Coming from a Fortune 500 e-commerce company, where discounts can’t be combined, and you pay for a month or you don’t, both my partner Kris and I are dumbfounded by the hoops that studio owners must go through in order to keep parents happy and prevent them from going across the street to their competitor. Discounts may be necessary, but here are alternative ideas to please your parents and your profit margins:

Here’s what we commonly hear: 

“I have 5 different class costs, and then I have add-on class discounts. On top of that, I discount my registration fee for families, returning families, and for families that take more than 5 classes. I also have discounts for people that register early, pay on time, or pay in full. Lastly, if a family registers in October instead of September, I will pro-rate them 1 month.”

We are scratching our heads, because you are all working so hard, and yet, being forced to discount, double discount, and discount more on top of that. We completely understand the competition is totally undercutting you, but as a senior sales executive for many years (at said Fortune 500) I want to share with you what I was taught which is…

Never undercut your product

Why? This actually undermines the value that your studio has in terms of excellence and perception. Remember the old adage, “perception is reality?” In this case that is true.  Deeper and deeper discounts can make your studio look desperate (well maybe we all are) but we really want to hide that! You still want to help out your parents financially and continue to increase enrollment, but you don’t want to give away the farm either.

I am not saying don’t offer any discount. I am saying their alternatives to simplify your discount structure so you are not offering three or four types of discounts, leaving you with a $10/class profit. In addition, simplifying your discount structure can help with bookkeeping as well as online payment and registration. Look at the chart below and see if it looks familiar:

Here are some ideas you can do instead that will not break the bank and will make your studio STAND OUT. Don’t fight fire with fire. Fight it with water. In order to do this, it is important to take some time to figure out what the average discount saves families per year. Is it $100’s or is it $1000’s? How does that discount cut into your profit line? The suggestions below are great marketing tools, aid in planning, and simplify your invoicing and accounts receivable.

Once you determine an average family “discount” you can identify your added value offerings:

1) Provide Free Dance Wear. Parents spend a fortune, you get dancewear wholesale. How much you can offer each parent depends on how many classes the students register for, and how much the clothing costs you.

2) Provide Free Costumes: Yes, this sounds CRAZY. However, if you spend only $50/costume, but are losing $250 on discounts, well, YOU do the math. There can be a cutoff point depending on how many costumes your students need to order. This also works from a collection standpoint if students pay for the first half of the year by Nov.1. This example is just an idea of what discounts do to profit margins.

Example of discounts versus alternative offer


3)  Offer one free private every other month: (or whatever makes sense from an accounting point of view.) Obviously, this will only work with older, more serious dance students.

4) Offer a 20-person dance party: For students enrolled in 4 or more classes.

Other costs that might be more profitable to discount:

  1. Competition fees
  2. Recital Fees
  3. Registration Fees

These are just some ideas to get you started, but the main point is to offer a product that is equal or greater in value to the parents (in terms of discounts) but less in terms of cutting into your profit margins.

I realize that this article is late in the season to implement now, but it is food for thought for this summer or next year. I look forward to feedback please so we can get the discussion going!