Profit per Hour

This one may be a shocker if you haven’t done it before, but that makes it all the more important for you to face the music now.

What I call ‘profit per hour’ is your studio’s profit (after expenses but before taxes) divided by the number of hours you work. Yes, all the hours you work – not just the teaching hours.

You will also hear this referred to as the ‘effective hourly rate’ and it’s one of the most crucial numbers you can track.

Even if music teaching is your passion and you love every minute of the hours you work, it won’t be sustainable for long if you’re not fairly compensated. Your students need you to stay in business so you can keep being their awesome teacher!

Notes About Salaries

If your business is structured a certain way, you may be drawing a salary rather than just taking the studio’s profit as your effective salary. For the purposes of this tracking sheet only, I recommend logging your expenses without your salary and seeing how the numbers would work out if your profit was your salary. This helps you see if your rate of pay is sustainable and when a raise is in order.

If you have employees who you pay salaries to, these should be logged under expenses on your tracking sheet. The profit calculation should only reflect your potential pay as the owner/director.

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