Most people are content with surviving. When you decide to thrive, it's going to upset some people.
Maile recently made a change to the incentive structure at Tula Yoga Studio. After three and a half years in business, she felt it was appropriate to update the incentive structure to start paying out incentive pay after a base of 10 students instead of 6.
She made this change to acknowledge the studio's strengths in it's own right, while also keeping in tact an incentive structure that would provide a handsome pay for full classes. (The lowest an instructor can make is $30 and the incentive pay maxes out at $80 when there are 27 or more people in class.) Her current revenue is solid, and generally supports an average class pay for instructors of the low $40s. Once it starts hitting the high $40s though, the payroll starts taking up a larger percentage of the revenue than a healthy business should allow. The studio will probably support an average pay of $50 within the next 12 months or so, but the average revenue per class probably needs to rise by about 20% to support that.
What she thought would be a simple non-controversial change was indeed just that for about 2/3 of her instructors, while the reaction by the other 1/3 has forever affected my perception of the yoga industry.
Background
At Maile's studio there are essentially three types of classes:
- Morning Classes which are important and popular, especially with members, but not generally "full". They tend to average about 5 to 10 students and would therefore generally pay the $30 flat rate.
- Evening Classes which are popular and fuller, with student counts ranging anywhere from 12 to 25 or higher. These would tend to average a pay of about $50 to $55 per class, and often spike up to the $70s and still at times hit the max.
- Specialty Classes: These are classes such as Family class, Mommy and Baby class, and Pre-natal classes. Like the morning classes these are important for the studio, but tend to be smaller and therefore usually pay the base rate.
The specific details probably aren't super relevant, but it's fair to say there was some unprofessional behavior and people who completely forgot that as independent contractors they are actually small businesses.
What was most shocking to me though, is that it was crystal clear most people didn't actually know how much they were making for the individual classes they taught. They didn't know which ones they should consider dropping if they were unhappy with the new structure, and which ones they should hang onto tightly because they would still be making $50 to $60 per class.
One guy posted on Facebook (yes, for real) that "he just couldn't live with the contract" he was offered. Here's the thing though: Had this contract been in affect for the past 3 months, he would have been making over $50 on average for his 5pm class.
This is what happens when you disrespect the business side of your chosen profession.
Instead of analyzing the performance of past classes to see that Maile was in fact over-paying for a lot of her classes ($72 for an hour long class with 20 people in it) and keeping their top performing classes, they burned bridges, hurt feelings and caused strife within the community.
Observations
I finally had enough when I heard instructors were complaining that Maile's expansion might temporarily affect their incentive pay. As it turns out, when someone has a lease that goes through 2026, they make business decisions with a longer time horizon than the next 6 months. The suggestion by some instructors that she should react otherwise left me baffled.
I began writing a series of Facebook updates with "Protips" prepended to them. I suppose the use of 'protips' is a bit snarky, but these are indeed firm beliefs I hold about economics, business principles, and advice that I have spoken hundreds of times before.
You can be beautiful and wonderful and special and replaceable all at the same time. Good business people embrace this reality while amateurs are frightened to death by it.
It's clear that I simply think differently than a lot of people. Some people were offended by this statement. But here's the thing: Yes, of course, obviously every individual is their own unique human. Also, again, Maile has a lease that goes until 2026.
Is the suggestion that a business should act in such a way that should tragedy strike someone, that the whole business should fail? If an instructor becomes super famous and wants something the studio owner can't afford, should the owner go out of business trying to keep them? These are extreme examples of course, but small businesses deal with nuanced versions of this kind of thing all the time.
Think about it with empathy. What should a studio owner do if payroll cost rises more than revenue allows? Correct it, or risk becoming financially unhealthy?
I get particularly frustrated when people seem to be angry at an action that will prevent financial ill health, as if being an owner that can project your costs out into the future is some sort of evil thing to do to your people.
If some instructors need to leave because of that, then that's the nature of any business. But I think if instructors present themselves to studio owners in such a way that suggests their studios can be held hostage, well I think that misunderstands a lot of things about the kind of commitment it takes to run a successful business. And also, if you respect the studio you work for, then don't you want them to thrive?
And one other thing, not to sound overly snarky, but based on the number of sub requests I see coming through our system, I can say with 100% certainty that nobody thinks a yoga instructor is more replaceable than a fellow yoga instructor. I'm not trying to be a jerk or anything here, but seriously. Instructors LOVE our find-a-sub feature. And when you request a sub for a class, you are in fact asking for someone to replace you for that class.
So maybe just a tad less self righteousness about this please?
The market rate for a service is set not just by other people who are paying for that service, but also by people who are willing to provide that service and the price they are willing to accept for said services. It's called supply side economics.
The market rate for yoga is not set by the one Equinox gym that pays $60 to their instructors. There is a very limited supply of those classes and it's one data point. That instructors can at once feel they are underpaid, while also watching other very good, very qualified instructors, work hard to pick up the same classes, yet not be able to process that the pay is in fact fair and within market range, is a level of misunderstanding of basic economic principles that will forever harm their businesses until they are able to grasp them. And to be very clear: Yes, if you underpay for a service, then you will get lesser quality instruction. But $60 for a class with 20 people in it is not that.
It also surprises me how little I see instructors thinking of their peers. Some people act as though anyone accepting a pay straight in the middle of the market, instead of the top of the market, is somehow unqualified and I simply don't think that's the case.
