As a presumed Economics major, even if you don't yet have your degree, you are more aware than most about the difference between value and worth, and the significance of every economic theory.
Thus it stands to reason that you, perhaps more so than any tutor on the market, are keenly aware of pricing your services so that it meets the demand of your customer base.
According to Forbes magazine, private tutoring is a global industry set to surpass the 100 billion dollar mark this year.
By all means, claim your share, but beware that doing so involves a lot of critical thinking.
Obviously, your knowledge, and the ability to disseminate it has worth, but in what measure?
Market potential value is an estimate of the total amount of money that could potentially be spent by consumers in a particular market.
Judging by the Forbes article, that is a substantial chunk, implying that people will pay a hefty price for quality instruction.
However, setting your rates for each hour of tutoring too high could price you out of the market.
Conversely, setting them too low may drive potential clients away.
Wait a minute! How can setting low prices go against people wanting the greatest value for their money?
The idiom you get what you pay for generally has a negative connotation.
What that means for you is that, if your prices are set too low, the quality of instruction you provide would most likely be perceived as poor.
Of course, that adage is not always true: you may be a terrific instructor imbued with an altruistic desire to pass on your knowledge, even at your own expense.
That doesn't necessarily read well in advertising copy, nor will you necessarily be believed.
In that spirit, we recommend against combatting folk wisdom while attempting to establish yourself as an economics tutor of merit.
Now, back to the point of this article.
Clearly, tutoring is a lucrative business. Claiming your share of that massive market will require finesse, dedication and a bit of work.
All of which is doable by employing economic strategies to find that sweet spot, where your rates are competitive – neither too high nor too low, and satisfying to both you and your clients.
To that end we don our thinking caps, roll up our sleeves and examine every principle of economics, to give you the best advice on pricing your services for maximum benefit to both parties.
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Rational People Think at the Margin
The Third Principle of Economics states that consumers want to purchase the goods and services that allow them the greatest level of satisfaction, given their incomes and the prices they face.
The pricing of goods can be easily assessed by weighing the cost of materials, production, packaging and transportation – and, yes: even reputation!
A Burberry handbag sells for much more than any serviceable tote you may find at Tesco, for example.
Further contributing factors to an item's worth are: stocking and displaying, advertising and even in calculating the wages of the store's employees and the cost of electricity that powers the lights and cash registers.
That pricing, with all that it entails, is then balanced by the rational consumer against the projected use of the item, its purpose and its anticipated longevity.
Some services are much harder to price because there are no tangible goods to focus on; only results.
The nail salon technician or hair stylist has a basis for pricing that incorporates the cost of products they use, their shop's overhead, the wages of their employees and so on.
As a freelance tutor of Economics, virtually everything you bring to the venture is intangible: your knowledge and experience, your ability to impart knowledge, and the human qualities that make you an outstanding teacher.
Here, we need to understand the difference between value and worth as they relate to your profession.
Worth attaches a price tag, but value signifies importance.
Your worth as a teacher of Economics must balance against the value your student gains from your lessons.
However important the acquisition of knowledge is to your student is what will ultimately determine your worth as his/her teacher.
That is one foundation upon which to build your price schedule.
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People Face Trade-offs
A good example of such a trade-off is the balance of equity versus efficiency.
For the purposes of our discussion, we postulate:
1. Efficiency is the property of society getting maximum benefit from scarce resources – in our scenario, knowledge and understanding of economic theory are those resources.
2. Equity is the property of distributing said knowledge fairly among society – in our little microcosm, said society represents every Economics student.
What that equation represents to you, the purveyor of that much sought-after knowledge is the time to prepare lessons, time to travel, time spent with your tutees added to the sum total worth of your expertise.
You may also consider your attainment of mastery in the subject of economics as a factor in determining equity.
Unless you are independently wealthy, you must realise a profit from your venture in order to achieve equity.
These are all factors that should help you determine your per hour pricing.
For your students, things get more complicated.
- Does their current financial position afford them the ability to even attend university, let alone pay for private tutoring in economics?
- They may find value in taking a semester off to earn money by tutoring economics themselves so that they can afford more schooling.
- What, for them, is the assessed value in grasping economic principles?
- How does this learning expenditure balance against their future earning potential as an economist?
- How does their future earning potential stack up against their future financial obligations?
As you project a curriculum to teach and the estimated worth of your venture, your students are pondering their future solvency based in part on what you can teach them, and how well.
