How much should you charge for your driving lessons, and what do you need to calculate to arrive at the correct lesson price for your Driving School?

There are many factors which need to be considered before coming to what you would consider the correct price for your driving lessons such as:-

What Are YOUR Costs?

How Much Do You NEED To Earn?

How Should You CalculateYOUR DrivingLesson Price?

Does It ReallyMatter How Much Others Charge?

When ShouldYOU IncreaseYOUR Driving Lesson Prices?

Should You Give Discounts?

What Is The Likelihood Of Prospective Pupils Paying The Price You Want To Charge?

So How Much Should YOU Charge For YOUR Driving Lessons?

When pricing your driving lesson fees the first thing that you will probably feel most inclined to do is to check out the prices of the opposition….and then undercut them!! This is all well and fine, but this should only be used as a guideline and NOT the only basis of coming up with your pricing policy.

You need to know how much you would like to earn, remembering to take into account your income tax and National Insurance payments as well as ALL the other costs involved in running and maintaining your Driving School Business.

What Are YOUR Costs?

Firstly, when deciding on how to calculate your lesson price you need to take into account a number of costs related to your business:

The Initial Cost Of Your Vehicle: The amount of your monthly payments (if any)

On The Road Costs: Driving tuition Insurance, Road tax, Servicing, Repair costs, Petrol/Diesel costs, Oil, puncture repairs, tyre replacement, replacement wheel trims, replacement floor mats, windscreen washer additives, air-fresheners, windscreen cloths, de-icers and windscreen scrapers, Car wash prices, vacuum prices

The Cost Of Having Your Car Equipped For Tuition: Dual-controls, Roofsign, sign-writing or side decals, instructors mirror(s), additional 'L' plates, on-board video camera (cost of tapes, batteries etc)

Vehicle Depreciation Costs

Advertising Costs: Yellow Pages, Thomson's, local newspapers, internet directories such as www.INeedDrivingLessons.co.uk

Your ADI Licence Fee

Pass Plus Form Fees

Tuition Aids: Highway Code, Driving Manuals, DVD's, CD-Rom's, clipboard, pens, paper (for drawing diagrams), print-outs of instructions and/or local road layouts

Stationery: Diary, appointment cards, letterheads, business cards, leaflets, postcards, Introduction Pack and/or handouts, pens, paper, ink cartridges, stamps, envelopes

Hardware And Software Costs: Desktop and/or Laptop computer, printer, (accountancy software , Theory/Practical DVD(s)/CD-Rom(s)), mobile phone

Website Set-Up Costs: domain registration, your monthly ISP costs

Financials: Income Tax and National Insurance — as you will probably be working on a self-employed basis now, Accountancy costs (or software if you do your own accounts), Banking fees

Attending Fees For: CPD seminars, workshops, motor shows PLUS travelling, food and parking expenses

You should now make a total of all of the above based on a 12 month period. If you do not know all of the exact costs, then you should get some quotations either by looking in your local telephone directory to find various suppliers (the business section of the Exchange & Mart is another good source for printing, insurance and mobile phone requirements http://www.exchangeandmart.co.uk/iad/bap/all ), or as most people nowadays have access, spend some of your valuable time to carry out your research on the internet, it will be well worth your while because invariably you will save a lot more money.

If you are not on the internet yourself — something which you should definitely consider in this day and age – you may well have a friend or relative, even a pupil who will be willing to help you. If this is not possible go to your local library which will have internet access available for public use.

As you work through the following sections you should substitute the bold figures where applicable with your own figures. Afterwards you can then experiment with your figures to see how and where you could improve your profitability.

In particular see how your profitability could increase by increasing your driving lesson by £1, £2, £3 per hour etc.

Now Lets Breakdown Each Section:

The Initial Cost Of Your Vehicle: The amount of your monthly payments (if any).

