What's It Worth?

[sensei8]

My brother and I were talking just the other day about nothing of any great concern, when, the subject of pricing structure came up.

My brother, Don, owns a highly successful Auto/Truck repair business. Don, being an ASE certified master mechanic, as well as being a pretty smart guy, I mean, Don does calculus for fun. Don brought up a valuable argument as we discussed back and forth about how one comes up with price setting. Proper price setting will make you or it will break you!

The other day a customer had brought his car into Don's shop to be repaired. This customer had done his own tune-up, and ever since he did the tune-up, his car has been running real rough and it had loss some power; basically, this guys car hasn't been the same since. The customer, over the next few months, tried everything to fix his car, but, to no avail.

Finally, perplexed and confused, this customer admitted that he was at a great loss as what to do, this customer admitted that he was well over his head, and decides to bring his car to my brothers shop for some needed help.

While/as this guy explains the problem to my brother, my brother opens the hood and sees the problem immediately! Spark plug wires #3 and #4 are crossed; they're on backwards!

Don asks this guy, "What do you think would be fair to you for me to fix your car?"

"50 bucks!" answers the customer after thinking about it for a few minutes.

"OK!" replies my brother.

Then, my brother reaches under the hood of the customers car and switches spark plug wires #3 and #4 to where they're suppose to be. Then, Don starts the car; presto! The problem and the car are both fixed; car runs great!

Don shuts the hood, then sticks out his hand and says to this guy, "That'll be 50 bucks!"

"I'm not going to pay you 50 bucks for what only took a few seconds to fix." responds the customer.

"Why not?" asks my brother.

"You told me that it would be worth 50 bucks to you for me to fix your car. Especially after you've spent many uncounted hours and untold money to correct the problem that you created." says my brother.

"Isn't it worth 50 bucks to you to pay me for MY KNOWLEDGE! To pay me for something I know, in which you don't know?" asks my brother.

"It's not my fault that I know it and you don't" my brother adds.

Great point! We, instructors of the martial arts, know something that our students don't know, therefore, they should pay us for our knowledge! It's just that plain and simple!

Or is it?

What's it worth? Whatever the market will bear? Whatever the demographics will permit and/or invite and/or allow? What is it worth?

After all, it's just the martial arts! IT'S JUST THE MARTIAL ARTS! If your students are willing to pay you an 'X' amount of dollars to learn the martial arts, which is something that they have no knowledge of whatsoever, then your knowledge must be worth something to your students.

What's it really and truly worth to you? There are many varying answers, reasons, and/or opinions to this very question. Is there a law regulating the setting of prices?

$100 or $200 per month? "That's a rip-off!" It is? Says who? Yeah, I agree that $100/$200 per month is highway robbery, but, that's just me. Obviously, many students are willing to and are paying hundreds of dollars per month.

What's it worth?

In todays economic downturn, one better know the answer to this question and one better be right. Otherwise, one better be prepared to close his/her doors when your competitor does know the correct answer. Wherever your demographics are; you better know the answer and you better get it right.

Get it wrong. Well, Wal-Mart sells "Out Of Business" signs for .99 cents...plus tax!

BTW, my brother didn't charge anything for his knowledge, he could've! But, that's not my brother. My brother just wanted the customer to say..."Thank you!"

So...what is it worth?

[joesteph]

Don asks this guy, "What do you think would be fair to you for me to fix your car?"

"50 bucks!" answers the customer after thinking about it for a few minutes.

"OK!" replies my brother.

I know we're supposed to be talking about martial arts, but it's a rare case to find an auto repair job that costs just $50. Another thought is that cars today aren't designed to be fixed by their owners; they're usually hooked up to a computer and special tools as well as knowledge are required.

Sorry, Bob, but I think Don handled it wrong. He should have had the guy come back later, then explained to him that the tralfaz was out of sync with the fabersham, which makes the veeblefetzer spin ante-clockwise.

It was repaired by using a hammerfist.