If you make $40 to $60 for a one hour yoga class, don't compare your plight to that of an hourly Walmart worker. The average Walmart worker makes $64 for an 8 hour workday. You sound like a fucking fool.
I should probably swear less because it makes me sound angrier than I am, but I have become convinced that nothing more highlights the class divide that yoga lives within like a yoga instructor comparing themselves to a Walmart worker. I've written about this before. Look, I get it. Business is hard. But it's also hard for servers, and bartenders, customer service reps and school social workers. I just don't know how someone who is paid $60 for an hour to 90 minutes of their services can, with a straight face, compare themselves to someone who makes minimum wage. I feel like it's a shocking display of ignorance, and it is offensive to the millions of people who truly are working minimum wage jobs and living at or below the poverty level.
The yoga studios you teach at should be acquisition channels for other components of your yoga business. If you don't have other components of your independent yoga business, nor a website to go along with it, you are doing it wrong.
It is simply impossible for a single studio to support the careers of 20 independent instructors. I get particularly frustrated when people don't see that a studio provides value for everyone - students and teachers alike. If you are an instructor and you aren't actively doing other things with your yoga business, the only person for your revenue problems is yourself. It's not the studio that's giving you a few classes with a pay structure well within the market norms.
The longer your time horizon is for achieving success, the sooner you achieve success.
Every single person at Maile's studio would benefit from her expansion long term. Again, her lease goes through 2026 now. They're working with someone with whom they might have a 10 to 15 year relationship with. And yet, the shortsightedness of some people doesn't allow them to see the reality that long term thinking helps them today.
Ownership does in fact come with privileges afforded to you, and you alone. People who do not understand this are cancerous.
Yoga studios do not exist to serve their teachers. They exist to serve their students, and the teachers are paid to help the studio owner serve those students. There are literally hundreds of ways Maile could have fairly updated her pay structure to achieve her goals. She picked the option that was best for the studio and community she is building, and is extremely proud of the incentive structure she's been able to put together.
She, and she alone, is the owner of the studio and it is absolutely her prerogative to structure her pay and incentivize her instructors. Instructors have a choice to teach at her studio, and if they don't want to be a part of it, they have the choice of leaving.
For instructors to pretend that being the owner doesn't come with the right to make these kinds of decisions is a shocking display of arrogance and egotism, especially when someone hasn't even taken enough care with their own business to do basic math.
Lessons for studios
After observing things for the past couple weeks, I've started to form some strong opinions about things that studios can do to improve their businesses and prevent this kind of strife.
1. Stop paying incentive pay on single people. Instead, pay incentive at thresholds. i.e., something like flat of $35, plus $7 for every 5 people over 10 or something like that. We'll be updating our payroll calculator to account for this newfound belief. It's clear to me that per head incentive pay structures can spiral out of control quickly, and when you work to correct this, some people will not be able to see the reasoning why. I can see already Maile will have to again adjust her incentive pay when the studio is able to command a base of 15 to 20 people, and regularly starts bring in 25 people per class. That revenue will probably support an average pay of $50 per class, but not the $60 that it will lead to.
Unfortunately, it will probably again cause problems when she course corrects again.
2. Never apologize for adhering to the economic laws that all other businesses must adhere to. Use it as an opportunity to teach. Over-communicate about this kind of thing. In hindsight Maile learned she should have been far more communicative than she was.
3. You will never get the goodwill your instructors give you the day you open your doors. Unfortunate but true. I don't know what to do about this other than to know it as a reality.
4. Pay people differently. Different instructors are worth different amounts to a studio, and trying to keep everyone on the same incentive structure suggests an equality that doesn't actually exist within the market.
5. Set the expectation from the beginning that as you grow and learn, instructors should expect their pay to adjust accordingly. Business owners should never, ever, be penalized for learning new information as their businesses grow.
Lessons for Instructors
1. Be able to identify who your allies are, and treat them differently than you would treat your enemies. Maile had people refuse to talk to her before resigning, all because they forgot she's always been an ally. Some instructors picked up classes others dropped and are now their making hundreds more each month.
2. Not everyone is out to get you. I understand some people take advantage of yoga instructors, but not everyone does, and being able to know that some people actually want to help you, and identifying them, is as important as identifying the people that would do you harm.
3. Do Math. It's shocking to me that people are not tracking the pay they get for each and every class they teach. If you don't respect your own business, why should anyone else? It's just a few columns: Date | Class Name | Base Pay | Incentive | Total. The first step to improving something is to measure it. If you want to make more money, measure how much you are making for each and every class you teach, and keep it updated constantly. Patterns will emerge, I promise.
4. If you want to maximize your dollars per time spent, don't drop all your classes, only drop the low paying ones. Understand that business owners think in totals and averages. If they can make the totals and averages work, they'll probably be able to keep you happy and you'll be able to treat them with respect.
5. Understand that business is in fact a form of nourishment, and by disrespecting the business side of yoga, you are disrespecting yoga in the entirety. Business fosters empathy because it requires you to see how other people value you. Don't be scared of this, embrace it, and you'll be one of the most valuable people a studio owner works with.
While Maile's studio will continue to grow and foster community, the past few weeks will probably go down as some of the toughest. What I witnessed the last few weeks has changed me. I look forward to putting all these lessons into my next set of business of yoga talks to help both instructors and studio owners alike thrive as they build their yoga businesses.