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Subscription Business Model for Music Studio Management

Posted by Gerry Cobley

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Mar 13, 2012 12:48:00 PM

While individual lessons have generally been paid on amonthly basis, because group classes have set schedules and durations, the most common form of payment has been "Up Front", or a deposit and balance at first class.

Music Classes Monthly Autopay

Recently, there has been a lot of interest in moving classes to a monthly payment model, and we at YourVirtuoso have combined a few existing features with a new one to handle this requirement:

  • Auto Payment Processing
  • Monthly Tuition Fees
  • Payment Notification Emails
  • Website flexible fee display
If you are a current user of YourVirtuoso, read below for instructions on how you can set it up.
If not...  
Subscription Model
The subscription model for enrolling and charging customers has the following characteristics that differentiate it from classic semester based enrollment and billing:
  • Classes run for a full School year (typically Sept. to May)
  • Payment is primarily on a monthly basis (a deposit is also possible)
  • Enrollment can happen at any time (but is concentrated in the months leading up to Fall start of classes)
Your Pricing Decisions
YourVirtuoso can be set up to handle subscription model through a payment plan which defines monthly payments. Here are the business decisions you need to make before actually getting into YourVirtuoso to set it up:
  1. Pick your session dates and prices based on your costs and business needs. For example:
    • If your tuition for 32 weeks needs to be about $450, and two sets of materials about $130, your total price for the year will be $580
  2. Using this as a guide, decide how you want customers to pay.
    • If you start in September and finish in May, YourVirtuoso will schedule 9 payments. 
    • If you want to charge a deposit deduct this from the total for the year, and then divide the total by 9. If no deposit just divide by 9 - In our example $64.44
    • Set your price by picking the monthly price that works for you. Lets say $65, which means the actual total cost of the class will need to be 9*65 = $585
YourVirtuoso Setup
Here are the steps you need to follow:
  1. Create a new pricing plan:
    • Go to Setup/Pricing Plans and Add a Plan. Call it What you want, maybe “Subscription Pricing”
    • In our example there is no registration fee or deposit, so just click on “Set Payment Schedule”
    • Select “Payments divided up equally over Session”. This lets you have payments always at the start of the month by picking “Per MONTH” and “Payments due at START”. Note that YourVirtuoso will decide later how many payments there are, but as long as your class starts in September and continues through May there will be 9
    • Save the Pricing Plan
  2. Apply the plan to the curricula you want to use it with:
    • Go to Setup/Curricula and edit each of the curricula involved.
    • In each curriculum, edit the curriculum details and pick your new pricing plan
    • Note that the plan can be applied to any curriculum that is following the 9 month, monthly payment model, even if the amounts are different.
    • Check the materials for the curriculum and make sure they are priced at $0 (All fees will be collected as simple monthly "tuition" charge)
    • If you had already set up classes for the session, they will have picked up your old pricing plan, so you would need to select each of these classes and change the selection using the “Plan Details” link.
  3. If you have not done so already, set up your new session with a start date in September and end date in May
  4. Create your classes as usual, with the following differences:
    • Select ALL the units you will teach for the year (Cmd or Ctrl click to pick the extra units)
    • Set the start date in Sept and the end date in May
    • Set Tuition using the new option of "per month". Select per month and enter $65 in our example
  5. Activate your session and classes and try enrolling a student from the class enrollment page to check that the price and payment schedule match what you decided - then cancel.
  6. Finally, make sure you are set up for automatic payments. Under Setup/MyInfo you will see “Preferences” where you can turn on auto payments and “Notifications” where you can choose to send reminder emails and copy yourself if you wish.
Transfers
When a student transfers, It is exactly the same as it is with semester based pricing. Normally there is nothing more to do than select the student on the class enrollment page and click transfer. The exception is when they are changing curriculum or if there were discounts applied to the original enrollment.
For this reason, YourVirtuoso will show you, just before you commit the transfer, the charges that are being removed, the new ones that are being added, and the payments that are being scheduled. Take note here of any differences so you can make the necessary AR adjustments. 

Mid Year Enrollees (Prorating)
Again, this is just like prorating in Semester based classes, but of course it will happen a bit more often. YourVirtuoso does not prorate automatically, so whenever you enroll someone, or are notified that they have enrolled online, after the class start date, you will want to check their account (AR). Generally you just modify the tuition to the prorated amount, and choose to take that off the first available payment.

Variations
Deposits: If you are really concerned about buying materials for students who have not actually paid for them yet, as is the case before the classes start, you can easily add a deposit to your plan. In the example we had above, lets say you wanted a $50 deposit. You would take the $50 off your target total price of $580, leaving $530 and divide that by 9 to get the monthly payment of $58.88. To make round numbers you could choose $60 per month plus $50 deposit. You would use that $60 when setting up the class tuition, set the first materials package price to $50, and modify your pricing plan to have a deposit of $50. NOTE: This can make prorating a bit more complex, so think it through before you make it more difficult to manage.


Materials: If you need to track materials for sales tax purposes. I suggest you stay with the simple model above (including setting materials price as $0), and then just use the "Materials Required" report to identify what materials were sold during that month/quarter and doing calculating sales tax from that using whatever materials price you and your accountant think is reasonable (and legal) in your area.

Topics: Management, Music Studio, Online Registration, Payments

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Helpful Information about the management of music and dance studios & schools, including systems for online enrollment; websites; customer accounts; reporting; email blasts...

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