How does a Mile High Karate School generate revenue?

The total revenue of a Mile High Karate school will be affected by several factors. In simple terms the revenue flow ends up being a function of:

New Enrollments X Tuition Rate X Retention Rates X Renewal Upsells X Cash Ratio

To simplify this picture the average path that a student may take through the business side of a Mile High Karate school.

First. The family is exposed to Mile High Karate in one of a variety of ways. They may first come in contact with us by responding to one of our regional ads in the Rocky Mountain News or Denver Post from our Infomercial or, they may be responding from a localized ad such as direct mail or val pak, or often they are either a participant in one of our many community outreach programs or are referred by an existing student. Regardless of source they enter our introductory process and hopefully (35%-65% of the time) end up enrolling in our “trial enrollment” which is for a year.

They either pay an average of $259 to enroll then $159 per month (our schools currently range from $139 to $189 per month for this program) or, they pay one payment averaging $1,700 (there are small family discounts for a 2 nd and 3 rd family member of 10% and 20% respectively.)

Second, The student enters our White Belt class where they train twice per week for eight to twelve weeks. During that time they are being prepared for and evaluated for our Black Belt training. Prior to testing for Gold Belt (at the end of the eight to twelve weeks) they are evaluated for – and, if they qualify offered the opportunity to join the Master Club (a higher level of training which takes them to Black Belt and Beyond.)

At that point if they join Master Club (which 35-50% should do at this point) they will either pay $500 down and have an approximately $100 increase in their monthly payment or will pay one payment averaging $7,800 (again with 10% or 20% 2 nd & 3 rd family member discounts)

Third, the student enters our Beginner Class (Gold, Orange , Green & Purple Belts) and either trains as a new Master Club member (with additional class times and opportunities and teams they can participate in at that level) or they train as a Gold belt for two months and continue and revisit the qualification process to Master Club. Most of those who have not yet joined Master Club will prior to the Orange Belt test – although some percentage never will and will continue on to the trial level.

Additionally, upon entering the beginner's class each student will purchase a variety of equipment including hand pads, foot pads, head gear, shin pads, rib guard, and some of the basic weapons required by curriculum. In total a student will purchase between $150 and $200 in equipment (our cost varies from 35% to 50% of the retail price of these sales.)

Fourth, the students continue to train through Beginner, Intermediate, and Advanced classes. During the process there will be an inevitable percentage of the students who will drop out without completing whichever program that they have enrolled to complete.

Our schools have encountered a low of 2% monthly attrition to a high of 7%. Our target is 3.5% or less per month is our target range. This varies monthly based upon a variety of factors – some seasonal such as Christmas Season or Summer – and, based upon instructional quality and parent-student rapport levels with the teachers and other staff.

In determining the monthly revenue stream of the school we categorize revenue streams as follows:

Tuition:

Enrollment Down Payments
($259 first student in family, $239 2 nd member, $219 3 rd member – average tuition)

Enrollment (1 year) Paid In Fulls
($1,700 on average)

Renewal Down Payments
($500 – 1 st family member, 10%, 20% family discounts – this number varies)

Renewal Paid In Fulls
($7,800 first person, 10% off, 20% off additional family members)

Monthly Tuition Payments (billed through Mile High Events by ASF via EFT or Credit Card $159, $139, $119 first, second, third family members - $100 more Master Club)

Retail Sales:

Pads, Uniforms, Weapons, Books, etc.