Let's Talk Discounts

At HINGE, we have long counseled clients about the hidden danger of discounting tuition. We believe—in the delicate balance between revenue structure and healthy spending—discounts put your school’s financial strength at serious risk. And if we are advising that expenses are manageable at a certain percentage of total revenue (8-10%), then charging an appropriate tuition rate to everyone under your schools’ care should be obvious.

So, what about those families who aren’t currently paying the full rate? This exception is often overlooked by business owners when they are struggling with cost control.

Some recent industry trends for business owners have been to use the elimination/reduction of discounts as a strategy to increase income. Very few schools now allow “free” / vacation days to families.  A simple elimination like this, used in conjunction with a tuition rate increase, can dramatically improve revenue. Other ways to improve revenue include limiting staff discounts to only two children per staff and offering no discounts for infants and toddlers, as you are most likely losing money with families in these age groups anyway. Also, eliminating the multi-children discount can give a boost to your revenue.

Overall, consider how your discounting is affecting your revenue and which discounts you can discontinue providing to families who aren’t paying their fair share of the full services you provide. A simple adjustment in the discounts you offer can greatly improve the overall financial health of your school.

Meredith Martin