Tutoring Pricing Strategies: Packages vs Hourly Rates

Pricing is one of the most important—and most difficult—decisions for tutoring businesses. Charge too little and you undervalue your expertise. Charge too much and families look elsewhere. This guide breaks down proven pricing strategies.

The Three Pricing Models

Most successful tutoring businesses use one of three approaches:

1. Hourly Pricing

How it works: Charge per session, typically billed after each meeting.

Example: $65/hour for high school math tutoring

Pros:

• Simple to understand
• Flexible for families
• Easy to adjust rates

Cons:

• Unpredictable revenue
• No commitment from families
• Cash flow challenges

2. Package Pricing

How it works: Sell bundles of hours upfront at a per-session rate.

Example: 10 sessions for $600 ($60/session)

Pros:

• Upfront payment improves cash flow
• Families commit to multiple sessions
• Slightly discounted rate feels like value
• More predictable revenue

Cons:

• Higher initial barrier to entry
• Must track hours carefully
• Unused packages = refund issues

3. Subscription Pricing

How it works: Monthly or weekly recurring payment for ongoing tutoring.

Example: $240/month for 4 weekly sessions

Pros:

• Most predictable revenue
• Families stay longer
• Easy budgeting for everyone
• Automatic payment collection

Cons:

• Commitment concerns for new families
• Must deliver consistent value
• Cancellation management needed

Why Packages Outperform Hourly

Cash Flow Benefits

Hourly model:

• Invoice after each session
• Wait for payment
• Chase late payments
• Unpredictable monthly income

Package model:

• Collect $600 upfront for 10 sessions
• Deliver sessions over 5-10 weeks
• No chasing payments
• Predictable revenue

Student Outcomes

Studies show students who commit to packages:

• Attend more consistently (15-20% better attendance)
• Show better progress (longer commitment = better results)
• Have lower no-show rates (they've already paid)
• Stay with you longer

Psychological Advantages

The sunk cost effect: Once families purchase a package, they're invested. They'll push through challenges rather than quit after a bad session.

Lower perceived cost: "$60/session in a 10-pack" sounds better than "$65/hour" even if it's similar pricing.

How to Structure Packages

Package Size

Common package sizes:

Recommendation: Offer 5, 10, and 20-session packages. Most families will choose 10.

Pricing Tiers

Create tiers based on commitment:

Example for SAT Prep:

• 5 sessions: $375 ($75/session)
• 10 sessions: $700 ($70/session) - 7% discount
• 20 sessions: $1,300 ($65/session) - 13% discount

The larger package offers better value, encouraging families to commit more.

Expiration Policies

Option 1: No Expiration

• Pros: Family-friendly, removes pressure
• Cons: Some packages go unused for months

Option 2: 6-Month Expiration

• Pros: Encourages consistent scheduling
• Cons: Can feel restrictive

Option 3: Rolling Expiration

• Pros: Balances flexibility and consistency
• Cons: Requires clear explanation

Most successful businesses use 6-month expiration with the ability to extend for reasonable circumstances.

Setting Your Hourly Rate

Even if you sell packages, your pricing is based on an hourly rate. Here's how to set it:

Market Research

Check rates in your area:

Online resources:

• Wyzant (check tutor profiles)
• Thumbtack (request quotes)
• Care.com
• Local tutoring centers (call and ask)

Typical ranges by subject:

Your Credentials

Add premiums for:

• Teaching certification: +10-15%
• Advanced degree: +15-25%
• Specialized training: +10-20%
• Years of experience: +$5-10 per year (up to a point)
• Proven results: +20-30% if you can demonstrate outcomes

Location Factors

High cost-of-living areas (NYC, San Francisco, Boston):

• Add 30-50% to baseline rates

Medium cost-of-living:

• Use baseline rates

Low cost-of-living:

• May need to charge 10-20% below baseline

Online tutoring:

• National market, so price competitively
• Typically 10-20% below local in-person rates

Pricing Psychology

Anchoring

Show the most expensive option first:

Premium Package: 20 sessions for $1,400
Standard Package: 10 sessions for $750 ✓ MOST POPULAR
Starter Package: 5 sessions for $400

The premium package makes the standard package feel reasonable.

Bundle Savings

Frame packages as savings:

❌ "10 sessions for $700"
✓ "$70/session (Save $50 vs. single sessions at $75)"

Odd Pricing

$69/session converts slightly better than $70/session. The difference is psychological, not logical.

Payment Plans

For expensive packages, offer installments:

$1,400 package:
→ Pay $700 upfront, $700 after 5 sessions

This reduces sticker shock while maintaining cash flow.

When to Raise Prices

Annual Increases

Raise prices 5-10% annually for:

• Inflation
• Experience gain
• Market changes

Grandfather existing families: Keep current students at old rates for 6-12 months, then migrate them.

Demand-Based Pricing

Raise prices when:

• You're turning away students
• Waitlist is 2+ weeks long
• Referrals are strong

Rule of thumb: If you're at capacity, your prices are too low.

Premium Services

Charge more for:

• Emergency/last-minute sessions (+50%)
• Peak time slots (+15-25%)
• At-home tutoring (+30-40%)
• Intensive bootcamps (+20-30%)

Common Pricing Mistakes

1. Competing on Price

Wrong: "I'll charge less than other tutors to get more students"

Right: "I'll charge fairly and demonstrate my value"

Students and parents don't choose the cheapest tutor. They choose the best-fit tutor who delivers results.

2. Undervaluing Your Time

Don't forget to account for:

• Prep time (before sessions)
• Travel time (for in-home tutoring)
• Admin work (scheduling, invoicing)
• Professional development

Your hourly rate needs to cover all of this, not just face-to-face time.

3. Never Raising Prices

If you haven't raised prices in 2+ years, you're probably undercharging.

Families expect periodic increases. As long as you provide value, most will accept reasonable rate adjustments.

4. Complex Pricing

Keep it simple. If families need a calculator to understand your rates, you've lost them.

Bad:

$65/hour for math, $70 for science, $75 for SAT,
with 8% discount for packages of 10+,
and an additional 3% for monthly subscriptions...

Good:

$70/session, or save 10% with packages of 10+

Raising Prices on Existing Families

Bad approach: Email: "Rates are now $80/hour effective immediately"

Good approach:

1. Give notice: 30-60 days advance warning
2. Explain why: "To maintain the quality you expect and invest in my skills..."
3. Grandfather period: "Your current rate is locked in for 3 months"
4. Show value: Remind them of student progress
5. Offer options: Smaller package at new rate, or maintain old rate until package ends

Most families will understand and accept reasonable increases (10-15%) with proper communication.

Package Management with Gigpie

Frequently Asked Questions