How Lucrative is the Test Preparatory School Business?

There is a constant need in the economy to keep expanding educational infrastructure across all levels, with the goal usually to improve the standard of education and provide adequate educational infrastructure for the school-age population, the key motivations are the perception that schools as a business, are cash cows.

However, there are key questions that need to be answered before venturing into the business of tutorial college. These questions include

WHAT IS A TUTORIAL COLLEGE BUSINESS?

This is a private education institution offering an intensive form of educational services and consultancy to a group or set of students by a tutor for a charged fee.

WHAT ARE YOUR SERVICE OFFERINGS?

The offering of educational and consultancy services to your clients (Students) with focus on Ordinary level (O’ level) exams while others offer foreign exam test preparatory services like TOEFL, IGSCE etcetera.

Suggested Read: Ultimate secrets you never knew about starting a school business

  1. MARKET STRUCTURE

The business of tutorial college operates in a monopolistic competitive market. This is a market with many test preparatory service providers with slightly differentiated offerings.

WHAT IS THE AVERAGE SET UP AND COST REQUIREMENTS?

 Average Setup Requirements
 Items  Desc. Qty  Amount (N)
 Classroms and Office Rent  500 Capacity Hall                                        1,700,000
 White Boards  6 (8,000 /unit)                                             48,000
 Mobile Partitions  100 Sq. meter (30,000/sqm)                                        3,000,000
 Furniture (For students and instructors)  100 (8,500/ unit)                                           850,000
 Fixtures and Fittings                                           250,000
 TOTAL                                        5,848,000
Source: Blitz-ng/Market data

HOW DO I PRICE TO MAKE PROFIT?

 Fee per Head  Number of Students  Monthly Rev
                                                5,000                                                  500                                        2,500,000
 REVENUE ANALYSIS
 Items  Amount (N)  Amount (N)
 Average Annual revenue (NGN)                                     30,000,000
 Less Expenses:   Salaries [10 staff]                                      (7,200,000)
 Packs of Board Markers [24 (1,200/Unit)]                                           (28,800)
                       Miscellaneous                                         (771,540)
                                     (8,000,340)                                      (8,000,340)
 NET REVENUE                                     21,999,660
 source: Blitz-ng/Market data

KEY SUCCESS FACTOR:

Being result-oriented will help drive the influx of students to your centre and referrals from students and parents. Thus, you must:

  • Lower your costs to below-average levels
  • Divide your service offerings to morning, evening and weekend classes for different types of Students at the same monthly subscription rate in order to maximize the use of your facilities, boost attendance and your revenue
  • Charge a monthly subscription fee which can be affordable for your premium service offerings
  • Being exam-focused will attract more students to your Prep school
  • Ask for referrals from satisfied students and parents

KEY RISK FACTOR

The demand for school services is price elastic and prices can therefore not be randomly increased otherwise enrollment will decline.

CONCLUSIONS

The business of a tutorial college is a money-spinning business. With the revenue coming in monthly, venturing into the business can fetch you a fortune.

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