5 Factors to Consider When Setting Your Tutoring Prices

Updated on May 17, 2023

The economics of running a tutoring center or test-prep business involve many different moving parts. Owners need to make several key considerations when zeroing in on the sweet spot for pricing their services.

1. Competition in the Local Market

Before making any decisions about your tutoring business, it is essential to know where it is positioned in the local market. There are several key factors that differentiate test-prep companies from each other. Each of them can have an impact on what consumers would consider a reasonable pricing model.

In an area with limited competition, companies have more flexibility in deciding on what to charge. But be warned! Even if you are the only game in town, if you set a price that is too high, you may drive clients toward distance-learning options, like online tutors or cheaper (less effective) digital test-prep companies. If you set a price that is too low, you run the risk of potential clients viewing your service as cheap and lacking value.

In areas with multiple test-prep businesses and local tutors, it becomes all that much more important to establish your own lane. Figure out how your company stacks up against the other options in your area. Commit to the things you do well, and set prices against the competitors in your particular niche.

2. Overhead

Any sound company must factor in the costs of running their business when setting their prices. Salaries, materials, utilities, marketing, and property costs all eat away at a company’s bottom line. Tutoring companies, just like any other business, must ensure that the revenue coming in is enough to cover these critical expenses.

If the cost of doing business becomes too burdensome, it may be worth considering ways to pare down expenses. Some ideas include:

• switching to a comprehensive, cost-effective test-prep curriculum (rather than buying materials piecemeal)

• negotiating with utility providers for better rates

• finding ways to maximize the value of your existing tutoring staff instead of hiring additional employees

• opting for a more cost-effective location to free up more room for profit

These optimizations can help widen your profit margins and, in turn, allow you to offer more competitive pricing for your tutoring services.

3. The Complexity of the Subject

Part of evaluating your services should include how complicated the content is that your company offers. Courses like AP Chemistry or college-level math support should command a higher price than an ACT® prep course or an SAT® group session.

In some cases, tutoring companies rely on more popular, higher-volume courses to subsidize the cost of their higher-level offerings. In all but the most competitive markets, this is a mistake.

Finding a qualified tutor and securing the materials for these more rigorous subject areas likely costs your business more than supporting a standard high school course or an SAT® or ACT® test-prep program. Therefore, if it is expensive to attract and retain a quality tutor for a particular subject, the services provided by that professional should command a high price in the marketplace.

4. The Strengths of your Tutoring Staff

Along those same lines, the qualifications of your tutoring staff are another key metric to use when setting tutoring prices. Your company should market your tutors’ qualifications like teaching certifications, college degrees, and professional experience as a part of your pricing justification. These skill sets reflect years of development and can be what sets your company apart from others in the area.

Conversely, if your tutors do not have such robust resumes, you may need to offer your services at lower rates for a period of time until you're able to establish a track record of success.  Then, armed with glowing testimonials and more experience, you and your test-prep tutors can take on the more seasoned test-prep providers at a higher price point.

5. Added Value

The more dynamic and personalized your tutoring offerings are, the more effective your practice will be at stimulating student growth. Offering tutoring and test-prep services that are custom tailored to student needs can give your company the ability to charge a premium.

Does your test-prep curriculum …

• dynamically adapt to student needs?

• promote student engagement?

• use real-time communication and data to hold students, parents, and tutors accountable?

• enable tutors and students to do quality work in between sessions?

• establish your own brand (rather than promote your competition)?

If it does, then these factors should be baked into your pricing pitch. Clients are getting more than just a pile of SAT® practice worksheets and some attention from an educator; they are getting a comprehensive support program to maximize student growth.

If your current tutoring efforts are less substantial, schedule a free demo to see how the test-prep curriculum and software from Clear Choice Prep can optimize your test-prep courses, save your company valuable time and money, and enable you to charge higher prices!