If you were to purchase a typical driving school car – in our particular example we are using a petrol Vauxhall Corsa – the costs would on average be as follows:-

Cost of car £7,795 bought on a 36 month payment plan.
Deposit: £1,948.75
Credit to be financed: £5,846.25
1st month payment: £301.70
34 monthly payments: £188.70
Final payment: £291.70

(Including finance charges of £1,162.95) Total amount paid: £8,957.95

This works out at (excl. deposit) an average over 36 months of: £194.70 per month

On The Road costs: Driving tuition Insurance, Road tax, Servicing, Repair costs, Petrol/Diesel costs, Oil, puncture repairs, tyre replacement, replacement wheel trims, replacement floor mats, windscreen washer additives, air-fresheners, windscreen cloths, de-icers and windscreen scrapers, Car wash prices, vacuuming costs

Car Insurance: £425.00
Road Tax: £120.00
Servicing (9,000miles x 3 per year) at £100 £300.00
Repairs & Tyres £200.00
Replacement wheel trims £50.00
Mats, De-icers, air fresheners etc £60.00
Car Wash and Vacuum £100.00

Total: £1,255.00

Monthly this calculates at: £104.58 per month
Petrol/Diesel costs based on around 1,000 miles per week: £445.00 per month

The Cost Of Having Your Car Equipped For Tuition: Dual-controls, Roofsign, sign-writing or side decals, instructors mirror(s), additional 'L' plates, on-board video camera (cost of tapes, batteries etc)

Dual Controls: £211.50
Roofsign: £63.45
Side Panels / Sign writing: £45.95
Instructors Mirrors, L plates, tapes, batteries etc: £50.00
On-board Video System: £375.00
Total: £745.90

For the purpose of calculation all of the purchase costs above are based on a 3 year / 36 month basis as reflected in the monthly calculation below:

Therefore, this equates to approximately £20.72 per month


Vehicle Depreciation Costs

Over 3 years, given that the vehicle will have probably covered between 25,000 and 35,000 miles it will now be worth around £3,795.00. So it will have lost approximately £5,162.95 of its original sale price. Therefore, remembering to take into consideration that you already paid £8,957.95. This means that on a monthly basis over 3 years your car will be depreciating at the rate of:
£143.42 each month


Advertising Costs: Yellow Pages, Thomson's, local newspapers, internet directories

Yellow Pages and/or Thomson Local advertising: £350.00
Local Newspaper classified weekly approx £7.50: £375.00
Internet directories can be free or up to around £60: £125.00
Total: £850.00

Therefore, this equates to approximately: £70.83 per month

Your ADI Licence Fee

This is £300.00 for 4 years and therefore costs you: £6.25 per month

Pass Plus Form Fees

If you are not already a Pass Plus registered instructor you can enrol if you are already an ADI at: http://www.passplus.org.uk/instructors_who_can_teach.asp

The Starter Pack costs £35.00 but includes 10 forms plus the Syllabus. After the initial registration the only ongoing costs are for more refill packs of 10 forms which then will cost you £28.00 each time.

Therefore, we will assume that you are already enrolled and that 50 of your pupils pass their driving tests each year and that 60% of your pupils (30 out of 50) go on to take Pass Plus. You will need to purchase 3 refill packs at £28.00 amount to a total of £84.00.

Therefore, this equates to: £7.00 per month

Tuition Aids: Highway Code, Driving Manuals, DVD's, CD-Rom's, clipboard, pens, paper (for drawing diagrams), print-outs of instructions and/or local road layouts

This will include your own editions of the Highway Code, Driving Manual etc – so that you can quote directly from them – your clipboard for diagrams and paper handouts etc. These will total around £100.00, per year

This equates to: £8.33 per month

Stationery: Diary, appointment cards, letterheads, business cards, leaflets, postcards, Introduction Pack and/or handouts, pens, paper, ink cartridges, stamps, envelopes

The most expensive of these items will be ink cartridges, which again can be found cheaply on the internet by going to www.google.co.uk and typing in 'ink cartridges', 'cheap ink cartridges' or 'discounted ink cartridges', or even do a search on www.ebay.co.uk . Your costs relating to these items will probably be around £150.00 per year.