That is the very definition of microeconomics, in a nutshell!
People Respond to Incentives
Rational people make decisions by comparing costs and benefits; that is why they respond positively to small gratuities that would sway them into deciding in favour of something.
Advertisers have a propensity for incentivising potential customers with a free gift.
The fundamental idea of gifting suggests that whatever is to be given would cost the recipient nothing.
Because people respond positively to the word free, while the word gift is treated with suspicion, that stylistic error has become a staple of the advertising industry!
Teaching principles of economics, you could certainly find ways to promote your services through small gratuities.
You may host a seminar or workshop for all of your tutees at a discounted rate, for example.
Perhaps you could encourage individual tutees to participate in group sessions at a lower rate if you have several students who live close to each other.
You may even encourage them to engage online!
And, speaking of online...
Have you thought of teaching macroeconomics or international economics online?
Teaching applied economics via webcam permits you a much wider audience because geographic restrictions are effectively removed.
Many Superprof tutors engage via webcam, and furthermore introduce themselves by offering a free lesson!
You may think that giving your knowledge away would run counter to the philosophy of earning your living, but statistics show that clients are more willing to seek collaboration if no monetary risk is involved at the outset.
Bear in mind that there is no regulation determining rates for tutoring sessions, no matter whether you teach at undergraduate level or secondary school students; or if your subject is math, language arts or economic analysis.
Nevertheless, we can provide you with some insight and guidelines to improving your chances of attracting clients.
What do Tutors in Your Area Charge?
Here we refer to economic principle #6 that addresses market economy:
A market economy is an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services.
From our perspective, now:
The many firms represent the collective tutoring body, whose greater social interest is student learning.
The households typify prospective clients engaging in the search and retention of qualified mentoring.
Adam Smith, Scottish pioneer of political economy suggested that, although people are primarily motivated by self-interest, inevitably that very interest will turn to promoting society's economic well-being.
Conclusion: although it would be in your better interest to charge a higher fee for your services, the market economy insists that, ultimately, you will defer to the needs of society – by setting your rates in accordance with the market in your region.
London tutors charge substantially higher rates than, say, in Scotland or Wales, and some tutors will charge for travel to a client's home if s/he lives outside of city centre.
Studying your local market, determining the feasibility of teaching online or hosting a workshop, and considering the number of lessons you must teach per week to meet your financial goals all impact how you will set your rates.
To help you with that task, we've compared tutoring rates in several UK cities and put them in a table for you, at the end of this article.
NOTE: all prices are estimates, as reported by Indeed
Teaching Strategies and Learning Environment
With competitive rates set for tutoring in your area, you must find some quality that distinguishes you from every other Economics tutor in the region.
Do you create lesson plans for each of your students? How would you draft and evaluate a quantitative analysis of their progress?
Would you use the student's textbook, create Powerpoint presentations or a mixture of both?
Are you more likely to lecture, or is your methodology more student-led – meaning s/he asks questions to which you provide answers, or indicate where answers can be found?
Your pedagogy and the dynamic environment you foster as you conduct your lessons is the best path to a reputation for teaching excellence, the very quality that will make you a most desirable market commodity.
The Bottom Line
The job market for teachers of economics is much the same as any other industrial organization, and predicated on the same principles:
1st Principle: Recognising that trade-offs exist does not indicate what decisions should or will be made.
3rd Principle: Remember margin thinking – price yourself competitively for your area and level of expertise.
4th Principle: people respond to incentives, so offering something for free is a good promotional strategy.
6th Principle: markets being the best way to organize economic activity; joining the market will give you the greatest exposure to potential clients.
You may refer to Gregory Mankiw's outline for other principles of economics, to determine the best possible outcome to your venture.
Be sure to let us know how you fare!
|Name of City or Region||Maths Tutors av. fee||Languages arts tutor av. fee||Economics tutor av. fee|
|London: average £17.29/hr||£27 - 33||£22.96||£18.96|
|Manchester: average £15.96/hr||£18||£14.27||£15.61|
|Glasgow: average £19.28/hr||£20.89||£19.28||£17.67|
|Cardiff: average £17.25/hr||£18.27||£14.17||£19.31|
|Leeds: average £16.56/hr||£23 - 30||£16.56||£16.56|
|Averages across the UK: £18.49||£21.86 - 23.85||£17.25||£16.19|
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