Cost of Running a Dance Studio

Discussion in 'General Dance Discussion' started by Larinda McRaven, Jan 4, 2008.

  1. danceronice

    danceronice Well-Known Member

    IME, it depends on the studio how they do payroll. I can see what works in a high-density environment like NYC-Boston not doing well out here....
  2. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    It depends. A studio will pay the teacher an lesson rate, and them some of them also tack on "earned income" or a fraction of the lesson value... also known as a sales commission that you don't reap until the lesson is taught out. Otherwise teachers could sell big packages, snag the commission, and then never teach the lessons, leaving the studio and other teachers to do the actual work.

    I have worked for independent studios that operated this way and every franchise that I have coached in worked that way.
  3. tangotime

    tangotime Well-Known Member

    Chain schools have a pretty standard arrangement , you are paid by your level of expertise for the hrs you teach, and, commisions are payed on the hrs your students purchase. Most schools pay for "parties " and outside activities .
    I did once work for a chain that paid salaries ( Min. wage ) and made up the difference if the hrs taught exceeded the basic wage . New staff are often given a 4 week salary to start with.

    Indies generally pay cost of teaching time at an agreed rate or set rate, irrespective of your level ( you may be teaching out hrs bought on a 1 off basis) ; some also sell small packages ( no commission paid ) .

    If I remember, there are some States that require by law, that a min. wage must be met for all staff .
  4. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    But the client list in a dance studio is PURE debt.

    If the student is currently enrolled and active then they ahave already paid for lessons and that money is long gone although the new owner has to honor the lessons without any income. If the student is not actively enrolled then the list is dead.

    And most students are there because of the teachers, once the teachers leave and new ownership-management comes in, the studio generally loses the clients (and a nice new owner will refund the remaining lesson money that the previous owner already spent).

    Is is NOT a winning situation either way.
  5. Spitfire

    Spitfire Well-Known Member

    So teachers can make a commission on lessons they are responsible for selling to a student; at least at some studios. Didn't know that; certainly is an incentive. I had mostly assumed one was paid for just the number of hours they teach.

    Now, if an instructor is teaching a group class is the rate of pay generally lower?
  6. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    No, the lesson pay rate is usually not good at all. A teacher generally has to pad their paycheck with other things like:

    commission (earned income)
    party pay
    students attend group pay
    students attend party pay
    showcases
    competitions
    year end bonuses (if the owner actually honors and pays it - one owner promised it to me and then right before christmas said his accountant told him it was not a good idea and he did not pay me my year end bonus).

    Technically anything that the teacher is required to be at they must, by law, be paid for. So if you expect me to sit at a meeting and listen to you yell at other teachers I expect to be paid.
  7. Spitfire

    Spitfire Well-Known Member

    And I didn't know they were paid for competitions. I generally don't get into discussions about this with teachers and owners that I have known so I'm not aware of the financial end of things.
  8. tangotime

    tangotime Well-Known Member

    I once took on the students from a chain school ( i was indie at the time ) and taught out the lessons for free, the upside? 95% of them stayed on and took additional lessons ( they did pay for parties ) .
  9. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    One time at a very very nice studio I worked at many years ago...

    A new student arrived, she had just moved to Connecticut from Nebraska. Her old school would not refund her lesson money when she moved. The cool school I worked for then called the old school and also requested the refund for her. Old school still said "no". New school struck a deal with old school. New school will teach out the remaining program and old school mails the paycheck to the new teacher in CT, just as if the lessons were still being taught out at the old school.

    Even if the new school was not able to even be paid for teaching out her previous lessons the owner would have worked out a deal with her... that boss was just seriously cool and that helpful. That student stayed at the new school for 10 years. And even flew all the way back to CT to go to the 20 Year Anniversary, even though she had moved on from CT 5 years before.

    Often times it pays to be nice.
  10. Spitfire

    Spitfire Well-Known Member

    Ok, I do have only one final question; which is generally better for an owner - to hire his or her own staff of teachers or rent space to independent instructors as many studios do?
  11. tanya_the_dancer

    tanya_the_dancer Well-Known Member

    This probably depends on the area. Around here, the models which seem to survive best are the kind which rents space to independents and can make additional $$ by renting the place for private parties, or a very small place whose monthly expenses are low enough that the owners don't have to hire more staff to cover the expenses.
  12. I would do both!

    Resident teachers would teach the people who come in through the door, or from advertising. Those are students we as a studio recruited. Also offer group classes

    And the independents bring their own clients. So the studio, which didn't have a chance to get that student, would still profit from them being there. I tell you, those $15/lesson or $20/lesson fee independents pay really add up... It s a win win!
  13. Spitfire

    Spitfire Well-Known Member

    I think studios with their own staff generally offer to rent space to independents, though as a rule I could be wrong.
  14. samina

    samina Well-Known Member

    impressive. for all the flack that some studios & instructors receive, there are truly some excellent & most helpful people in the dance world.
  15. tanya_the_dancer

    tanya_the_dancer Well-Known Member

    I've heard that it's not necessarily the case, especially when the resident teachers might not be as experienced as the independent in question (i.e. if a studio has some trainees who just don't look as good next to someone with, say, 10 years of teaching experience).
  16. suburbaknght

    suburbaknght Well-Known Member

    That's the type of teacher I strive to be.
  17. nucat78

    nucat78 Active Member

    Are they never considered a source of future revenue and therefore possibly an asset? Yes, they are a short (or long) term liability as far as needing to fulfill contracts, but the names should have some value as potential clients. Or maybe not... The question becomes, "What is a list of existing clients worth to a new dance studio owner?"

    But we can leave that to the M&A folks.
  18. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    No, a list is an asset. Previous student enrollments are pure debt.

    Would you pay me 17k to get my business? You can have my list of people that may never want a lesson with you, and you can work off 40 lessons of prepaid packages for each those 30 people that do.

    Now consider that half of my people want refunds because they don't want lessons with you... where do you get that money from? How do you pay bills when the clientele just dropped by half and you have to wait for new enrollments?

    So I got the money from the student AND I get money from you... and I walk away happy. You have to teach off 1200 lessons for the next year... without pay.

    Unless the owner has put that lesson money in escrow accounts and only touches percentages of it as each lesson is taught out that money is long gone and there isn't even money to pay bills, let alone pay a teacher... until new enrollments come in.

    It is only reasonable to buy a functional studio that is FUNCTIONAL and there is NO TEACHER TURNOVER. Simply legally changing the name of the person on the LLC or Inc is fine. But taking over a failing studio is a (generally) bad risk. And buying a studio where everyone walks out and leave the new owner to start from scratch is pointless.

    Why not just open up fresh next door for 1/3 the cost?
  19. Joe

    Joe Well-Known Member

    ftfy ;)
  20. Larinda McRaven

    Larinda McRaven Site Moderator Staff Member

    How? When you are generally required to be at a studio that runs like this from 12:30-10pm...

    But yes, if you wanted to work a newspaper route at 6 am... feel free!

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