This equates to: £12.50 per month

Hardware and Software costs: Desktop and/or Laptop computer, printer, (accountancy software , Theory/Practical DVD(s)/CD-Rom(s)), mobile phone

Again by searching the internet you should be able to pick these items up at quite a reasonable price, with www.ebay.co.uk being the one that immediately comes to mind. But do another search on www.google.co.uk and you may grab an even better bargain.

You should be able to pick up a good computer now for around £300.00 and a decent printer for about £50.00.

I have just taken a look on www.ebay.co.uk for accountancy software. There were 57 items for sale and the prices ranged between £1.99 and £19.99. This is all you need to spend for your complete book keeping needs. So for arguments sake we will assume that you went for the more expensive software at £19.99.

So we add the £19.99 to the £350.00 we spend on the computer and printer which should all have a lifespan of at least 3 years and we have a total of £369.99

This alone equates to: £10.28 per month

I don't need to tell you that there are many, many different and available mobile phone deals out there, with free phones, free minutes and free texts.

So after all your 'free' time has been used we will assume a mobile phone bill of approximately: £60.00 per month

Website Set-Up Costs: domain registration, your monthly ISP costs

If you don't already have a website, then you should definitely be considering building one or having one built for you. This will give you an online presence which will present your business to an even wider market place, which is only set to grow and grow year by year. You will also be able to be contacted by email as well as advertising all your services and contact details in a far greater, cheaper and more cost effective way than you could ever do with an advert in a directory or newspaper.

The cheapest option would be to build your own website. Of course many of you will not feel competent in doing this. There are many different possibilities of getting one built for you, perhaps even ask one of your pupils in exchange for some driving lessons perhaps. But for our purposes we will assume a cost of £200.00.

You can register your website domain for just a few pounds a year. A domain is the website link to your website such as www.DonsDrivingSchool.co.uk . I have checked: http://www.ukreg.com/register-domains/?gclid=CM6j9Ivj4JQCFQpYQgodrCWURA . This is a Domain selling website. They have domain names from £2.95 per year, and certainly less than £10.00 per year for the most popular co.uk ones, or you can purchase one for 10, 40 and even 100 years….and it will be yours forever. For calculation purposes we will assume that you will be paying £6.00 per year for your domain name.

Your ISP (Internet Service Provider) costs can vary between Free and around £30.00 per month. For our purposes though we will use £15.00 per month as our price.

Therefore, calculating the website construction and domain registration on a 3 year basis, this will come to £6.05 per month added together with the ISP of £15.00.

This equates to: £21.05 per month

Financials: Income Tax and National Insurance – as you will probably be working on a self-employed basis now, Accountancy costs (or software if you do your own accounts), Banking fees

As an ADI, you are, or are planning to be, self-employed. If so you will probably be paying Income Tax at the standard rate, if in any doubt please consult an accountant or financial adviser. In this event you should put away around 25% of your income even though it may create a surplus which can then be accessed in emergencies such as unexpected car repairs. Assuming that you will be paying income tax at the standard rate you should put away at least: £998.00 per month

Unfortunately we all miss various payments from time to time, or go just over our overdraft limit, so we should allow for various bank charges throughout the year. As you will be aware by press and media attention in the last few years you may well be in a position to reclaim some of those charges dating back to the last 6 years. For further information go to: http://www.moneysavingexpert.com/reclaim/bank-charges

Accountancy costs and bank charges amount to approx: £70.00 per month

Attending fees: CPD seminars, workshops, motor shows PLUS travelling, food and parking expenses

On average the entry fee for a seminar or workshop tends to be around £35. But you also have other costs to consider, the fuel it costs you to get there and home again, as well as any meals you may have to buy while you are there.

Therefore, the average seminar or workshop is going to cost you altogether around £80.00. For the purpose of this exercise we are going to assume that you will be attending 2 seminars and/or workshops each year at a cost of £160.00.

