Paid In Fulls (PIFs) have made a big comeback in recent years. Organizations like MASS have championed the cash out as a way of getting maximum revenue from a student base that is bound to drop out anyway. As much as I don’t like the idea of treating every student like a potential dropout, smart use of PIFs can boost your bottom line significantly and MASS has it down to a science.
At its most basic level, a PIF is sold as a discounted membership. The student pays in advance for a period of time or a set amount of classes and receives a 20 to 30 percent discount for doing so. Some schools have made this their primary focus with new students. They offer significant discounts for paying in full. The VIP Pass program adds an additional $100 off the cash out price if the student uses it within the first few days.
As attractive as this may be – and let me tell you, some schools are racking up some amazing gross numbers doing this – there are some dangers that you must be aware of. Other schools have nearly gone out of business following the PIF strategies because they did not follow these important realities about PIFs.
Cashing students out works to the degree you:
1. Deliver what you sold.
2. Keep a steady flow of new students coming in. If everyone has paid and no new students are joining, your cash flow will dry up, creating massive stress. You must keep a stream of new potential cash outs coming in.
3. Are not a bloody fool with the money. Any bloody fool can spend money. When you first start doing lots of cash outs, you may be making more money than you ever have, and there is the temptation to buy a Mercedes or a new Presidential Rolex. But remember, if you have some slow months and everyone has cashed out, you will still have to pay the bills. Save the money and work toward buying a building for your school, rather than an expensive toy for your ego. Pay your rent in advance or stick the money in a mutual fund. Just don’t get stupid and buy a new Mercedes to show off to your broke friends. Any bloody fool can spend money. Don’t be a bloody fool.
4. Have an upgrade stream, so you can continue to offer new programs to current students who may have already cashed out on other programs. For instance, a student who cashed out a New Student 100 Class Program may do the same with Black Belt Club, Masters’ Club, Leadership Program, or Career Development Program.
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