Laura is a new homeschool leader struggling with figuring out what to charge for her program. She asked this question on the I am A Homeschool Group Leader Facebook page
If you are a small homeschool group, how do you figure out costs? We know for the space for the year it will cost us $900. We want to split it as equally as possible but without knowing the total number going to register, we don’t know what to divide it by. -Laura
Laura,
In accounting there are fixed expenses (like your rent or website fees which does not vary with the number of families you serve) and variable expenses, which vary depending on the number of families you serve (like supplies and sometime insurance).
Variable expenses are usually easy to estimate and charge the families accordingly.
But fixed expenses like the website, rent, etc. need to be paid from what you charge families, too. Sometimes they are called overhead expenses. So I recommend that you estimate a minimum number of families you expect and then create a budget of what income you need to cover both the variable expenses and the overhead (fixed expenses).
Create several budgets with varying numbers of families.
Don’t be afraid to over charge. You need to accommodate for those overhead/fixed expenses.
I see lots of homeschool groups charging several fees for every last expense like $9 for insurance, $5 for the website, $20 for supplies, etc. That assumes that everything is a variable expense, but it’s not.
Instead, just charge the families one round dollar amount. Make sure it’s large enough to cover the variable expense, the overhead (fixed) expenses, and a buffer.
You need a buffer for unexpected expenses or surprises like a global pandemic!
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Other leaders in the Facebook group ‘ offered this advice:
You might start by deciding what the maximum amount your families would be willing to pay. For example, if you don’t want your families to pay more than $50 per family for the use of space, you know you need a minimum of 18 families (to cover a $900 facility fee).
Our first year, we took our best wild guess at how many families we thought we would have. We underestimated just to be safe. We had money left over because we had more families join than we budgeted for which was great. That allowed us to have some buffer money in case we had years with low enrollment.
In my experience it is always better to slightly overcharge rather than undercharge. It’s a great thing to have enough money to pay for unanticipated costs without having to ask the families (for more money) every time.
You might find my book Money Management is a Homeschool Organization helpful. I discuss budgets and show a few sample budgets.
