Post a new topic
    7 Replies Latest reply on Jan 5, 2010 10:51 AM by DebbyBlitzLoc

    Hourly rate or revenue sharing model?

    WhiteBrow Wayfarer

      We have just expanded our martial arts training facilities to 5,000 square feet (up from 500 square feet) - the rent and related expenses is significantly more. This hobby now needs to be run like a business. We'll need to increase our membership significantly to cover our increase in monthly costs. One approach is to offer a greater breadth of classes & hire instructors. Currently, only the 3 owners and three students teach classes. If we hire new instructors I'm not sure if a fixed hourly rate vs. a revenue sharing model based on reaching a specific class enrollment threshold would be more appropriate given our new fitness center situation. Can the community weigh in?
        • Re: Hourly rate or revenue sharing model?
          LUCKIEST Guide
          Tell us more. SCORE always suggest you write a BUSINESS PLAN, explaining in detail your plans.
          You can also prepare a spreadsheet showing income and expenses and adding WHAT IF.
          How long have you been in business?? What part of the country??
          What made the decision to go from 500 to 5000 sq. feet.
          Do you have competition in your area?? Good luck
            • Re: Hourly rate or revenue sharing model?
              WhiteBrow Wayfarer
              We've been teaching for a year now, however just moved to a bigger space. We've been doing martial arts all our lives as a hobby and now that we're established and one partner is retired, we decided to expand the art, by teaching other generations to carry on the tradition. Why did we move to a bigger space? Our old space was too limiting, especially when trying to teach our students traditional weapons. Yes, we have competition as there are other martial arts schools nearby that have been established for many years as well as local gyms that are starting to be trendy with martial art like classes. We have great facilities for the martial arts practioner including a boxing ring. My partners and I plan to stick to teaching our traditional martial arts, but realize that to make the bottom line we will need to attract more members, which means offering a wider diversity of instruction (e.g. kickboxing, yoga) and thus the need to start hiring. Just not sure how our pay/incentive structure should look like?
            • Re: Hourly rate or revenue sharing model?
              Techie Wayfarer
              That's a tough question. My partners and I share revenue, but that's because we are all contributors. I am guessing you had significant start up costs to rent and furnish the facilities, not to mention take on the risk. What are these instructors doing? Just teaching a class? If that's all they do, and nothing else..I'd recommend the hourly rate.
              • Re: Hourly rate or revenue sharing model?
                Flowers Newbie
                We always prefer predictability, so we would opt for fixed rate. There is some good advice in this string about business planning...but we always regret any unplanned expenses and prefer knowing our costs up-front.
                • Re: Hourly rate or revenue sharing model?
                  Woodstock Newbie
                  I agree: hourly rate. It will be more predictable for the instructors as well. They can't directly affect the success of your marketing, so they probably won't be too interested in sharing risks with you.
                  • Re: Hourly rate or revenue sharing model?
                    JLWmassage Wayfarer
                    When I ue to teach horseback riding lessons, I was paid per student in each class. Starting pay was $12 per student. Most of the time I had 3 students in a lesson so I was making $36 for an hour lesson
                    • Re: Hourly rate or revenue sharing model?
                      DebbyBlitzLoc Adventurer
                      I would have to agree! Instructors would not be as interested in your risks as they would be in their own financial stability. Paying hourly is one option, however paying per student as was suggested is an even better option!

                      When you pay per student you are empowering the instructors to take on some of your marketing and sales responsibilities. The instructors want to make money, therefore logically they will get out there and drum up new business for you. This seems like the best win-win solution for your business.