I've been working as an independent musician and software developer for a long time. Since I graduated in 2012, in fact.
I've watched and listened to tons of videos and podcasts about business in general and pricing more specifically, but something that I only recently heard a good explanation for was what "profit" looks like for somebody who's working as a contractor or a private music teacher.
And that's a problem! Because profit is how you actually grow a business, and work toward not only financial stability but real upward mobility.
It seems like a simple calculation, right? Profit is the amount that you make for something after you subtract how much it cost you. This is easy to calculate for a physical item. If you bought it for $5 and you sold it for $15, then your profit is $10.
This gets more complicated once you try to start accounting for your time, your own personal value, and the variety of things involved in running your own business.
In working independently, most folks (including myself, for a long time) don't really think about the money that they make in terms of profit. Only in terms of revenue. And it makes sense why.
The reason is that we are thinking in terms of having a job and not in terms of running a business. When you have a job, you get a paycheck. And how do you advance at a typical job? You get a raise, or get a new job, and your take-home pay goes up.
But it's not quite so simple when you are running your own business. You have:
And there are costs associated with that "everything else" category. Actual costs that you pay for equipment and software, and intangible costs like the time you spend managing your schedule.
So how can we move from a paycheck mindset to a profit mindset? The best explanation I've heard was to think of how much it would cost you to hire somebody to do the job that you are doing. And there's actually a specific business model that we can look to in order to think about this in the context of teaching music. Music schools.
So let's say that we consider only teaching and not the admin overhead. If you were a music school, you'd hire teachers to teach, but the students would be paying you. If you charge them $50 for a half hour lesson and pay the teacher $30 of that, then you've made $20 of profit on the lesson.
And if you've taught lessons at music stores or music schools then you're familiar with this dynamic. But as an independent teacher, this is a lever that you can pull for success.
If you are on your own and charging $30 for a half hour lesson, you are not profitable. In fact, you've just broken even. And you still have to account for that pesky "work you don't get paid for" category.
And if you aren't profitable, you're losing money. You don't have funds to spend on increasing your advertising budget, purchasing new equipment, or worst case paying rent or your mortgage.
Obviously, the more you charge, the more you'll profit. I've already written about the simplest ways to figure out how much to charge for music lessons, as well as a video with some more advanced strategies on how to use positioning to grow your teaching practice.
The other way is to reduce your expenses. The trouble is that there are the concrete expenses, like a Quickbooks subscription, and more abstract expenses, like the time you spend managing student schedules. In my video about automating your studio finances, I talk about how to understand the true value of your time.
My goal here at CodaCal is to provide tools that allow you to spend less time on the admin side of your studio, which in turn reduces those "abstract expenses," decreasing the costs associated with running your business, and making it easier to become profitable.
As independent music teachers, recognizing and embracing the concept of profit is essential for growth and sustainability. Moving beyond a paycheck mentality to understand the true costs of our teaching—including the unseen administrative efforts—is the first step towards financial empowerment.
By reevaluating how we price our services and manage our time, we can uncover opportunities for genuine profit, paving the way for a more stable and prosperous teaching career. Let's redefine our work not just as a job, but as a thriving business where profit leads to personal and professional advancement.
Remember, the key to transitioning to a profit mindset lies in valuing every aspect of our work, from lesson planning to brainstorming. By doing so, we can ensure that our passion for music education also translates into a viable and rewarding business.