Cheap Driving Lessons – Industry Destroyer?

Cheap Driving Lessons-purple-star-25We’ve all seen the adverts… “First 3 hours for £6.33 each”, “5 hours for £25”, “10 hours for £75”, and even “20 hours for £200”.  For many instructors who are offering a highly-professional service and trying to make a decent living, these offers for Cheap Driving Lessons come as a complete ‘kick in the teeth’, as they strive to compete with thousands of ADIs selling their ‘professional’ services for a pittance.

The majority of instructors that I speak to feel that these special offers are cheapening the industry – after all, qualifying to become a driving instructor isn’t particularly cheap, overheads can be high (especially with the rising cost of fuel), and we all have our bills to pay.  But rarely do I find driving instructors openly admitting to be the ones offering these cut-price driving lessons; it’s almost as if they are embarrassed by the stigma attached to them by other ADIs charging a ‘normal’ rate.

So who are these instructors and driving schools, why are they able to charge so little for this professional service, and can anything be done about it?  On the other hand, should anything be done about it?  Is it a good marketing strategy to get ‘bums on seats’?  Maybe these instructors are the winners in all of this?

Who is Offering These Cheap Driving Lessons?

Across most industries, businesses use tactics (such as initial discounts and special offers) to entice potential customers to call them before their competition.  And when offering services to members of the public, the promise of financial savings is without doubt the most common way (and let’s face it, one of the most successful ways) to attract new business.

nothing-offA small minority of driving instructors do not offer any special introductory discounts at all, other than maybe a discount for block booking 10 hours.  If they’re busy, then great – their business model seems to be the one most ADIs can aspire to – they’re obviously doing something right!

For the most part, it seems generally acceptable for driving instructors and schools to offer the first lesson at half price, or even for ‘free’.  Some also do a ‘first 3 or 5 hour’ deal at a reduced rate.  But an increasing number of ADIs are offering far more than that, with longer term cheap driving lessons.  So who are they and why do they do it?

  • Newly qualified ADIs trying to rapidly expand their client-base
  • Instructors & driving schools trying to rapidly build a new client base in a new location
  • Franchised driving schools trying to rapidly fill new instructors’ diaries so that they can start charging them a weekly franchise fee
  • Poor-quality instructors who have a high pupil loss rate
  • Instructors with poor business/marketing skills
  • Instructors that are finding it hard to source work through word-of-mouth recommendation
  • Trainee instructors – franchisors selling off cheap lessons with instructors who have not yet fully qualified
  • Instructors who have extremely-low running costs, e.g. not updating their tuition vehicle on a regular basis / reducing fuel costs by spending as much time at the roadside as possible
  • Unlicensed, illegal instructors – those working without holding a valid PDI or ADI licence

How about setting a Minimum Lesson Price / Hourly Rate?

oftIt has been argued for years that the DVSA and/or Driving Instructor Associations should work to set a minimum hourly rate for driving lessons.  However, under Articles 81 and 82 of the EC Treaty and the Competition Act 1998, to set a minimum price would be illegal.  This is true whether a minimum price is agreed formally or informally.  The following is an extract from the OFT’s Competition Law Guidelines (Agreements and concerted practices), which is available to download in full by clicking here:

2.2  Article 81(1) and section 2(2) of the Act provide an identical list of
agreements to which the provisions apply, namely those which:
‘(a) directly or indirectly fix purchase or selling prices or any other
trading conditions

3.4 An agreement whose object is directly or indirectly to fix prices, or
the resale prices of any product or service, almost invariably infringes
Article 81 and/or the Chapter I prohibition. The OFT considers that
such price-fixing agreements, by their very nature, restrict
competition to an appreciable extent.

3.5  There are many ways in which prices can be fixed. Price fixing may
involve fixing either the price itself or the components of a price,
setting a minimum price below which prices are not to be reduced,
establishing the amount or percentage by which prices are to be
increased, or establishing a range outside which prices are not to
move.

The only way a minimum lesson price would come about is if there was a change in government legislation.  This is a very long and costly process.  The government is also committed to reducing the burden of legislation, so (in my opinion) the likelihood of them ever doing so is virtually zero.

24335882_sAlso, we should consider the possible implications of our government setting a minimum price, which could in fact turn out to be far lower than most people are currently charging.  Imagine, for example, if the government settled on a strict minimum price of £10-£11 per hour – would this solve the problem?  And if it was set at say, £25 per hour, what types of people would this attract into our industry?  People chasing the income, potentially comparing it to their current minimum wage of £6.31 per hour.  It could swell the numbers of ADIs on the register to an even more unsustainable level.  Either way, I don’t personally believe a minimum price is a good move for any of us.

Cheap Driving Lessons – Ads Exposed!

Who’s earning the most?

