The Definitive Guide To Growing Your Tutor Business

Increasing Average Transaction Value

There are 3 ways to increase profits for any business;

  1. Increase the number of paying customers
  2. Increase the average transaction value
  3. Increase the frequency of transaction

Here, we will look at #2; Increasing the average transaction value ie increasing the amount the customer pays.


There are a number of ways to achieve this increase in transaction value.  The most obvious is to increase prices.  There are many other methods, and combined together they provide a powerful way to increase your business profit.

1. Increase your prices

Increasing your price per lesson is the simplest way to increase your transaction value.  There will be tipping point beyond which your customers will not accept a price rise, but up to that point, you should be able to gently increase the price and it will not make a difference to continued custom.

Price increases can and should operate in tandem with other elements here, to justify the rise and to help it stick.

By increasing your price per lesson you increase your profit margin, which means you can service your students and parents more, because you have more money at your disposal.  This also means you have more marketing budget at your disposal to reinvest into your business.

Think of the tax rises each year on cigarettes, alcohol or fuel.  They go up by small increments each year, so it doesn't kill the market.

With existing customers, a gradual, sequence of small price rises will likely prove better than one sudden big price rise.  A 5% or 10% rise this year and the same next year will be more beneficial to continued repeat custom than a 20% rise this year.


2. Offer larger units of purchase​

Most fast food chains have a "go large" option.  If you ask for popcorn at the cinema, they will usually ask if you want the regular size or the large.    McDonalds will ask if you would like to "go large" or "super-size" your order.

In this way, they increase the transaction value.

This is an 'upsell' or upgrading a customer to a 'superior' or larger version of the same product.

A local tutor​ changed her class duration from 1 hour to 1 hour 20 minutes, and increased her prices accordingly.


3. Offer cross-sells of related products

If you go in McDonalds and ask for a burger, they will most likely ask you "Would you like fries with that?"

Not everyone says yes, but a lot do.  This one simple question is responsible for a vast proportion of McDonalds' profit.

This is a 'cross-sell'; adding something else to the order that is a logical fit with the original product.

Another example of an effective cross-sell is on Amazon's website: "People who bought that also bought this" with a suggestion of an additional product.

​Point of sale is the most powerful time to offer a cross-sell.  Right when they are buying.  This is why you see the impulse-buy products at the supermarket checkout. Your website's "Thank you for buying" page is prime real estate to offer other services.

What else could you sell to your students or parents?

Some successful tutors offer homework premises after school, for students to come and quietly do their homework, or to practice.

You might offer monthly catch-up extra lessons for small groups to come and get further help.​

You might cross-sell other services that are related. For example, language tutors might add an exchange trip. For music tutors, it might be sheet music.  What other company or business could you partner with to offer their products or services, in return for a share of the revenue?

For any subject tutor, you might consider the added value (for which you charge extra) of giving students and parents exclusive access to their lesson's recording.  You can make this available online, for only that one student/parent using the TutorTube online classroom system.


4. Bundle your offerings as a package​

Rather than adding an occasional upsell or cross-sell, by bundling services as one package, and including as many add-on benefits, you can increase the regular price, not just a once-only transaction.

You might call it a bronze, silver and gold service, and differentiate each by adding extra value and bonuses to each successive level.

Use the TutorPay service to automate a repeat payment bundle.


5. Position yourself upmarket

By repositioning your service as further upmarket you can charge more and more easily, by making 2 concurrent improvements.

Enhance your marketing and service such that it looks and feels more expensive, more upmarket, more Rolls Royce. Have better looking brochures, business cards and website.  Add extra value to your existing service in whatever way you can.

Actively market to more affluent customers, who will not have a problem paying higher prices.  Often such customers will seek out higher priced services because many act on the assumption that higher prices means better quality.

Similarly, if you can make your service suitably different, you will make yourself attractive to a certain type of customer who is prepared to pay to be different.  Think of Virgin Airlines (and most Virgin branded products).  They are notably different from the norm, and their customers love them for it.


6. Prove your expertise

Customers need you to prove you are the expert.  The clearest way to demonstrate your expertise is to have higher-level qualifications.

Whatever you teach, you need to have qualifications in that subject to the highest possible level.

A piano tutor who has Grade 2 themselves is not going to be able to charge as much as a Grade 8 piano tutor.

Customers use qualifications as a shortcut to making their buying decision (and their decision to continue).  They will likely compare the skill-level of your competitors.  Improve your chances with higher-level qualifications and/or extra courses.

This may sound a glib suggestion.  But what qualification can you most easily elevate yourself with?  Make sure you show your clients the qualifications you already have.

By having qualifications higher than your competitors, you can attract more customers and charge higher rates.


7. Expand subjects

Could you teach other subjects or deeper into your current subject(s)?

For an English language tutor, maybe expand to add English Literature, for example.

Could you teach a grade-level further?

In this way, you can increase what you are offering to an individual student and hence charge more.


8. Grow your team of tutors

By bringing on other tutors into your business offering, you can grow the services you offer and hence can increase the average value per transaction.

How you structure the breakdown of your profit between you and your team is very much your own business, whether they are employed, self-employed, part of a collective / cooperative etc.

Taxation needs to be considered with this model.  For instance, VAT will apply on lesson fees for lessons that employee tutors teach, but not on the lessons that the business owner teaches.  Subcontracted independent tutors would be taxed independently.  Consult your Accountant for the latest details and advice.


9. Bring your other services out into the open

How do you know if your existing customers know about all your add-on services?

Make sure all your customers are made aware of each and every service you offer by updating all marketing material to put all services in front of all customers.

After you have read this, at the bottom, add a comment with your feedback to answer these 3 questions...

  1. What was most useful?
  2. Any suggestions of your own to help other tutors? 
  3. What more do you want to know about?


The rest of this Definitive Guide is as follows;

Definitive Guide Introduction & Marketing Theory <<

  1. Increase your student base:  To read the detailed methods for getting new potential students, converting them to paying customers, and keeping them...​
    - Click here to read the Online methods <<
    - Click here to read the Offline methods <<
    - Click here to read the pure Retention methods <<
  2. Increase your average transaction value
    - Click here for details <<
  3. Increase the frequency of repeat purchases
    - Click here for details << NEXT