Q: My school runs classes September through June, but I only charge for September through May. I’ve followed this model for eight years and never made the change to charge for June tuition, but I plan to start doing so for the 2014–15 year. Now I’m wondering if I should also increase my monthly rates by $1 or $2 at the same time. What do you recommend?

A: It is reasonable and recommended to raise your rates incrementally every couple of years to account for the general increases in utilities, rent, insurance and overall cost of doing business. Determine your up-to-date annual revenue needs (divide the total amount of overhead expenses by the number of classes you offer—you’ll discover what each class must earn in order for you to break even). Once you know this number—and it has likely increased over the years—you can determine what the tuition rate increase should be and if changing to a 10-month payment structure is best. Be prepared to clearly state how your new tuition rates are calculated so that current and potential students can see what they are paying for. Otherwise, a sudden increase and additional month of tuition without explanation may seem drastic.

We have personally found that a 10-month payment plan helps even out our studio’s cash flow. If you have an early recital and think you might have a hard time collecting June tuition, consider adding that amount to your registration fee during enrollment at the beginning of the year. If you open up your fall registration in July or August, this may also even out cash flow.

Once you determine what tuition structure and rate will give you the most peace of mind and customer satisfaction, you will be on your way to consistent cash flow.

Kathy Blake is the owner of Kathy Blake Dance Studios in Amherst, New Hampshire. She and Suzanne Blake Gerety are the co-founders of DanceStudioOwner.com.

 Photo by B Hansen Photography, courtesy of Suzanne Blake Gerety