This then equates to: £13.33 per month

We have now concluded our business expenses and come up with a grand total of:

£2,185.99 per month

But of course this is based on a 52 week year. As we are working on a 48 week year (1 week off at Christmas, 2 weeks off in the summer, and odd days here and there), the actual monthly total we need to run this business successfully is:

£2,344.26 per month

This Figure DOESN'T Include Any WAGES Or Personal Income For YOU!!

This Is The Income That You NEED To Generate….

…. Just So That Your BUSINESS Can Survive!!

So How Much Do You Really NEED To Earn?

You may well already be an ADI, but this will apply to you as well as anyone considering entering this profession for the first time.

Besides all of the above business expenses you now have to take into account your actual home living expenses. This should include your mortgage/rent, council tax, utility bills (electricity, gas and water) etc., but not any of your business expenses which you included in the business expense calculation. A useful tool to help you can use can be found by going to: http://www.moneysavingexpert.com/budgetcalculator.phtml . This is also a great site to help you save money on a vast variety of your outgoings.

Now you should add your business expenses to your household expenses and this will show you how much you need to earn over a 12 month period.

The national average wage in the UK at the time of writing is around £26,000 per year which converts to £500 per week or £2,166.67 per month.

Therefore, based on a 48 week year (4 weeks for holidays, one week at Christmas, two weeks in the summer and a few odd days off here and there) if you were to charge a fee of £23 an hour for your driving lessons you would need to earn £541.66 per week which would equate to 23.55 lessons each week.

Now we need to add in your business expenses as in the first calculation.

So therefore if you want to at least earn the average wage of £26,000 after your business expenses have been accounted for you will now need to earn at least:

£4,510.93 per month

This equates to approximately nearly 197 lessons per month at £23.00 per lesson, or at least 49 lessons per week EVERY WEEK! Any less than this then you will earning less than the average UK wage.

At £25.00 per lesson it would equate to just under 181 lessons a month, or at least just over 45 lessons a week. At £27 per lesson this falls to just over 167 lessons, or just under 42 lessons per week which is much less pressure to fill your diary.

This is also why you should encourage your pupils to take 2 hour or at least 1½ hour lessons each week.

This way you will not need to find so many separate individual pupils. Instead of 45 pupils to attain 45 lessons, you only require 25 pupils. You would only need 17 pupils taking 2 hour lessons (34 hours) and 3 having 2×1 hour lessons (6 hours) and 5 pupils taking just 1 hour per week (3 hours).This totals to the necessary 45 hours. Obviously some weeks you will have more lessons – particularly when you take into account driving tests and Pass Plus or motorway lessons – and some weeks you will have less, but your aim is to at the very least to reach – or preferably exceed – your average target.

How much should you charge for your driving lessons, and what do YOU NEED to calculate to arrive at the correct lesson price for your Successful Driving School business.

If you decide that you would prefer to earn more than the current £26,000 national average wage, you should substitute the £26,000 with your own specific figure and carry out the calculations again as set out in Part 1.

So Now How Should You Calculate YOUR Driving Lesson Price?

After taking all the above into account and carrying out your calculations, you should then be in a position to calculate your lesson price according to the costs involved in running your Driving School business together with the living standards you require and the amount of lessons you feel that you are happy to do, and feel that you can achieve each week.

For example, if you were to set your lesson price at for example £25.00 per hour, it equates to needing only 181 lessons per month, now reducing the need to only 45 lessons each week.

If you set your lesson price at an even higher price of £27.00 per hour, only 167 lessons are required each month or 42 lessons per week.

Therefore, if you want to conduct fewer driving lessons each week, but generate the same amount of income you should set your driving lesson price accordingly.

Remember that the fewer lessons you carry out at a higher price, the less wear and tear and lower annual mileage on your car. Conversely, that the more lessons that you carry out at a lower price, the more the increase in the wear and tear and higher annual mileage on your car. The wear and tear factor affects your day to day costs, but the mileage affects the final resale or trade-in price when you are ready to change your car.

Therefore, the Fewer DrivingLessons you carry out at a Higher Price, the more Profitable And Successfulyour Driving School business will be.

Source: http://www.drivingschoolsuccess.com/public/93.cfm?sd=24