I have wrestled with this problem many times and eventually came to a bit of an uneasy compromise. We conduct gradings 3 times a year and provided the student has met the criteria (minimum training time) we consider them for selection. Provided that we as instructors have done our job correctly, theoretically everyone should be able to demonstrate to the required standard and therefore pass. Unfortunately this falls down as some (mainly younger) students, no matter how enthusiastic and motivational his or her instructor is, just decide to coast through lessons for whatever reason. These students will not be selected for grading and the reasons given to their parents - if they don't want to learn why waste money on bringing them and waste instructors time? While instructors are constantly trying to get their attention they are neglecting the needs of the more attentive students. None of us want to end up providing a baby sitting service. Students who scrape gradings are usually told exactly that and more effort, concentration etc is required or they will miss/fail their next grading. We usaully wait a few weeks before doing this so they get to "enjoy" their new grade without demotivating them. We do fail several students over the course of the year, but before doing so we assess if it is in their and the clubs best interest. For example - If you have invested time and effort in someone over several years and then fail them for whatever reason they may give up. If we believe the failure will give them the kick up the backside they need, it may be a valuable lesson for them. We never charge for retests as we dont believe in making profit on the back of someone failing a grading. I would suggest if everyone who takes a grading expects to pass that that may be counter productive, so that is why failures are an important part of gradings. Unless of course money is the motivator. We try to instill the idea that belts are never given - they are earned through each individuals hard work and practice. Such a shame that kids these days are used to turning up and getting a certificate or an award. Shame that life is not like that. Just my opinion.