You are a passionate yoga practitioner and part-time instructor, and you have decided to turn your passion into a full-time job. So, how do you price your services?
Well, I have some bad news and good news for you. From a finance perspective, the bad news is that you are not selling health and goodness, but time. The good news is that your sold time can be multiplied financially by having more than one client simultaneously. In other words, the same hour of a yoga class can bring you £10 or £1,000, depending on how many people you are teaching.
To begin with, you need to determine a minimum hourly rate, which will be given by your cost base.
Minimum hourly rate
Here is the information you need to know – and I added some scenarios to make it more practical:
1. Your standard available time is 2,000 hours a year (excluding weekends and bank holidays)
2. How much do you personally need to live on annually? Let's say £30,000
3. What materials do you need to deliver your service?
If online delivery:
- Mat, boards, clothing – let's say £500 a year
- Zoom subscription – let's say £144 a year
- Depreciation of laptop – if you have an old one that you can use, no cost; if you need to buy a new one, let's say for £500, you can spread the cost over 3 years = £166 a year
- Internet connection, let's say £50 a month = £600 a year
- Bank account charge (including Eventbrite/other platforms to manage card payments) – let's say £300 a year
- Promotion to spread the word about your classes – let's say £2,000 a year
- Accounting for your end of year self-assessment – let's say £500 a year
Here we go with the speculative math for minimum hourly rate calculation:
- £30,000 + £500 + £144 + £166 + £600 + £300+ £2,000 + £500 = £34,210
Divide by 2,000 available hours = £17,10
If classroom delivery, you will not account for internet, zoom and laptop, but you need to add the following variables to your minimum hourly rate:
- Room hire
- Transport to and from location
You may end up with a higher minimum hourly rate, but the location may help with your marketing effort. What about the maximum hourly rate?
Maximum hourly rate
This is given by the market and your personal branding or specialisation. The better known you are, the more you can charge. The more specific your niche is, the more you can tailor your fee to that niche (provided the niche can afford your service).
However, from a financial point of view, the rule of thumb is your maximum hourly rate is 3 times your minimum hourly rate – which in our scenario is £51.30. This rate builds comfortable profitability; it allows for the fact that you will not be able to deliver all 2,000 hours a year, and you may subcontract some classes to another yoga instructor if you go on holiday or need to take a break.
The market can push your price down and your selling effort up. If other yoga teachers charge £10 per person per hour, you need a minimum of 2 paying clients in a group to cover the cost and 10 to be nicely profitable. If they charge £5 per hour and you need to follow the market, you need a minimum of 4 paying clients in a group.
Can you actually find a client willing to pay £50 per hour for personal yoga practice? Probably, depending on your brand and reputation and which market you are attracting. But most likely, you will end up with an optimum rate that is between the minimum and the maximum rate based on how well you are known, the market, and you will make up the profit from the multiplier, i.e. how many people you can draw to your classes simultaneously.
Your personal branding and specialisation can ease the market pressure by allowing you to charge whatever you think your service is worth. Good luck and namaste!