Cheap initial offers (and even some longer term deals) are often subsidised later on in training by higher lesson prices.  As a result, what seems like a ridiculous hourly rate for introductory offers can actually result in higher average hourly rates.  For example:

Driving School A:
Initial Offer – 1st hour £10
Regular Lesson Price – £20
Cost over 40 hours = £790 = £19.75 per hour

Driving School B:
Initial Offer – 1st 5 hours for £25
Regular Lesson Price – £23
Cost over 40 hours = £830.00 = £20.75 per hour

Many customers will go with the company that offers the best initial deal, as they don’t see the ‘bigger picture’ in the long run.

Be wary of using small print!

Some initial offers for cheap driving lessons don’t actually relate to the first lessons at all – and may relate to the hire of the car on driving test day, or even a discount off Pass Plus lessons.  When carrying out my research into lesson prices, I came across a website which offered the following deals:

We have two offers in the £20 range:
4 hrs for £20 – The first lesson is a 2hr lesson, at the end of this lesson you pay £20. The other 2hrs are received on the day of your test as you have an hour for the test (you use the instructors car for the test) and an hour before the test to practice. This totals 4hrs.

5 hrs for £25 is the same as above, but if you take the pass plus course (which is a mandatory 6hrs with no test) you would receive an hour of this for free.

I don’t know about you, but my head hurts after reading all that! It all sounds a little too complex to me, and if I were the customer, I would run a mile out of sheer confusion! 🙁
If you insist on running an introductory offer, then keep it as simple as possible with no catches, which will be much more customer-friendly.

Clever Marketing Opportunity?

From an ADI’s perspective, could these offers be a great marketing opportunity?  We have already seen that by offering the first 5 hours for £25 and then setting the regular price at £23, we can in fact make more profit.  The main fear about doing so would be that clients would come along, take the five lessons, and then find another instructor offering a similar offer.  And this is a true fear.  But one could argue that over 5 lessons with a really good instructor, the learner is likely to have established such a degree of rapport with their instructor and have got comfortable with the tuition vehicle that they won’t want to change, and in fact will be happy to pay the ongoing £23 per hour rate.

craigIf you do use introductory offers, it is absolutely essential that you consider those ‘cheap’ lessons as an opportunity to showcase your skills, business and professionalismConsistently over-deliver on your pupil’s expectations.  Turn up on time, make sure the pupil gets maximum value and the best professional service you can offer.  Make sure they have fun, learn loads and go home with the biggest smile on their face.  Even if you do attract a ‘deal hopper’ who finds someone cheaper after your initial offer is over, they’re likely to book back in with you if they find their new instructor offers a truly ‘cheap and nasty’ service.

If you have the mentality of “What’s the point of trying hard?  I’m only doing this lesson for £5, which won’t even cover my costs”, then you are unlikely to deliver a good service and it’s inevitable that the customer will go elsewhere and never come back! And that’s potential earnings of £700 – £1,000 lost forever (assuming they would have taken 30+ hours of lessons).

If you’re an instructor worrying that instructors with cut price lessons will be taking your business, stay ahead of the game – what can you offer that your competitors don’t?  Is your pricing structure offering you the best return?  Are you marketing yourself effectively and are you doing a great job?

Focusing on what YOU can offer to your customers will certainly be more productive than focusing on what  your competitors are doing.

Charge what you are worth

1468594_263217637160603_530427960_nThis is a really important thing to remember.  Do you consider yourself to be delivering as good or better service than your local peers?  If so, charge accordingly.  By undervaluing yourself in offering long-term discounted lessons, you are sending out a clear message of desperation to your colleagues and prospective customers.

Two ends of the spectrum

I don’t believe we should become overly concerned with our competitors offering cheap driving lessons.  To me, there are two ends to the customer spectrum.

  • At one end are customers who are seeking the best price, largely irrespective of the instructor.
  • At the other end are customers who are seeking the best instructor, irrespective of price.

Which type of client would you like to attract?  Once you have the answer, market yourself and price yourself accordingly.

Our challenge to you – Increase your lesson prices!

We’d like you to take this challenge.  Perhaps start it on the 1st of next month.  Increase your lesson price by £1 or £2 per hour.  You may be tempted to do this for only new pupils, but I would recommend you do this for all of your current pupils – and you may be surprised to hear that very few (if any) will complain.  Those that like you as an instructor will happily pay the extra – after all, “it’s only £1”.

You may be thinking that by increasing your prices by £1 or £2 per hour that fewer people will book in with you.  In our experience, assuming you are at or below the average price in your area anyway, this is highly unlikely and is a limiting belief that will hold you and your business back.  If anything, people will perceive your services to be of more value – higher priced services tend to attract higher value customers – those that are more likely to be reliable and keen to learn.

Finally, by increasing your prices by just £1 per hour, you can give your income a significant boost.  Based on 35 hours of lessons per week, that’s an extra potential of £1,820 per year.  Enough to cover the entire cost of your ADI insurance policy and several otherdown arrow hefty costs. Increase your lessons by £2 an hour, and your income will grow by £3,640.

Food for thought? 😉

Share your views as an instructor about cheap driving lessons!  Will you be taking us up on our challenge?  Have you increased your lesson prices recently?  If so, what positive (or negative) effects did it have on your business?  We love hearing from you, so please add your thoughts in the comments below.

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