[sensei8]

I know we're supposed to be talking about martial arts, but it's a rare case to find an auto repair job that costs just $50. Another thought is that cars today aren't designed to be fixed by their owners; they're usually hooked up to a computer and special tools as well as knowledge are required.

You're right, we're suppose to be talking about the martial arts and I was talking about proper price structuring of martial arts schools, but, I used a recent example that I thought might describe a pricing situation. I don't care if people can or can't or aren't suppose to fix their own cars, and as as far as the $50 bucks, that's cheap, especially in the state of California and the fact that my brother charges by the Chilton Flat Rate and once again, $50 bucks is nothing.

Sorry, Bob, but I think Don handled it wrong. He should have had the guy come back later, then explained to him that the tralfaz was out of sync with the fabersham, which makes the veeblefetzer spin ante-clockwise.

That's fair to say! But Don wasn't EVER going to charge the guy, Don was just funning with the customer, whom he's known for over 27 years. Don didn't handle it wrong because this customer he's known for as long as he has has never said 'thank you' whenever Don does something for FREE, so Don was just going to make a point to this customer/friend, that's it! Maybe my brother was tired of his customer/friend taking advantage of my brothers kindness all of these years, and a simple 'thank you' wouldn't have hurt this guy to say to my brother for fixing something this guy couldn't.

My brother understands that in today's economy, people are going to try to fix their own cars by themselves to save them some money, Don supports that effort in people, but, when they do and something goes wrong while they're trying to repair their car, my brother's there to fix it, and my brother won't charge anything if it's something minor, but, something major, my brother will charge accordingly.

Once again, what is it worth?

[joesteph]

[T]his customer he's known for as long as he has has never said 'thank you' whenever Don does something for FREE . . . [A] simple 'thank you' wouldn't have hurt this guy to say to my brother for fixing something this guy couldn't.

I think part of "What's It Worth" includes a sincere "Thank you" now and then to our teachers. Last class I had before the weekend, there was a smaller turnout, so my teacher let me work with another student on some "odd" defense against wrist grabs. It was fun and I made sure I thanked her before I left. On her birthday, as she's also their teacher, I have my boys present her with a small box of chocolates and a card that they sign (well, at age seven, they print David and Patrick).

Sometimes payment isn't made in money but in thoughtful recognition.

[sensei8]

[T]his customer he's known for as long as he has has never said 'thank you' whenever Don does something for FREE . . . [A] simple 'thank you' wouldn't have hurt this guy to say to my brother for fixing something this guy couldn't.

I think part of "What's It Worth" includes a sincere "Thank you" now and then to our teachers. Last class I had before the weekend, there was a smaller turnout, so my teacher let me work with another student on some "odd" defense against wrist grabs. It was fun and I made sure I thanked her before I left. On her birthday, as she's also their teacher, I have my boys present her with a small box of chocolates and a card that they sign (well, at age seven, they print David and Patrick).

Sometimes payment isn't made in money but in thoughtful recognition.

SOLID! As soon as I read this post, I immediately dropped to the floor in my spirit so that I could say 'thank you' to my Dai-Soke properly for all he's done and for all he is to me!

Osu!

[bushido_man96]

I do agree that when it comes to wanting or needing something that one cannot provide for themselves, be it because they don't know how, or just don't have the resources to do so, then it is the right of the person providing such things to charge accordingly.

Yes, some will charge more, and some less, but that's what makes up the market, and it may be driven by uniqueness or quality of the product/service offered. If you don't like what someone offers, then learn to do it or get it yourself, or move on to the next in line.

[Tiger1962]

I believe you can't put a certain price tag on certain things. There are a lot of issues to take into consideration - that's why. Martial arts for example. Although you are teaching lessons to people, the cost of your instruction needs to factor in location - the neighborhood in which you have your dojang, the current economy, and the quality of and facilities in your school.

