Discussion in 'Ballroom Dance' started by DanceMentor, Jun 17, 2013.
Yes, but how do you know they have family in HK/Taiwan?
I totally can see how many would see it this way.
Each market/city will have some different factors involved which might include:
1. Number of studios where you can teach
2. Studios that are open or closed, and if they nallow you to teach in multiple places (this one has some tight rules).
3. Number of new student prospects coming to market. Ex. a city with a lot of newly wealthy people is quite different
4. Popularity of dancing as a whole and opportunities to meet prospects outside the studio that would likely want to dance.
5. Average income of students.
6. Cost of living: can be a big motivator or demotivator for both the student or teacher.
7. Competition: some markets have more or less instructors per active student.
In my case, there are tons of studios, tons of instructors, dancing is popular, there are varying micro markets with different income levels, the cost of living is high (but does vary), most studios are open but this one had some closed type policies, so you get the picture.
There were other factors besides money for me, but I know some people really focus on the money. I have time and many options to consider in this huge market, LA. Who knows? Maybe I'll check back with this studio later.
So I don't want this to sound harsh, but that is what they teach in business school and it would apply to a large business that can use the economy of scale. However for service industry (teaching), and my business (hand made jewelry) discounts mean one thing. I make less money on that sale.
My pricing is based on time and material, if I sell 100 or 2 each one takes the same time and amount of crystals, but somehow everyone thinks they should get a discount for buying more. This is the same with lessons, floor cost stay the same.
Business school rules don't translate into cash flow period.
Having run business's (both large and small, both service and equipment related - all sales oriented) I have to disagree with you, at least in part.
You made the comment that discounts mean one thing, less money on a sale. That is one way to look at it, and if your business is thriving to the point that you do not need additional sales, more so if you have no additional time to make additional product, then you are correct. The same would be true for a studio whose instructors and busy from opening to closing.
However, the discount for a volume purchase may mean the difference between selling and not selling, not less money, but no money because of no sale. Like I said, if your volume is at the point where you can handle no more business or you don't really need the money and you would just as soon not sell as sell at a discount, as a business owner that is 100% your decision.
The same is true for consumers of your business. They have earned the money they are spending, and they have the right (if they have a family, one might even say obligation) to get the best value they can for the money they are spending. If they are willing to part with more money today which secures additional revenue for a business that might otherwise lose this opportunity, then it is a business decision. In dance, if the floors are full, no need to accept a discounted offer. On the other hand, if the instructors are spending a good deal of the day standing around, it would be something you might want to consider.
It is just not as simple for everyone as saying a discount means I make less money
What my teachers charge for a single lesson is not something I'm prepared to pay, given that I'm going to be taking 100-200 lessons per year. They don't have to give me a discount for buying more lessons; they can charge whatever they want, and I'm free to accept what they charge or go elsewhere. If I had to pay their single lesson price, I'd probably take my business elsewhere. Fortunately, I have that option. So, maybe they'd get $10-$15 less cash-flow per lesson, but if you multiply the number of lessons I'm taking by the discounted per-lesson price, that's (tens of) thousands of $$$$ in income versus $zero$ if I go elsewhere.
Of course, each teacher's situation is different. I'm sure some don't need to discount their lessons because they're so popular that they have no trouble filling their available slots, or maybe they're part-time and have fewer slots to fill. But for those that need the business, I think discounted lessons may be a viable way to increase their overall cash-flow. The situation might also be different for me if I were a much higher-level competitor faced with very few options for instructors. My choice would then to be pay what they're asking, take fewer lessons or not take lessons at all, or take them from a lower-quality instructor.
Agreed -- otherwise why offer a discount in the first place. From a business perspective, it would only make sense to offer a discount if you thought it would help you make more money.
Interesting.. of course it is more complicated and I don't want to hijack the thread. When I say big business, I mean NYSE size, not big owner run. I often hear salesmen say this a discounted sale is better than no sale. But that discount is often more expensive that just the sale. First of all you have to know the price point compare to your competition, and will they always want a discount, you have just permanently marked down your products, what expenses are involved in giving that discount. It is very complicated, and you are right everyone has the right to request a discount and get the most for their money, and I have the right to say that I don't mark down my products. I have had people say if you give me a discount, I will buy it right now, and I generally say sorry, but this price is my bottom line. I can do what many retailers do and mark it up and give 15% off.. comes to the same price. I choose to give everyone a great price, not just the people that ask for a discount.
