face. It is fun and quality relationships are built. Printed advertisement has not worked worth a Damn! And has cost me more that 10K in two years.
Karina S.-C., California
I have implemented using DWOLLA (www.dwolla.com) for my students. I used “Square” for a while which helped with use of credit/debit cards however it was not a fixed cost. Although DWOLLA (stands for Web Dollar) is not an automatic payment, it’s easy to use and everything is done online or though a smart phone. I looked into a lot of different methods and so far this one works well for me for the following reasons:
• Fixed costs @ $ .25 per transaction – that’s it. PayPal/Square and others “double dip” and charge a fee plus a percentage!
• Online/Smart Phone
• Accounting is easy access
The only drawback is that it is only available (thus far) in the United States and some families told me it was a little difficult getting enrolled. Also, it does not yet have the name recognition that PayPal does.
I’ve been using DWOLLA now for some time and so far so good! I do have each family sign and return studio policies and they MUST give a 30 day notice in writing if leaving the studio. Fortunately, I have never had an issue with this…also, new incoming families become “members” of my studio. This helps to cement the LTR.