Let me give a very specific example: if your school is in a middle to lower class neighborhood, has really bad floors, poor lighting, poor ventilation or heating / air conditioning, etc., etc., do you really think it would be smart to charge the same as another school that is in an upper middle class neighborhood, has a gorgeous dojang floors, mirrors to train, no peeling paint on the walls, ample equipment, etc., etc. ? Personally I think the answer is a no-brainer here.

It is a business after all. Yes, what you learn there is valuable - but as a business owner, you can't let your ego about your knowledge go to your head and charge people crazy tuitions, or raise their tuition when we are in the middle of a recession or your studio is located in an area where people are NOT "well-to-do". It's different demographics.

Unfortunately, some instructors/school owners just don't *get this* and try to copy what other martial arts schools do, but those are the ones who are doing better financially, are in better neighborhoods.

These instructors should not be surprised when they have a high drop out rate or lack the ability to recruit new students. You can't follow what other businesses/schools do that are NOT in the same demographic category as you.

Worth = lots of factors to consider.

[sensei8]

What is it worth?

Some of you here might remember when I had cut my prices in half because of the economic downturn. Even then, I cut it another 10 -30 percent off of that. Why? My students are more important to me than my wants, for my students are what I value, and they're what I deem of great value.

During all of this, I kept my ear to the grind stone to monitor what the economy was doing. School after school within my 25 mile radius was taking hit after hit; shutting their doors down! Even one school was raising its prices to make up for drop out ratios...ouch!

I reassured my students that their school wasn't going anywhere. If need be, I'd relocate my school to my church, with my churches invite, blessing, and approval. Thankfully, that never happened!

Setting a proper pricing structure is vital and it can't be ignored. My prices have never been over $100 per month, because that's MY choice and my dojo is in a middle-upper-middle class neighborhood with every bell and whistle imaginable. Therefore, I could've charged over $100 per month, but, I'm not in the martial arts for JUST THE MONEY!

Yes, it was my only source of income, but, my student base was well over 300 students. I did what I think was right, just as any other instructor/owner does. My income now comes from the Shindokan Hombu in my duel duties as Kaicho and Chief Instructor. Is the pricing stucture at the Hombu similar to the other schools in its 25 mile radius? It was! Just as soon as I took over...WHAM...I restructed the entire pricing structure. Why? Because, I'm still not in the martial arts for money, I'm in the martial arts to share/exchange knowledge of the martial arts with whomever and I must make it affordable to all! What did my Dai-Sole do when I restructed pricing and the like? "You're in charge, do what you feel is right and necessary!", this is all he said. So...I did!

Understand this, if you make a wrong decision on pricing, especially in this economy, wow, you're going to be teaching yourself, and it won't be anything about the martial arts.

[Tiger1962]

Sensei8 - from what I've read, I believe you did the right thing at the right time and I commend you on that.

But unfortunately, not all martial arts school owners think the same way you do. They talk with their friends who own other schools or visit other schools and think "well, if so & so can charge x-amount of money, then, why shouldn't I?" (not factoring in the demographics and other vital issues before deciding on that).

I hate to sound harsh but it's reality - they eventually suffer for their foolish mistake.

[bushido_man96]

I believe you can't put a certain price tag on certain things. There are a lot of issues to take into consideration - that's why. Martial arts for example. Although you are teaching lessons to people, the cost of your instruction needs to factor in location - the neighborhood in which you have your dojang, the current economy, and the quality of and facilities in your school.

I agree with this. One needs to be reasonable when setting the prices.

Some of you here might remember when I had cut my prices in half because of the economic downturn. Even then, I cut it another 10 -30 percent off of that. Why? My students are more important to me than my wants, for my students are what I value, and they're what I deem of great value.

I remember discussing this previously, and I commend you for your actions. Top shelf, sir. However, I raised a concern then, and I want to bring it up here again, just for a refesher, and discussion. My concern was that if and when things would happen to turn back around, could you, or would you, bring prices back up to where they were, without the students grumbling and asking "why?"