This is the reason most retailers mark their products way up and then give 15% off coupons. Besides I wouldn't want to be known as the cheap teacher.
I really think you missed my point, marked up or marked down the product is worth what someone will pay for it and no more. You are obviously selling enough of your product that you are happy with your sales and you must be providing value in relation to your competitors to be successful, which it appears you are.
As far as marking something up 15 percent so you can discount it, I think consumers are much too smart today for this to work. (This is a general statement of which I am sure you could find many exceptions). It is too easy to get on the internet and compare pricing for most items. For your jewelry, it would not be so easy but it remains that it is only worth what someone will pay for it. If you make a 1000 units a year and 1000 people think your asking price is fair and buy your product, it matters not what the millions of other people think. However, if you make 1000 units per year and only sell 200 of them, it matters greatly what the rest of the consumers think your product is worth. If you can mark your product up 15% and still sell all you make, you are not currently charging enough.
Tell that to J.C. Penny! Smart or not, their customers wanted to know they were getting discounts, regardless of howmuch they were actually paying. (But now we digress far.)
I'm curious. I found that in the Bay Area, where there seems to be a large Chinese population, the ballroom dances (at regular ballroom studios, not specifically Chinese parties), featured a dance called the "Chinese Tango". Do they do that in LA as well, or in other parts of the country?
Agreed. Large manufacturing businesses typically get economies of scale in costs of production. As you say, that's not how the service industry typically works: if you sell 5 times as many lessons, that does not mean you can now teach a one hour lesson in 30 minutes instead of an hour.
Regardless, a product or service (jewelry or dance lessons in this case) is only worth what the consumer is willing to pay; if the consumer is not willing to pay there is no business conducted (unless it is a monopoly and the service/product is needed).
I should have not mentioned consumers and whither they are smarter or not. I know nothing about JCP and I really know nothing about consumers other than myself.
My wife and I frequented a local franchise studio and liked it there. We made an offer to continue that would have amounted to about 20,000.00 per year to the studio. They didn't like our offer and refused, we were not willing to pay more so we left. They had a right to refuse our offer and we had the right to spend our money elsewhere. The end result is I found a studio with an instructor who is awesome, the lessons are at the price we offered the franchise studio and are 55 minutes long rather than an 40 minutes, 10 of which are nonsense warm-ups (I come to my lessons warmed up).
Since our schedule is flexible, our offer was based upon all lessons being in the afternoon which is their slow time. The end result is, another studio is delighted to have the money that would have gone to the franchise studio, we are delighted with the new studio and the instructors at the franchise studio are still standing around doing nothing most afternoons.
Did the franchise studio make the correct decision; not for me to say and really none of my business. They made a business decision and I made a consumer decision; I am very happy and hope they are too.
Take some examples though...
1. Some buy jewelry because it is cheap, and some buy it because it is expensive.
2. Some buy food with a volume discount, and some prefer smaller quantities that they can keep fresh and maybe even organic
3. Some people buy a car because it gets them from A to B, and others buy it because they want to also feel sexy or important driving it.
There is something to be said for a dance studio or instructor positioning themselves to offer the bulk or discount lesson product, versus the studio that offers the classy atmosphere, top coaches, etc.
Actually I really didn't miss your point. But JC Penny is one example of the retail consumer not understanding and so is Macy's. (Business to business is different sales) Locally the former department store alway gave coupons and Macy's tried to stop, but it slowed the sales, so they went back to coupons. Once discounts are offered, customers always expect them. There is a lot more than just to sell or not and I am afraid you missed my point. If you are selling 100 units at a discount and loosing money on all of them, or only selling 25 but making money on all, which is better? As I said it is extremely complicated to find price point, selling volume, niche market, competitors price...... I know I didn't buy my Lexus because it was the cheapest car on the market. I didn't pick my studio because it is the cheapest, but I get great training, great visiting coaches and it met my personal goals. This works for all purchases.
Here's a well-known, in-depth analysis of that complexity for the software world:
I think certain parts of that could be applied to the dancing world, too.
Yea, I get it, and there some types of items more common for volume sales. More expensive items are less commonly sold in volume (but it does happen). I am finding there are different policies at different chinese studios too, and the prices very depending on whether they are more social studios versus competition oriented.
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