Rethinking your rates: some insights

Dale Coulter
Dale is the Director of Studies of Expath in Berlin. He also teaches extensive and intensive business
English courses for a number of clients in Berlin and writes online and published materials. His
interests include data-analysis, design thinking and running.

Just over 200 hundred people filled out the pay survey in 2014 I conducted. 125 people filled out
this 2015 version. Not representative of how many teachers there are in Germany. Certainly not
enough to call it a comprehensive survey of Germany. But, even at its most representative, data
doesn't provide all the answers to all our questions. Put a group of psychologists and data-science
crazy marketers in the same room and let them fight this one out. It helps though. Otherwise we're
just feeling around in the dark.
This slice of data. This segment of our profession. A group of people looking to share their values
with each other. What this provides us with is a lens to look through. It's the most primitive map 17th
Century explorers used to navigate the globe. The insight I hope it gives you is a rough indication
on what an acceptable rate for you is, how to calculate that and what your options are.
If I've learned one thing from doing this survey (twice) it's that averages don't paint the whole
picture. They can be misleading. They can be influenced by outliers. This is why I use percentiles in
this article. Percentiles are a multi-dimensional way of looking at data. A percentile, let's say the
40th, will take a ranked group and tell you what percentage of numbers are below that. For this
example, let's say we have a test score of 30/100, which seems pretty bad. But, if we find out that
30/100 is actually the 90% percentile, we find out that relatively, that test score is in the top 90% of
test takers. So you think hey, I earn 22 from Bob's language provision and this figure falls
between the 50th and 60th percentile, you know that 50-60% of rates are below that, and 50-40% are
above that. Why is that better than an average? Because, an average could be affected too greatly by
one or two outliers, so the average is 26, but that's because there is a low outlier (8) and a high
outlier (52).
Why is setting your rate a thorny issue?
How much to charge? has been perplexing businesses since cave people started trading. What if I
lose out? It's a sensitive issue because it's your livelihood. In many cases, it's your trade, your
profession and let's face it, you don't get paid much for it. Compounding this issue is the fact that a
lot of the institutions we work with quote a rate (quite surprising for any of my freelance friends in
other professions). In the survey we asked what percentage of respondents income came from direct
(or private) clients (from this point on referred to as directs). The 50th percentile shows that 55% of

income comes from this source. That's pretty significant and warrants some insight into setting your
rate. What's more, that indicates that many people work with institutions that set their rates.
What is a benchmark living wage or an advisable MAR?
An ideal situation would involve finishing the month with something to put away for a rainy day.
One way of breaking down the challenge is to calculate an MAR (minimum acceptable rate).
You could do this by calculating your overheads (personal and business) and divide it by the hours
that you work. Respondents to the survey provided information on their average spending on areas
such as rent, 'Rentenversicherung', income tax, admin costs, transport, food and lifestyle to name
but a few (see table 1.1).
1.1 Responses to month overheads (values in )
0- 251- 501- 751- 1001- 1251- 1501- 1751> 2000
250 500 750 1000 1250 1500 1750 2000
Berlin
1
3
7
8
1
7
2
7
Frankfurt 1
1
2
1
3
Munich
1
1
2
1
Stuttgart
1
1
Hamburg
1
4
Cologne
1
1
1
3
Dusseldorf
3
1
1
Bielefeld
2
A more practical example. In Munich, two people had total overheads of between 1751-2000. How
much and at what rate would you need to teach at to make that figure?
Overheads / teaching hours (45 mins) worked = MAR
2000 / 100 = 20

2000/ 60 = 33

2000 / 90 = 22.22

2000 / 50 = 40

2000 / 80 = 25

2000 / 40 = 50

2000 / 70 = 28.57
Let's say you work only with language schools teaching business English. The 50th percentile in
Munich says 22.5 per teaching unit, which means you're looking at 90 hours per month, or 22,5
teaching hours per week to make that figure. Or, let's say you teach some ESP with directs. Take the
50th percentile, which gives you 33.5, which places you at about 60 teaching units per month, or 15
per week.
1.2 50th percentiles of rates in Munich, Cologne, Frankfurt, Berlin
1-1 D = 1-1 private client , 1-2 D = group of 1-2 private client, 2+ D = group of 2 or more private client, Flat D = flat rate for a private client , D ESP
= private client ESP (English for Specific Purposes), D BE = private client Business English, D Coaching = private client coaching , D SS = private
client soft skills training, LS ESP = language school ESP , LS SS = language school soft skills training, LS BE = language school business English,
LS EP = language school exam preparation , LS GE = language school general English.

1-1 1-2 D 2+ D Flat D D D BE D D LS LS LS

D
ESP
Coa SS ESP SS BE

LS
EP

LS
GE

chi
ng
Munich

21.2
22.5 20 20
5
57 45 29 22.525.75 26 25.75
24.2
38 38 26
24.25 26 26
5
32.
35.5 22.5 17 20 17 17
5

27.5 21.25 21.25 33.5 33.5 25.75 38 38 22.5

Cologne

38

38 40.25 42.5 40.25 38

Frankfurt

38

38

38 42.75 38

38

Berlin

26

31

33

33

33

33

* responses for other German cities did not total enough to make percentiles. Minimum responses needed: 8.

With an indicator, the situation is a little easier to judge your rate and what rates you're happy to
accept or not accept. While it's not an exact science you can mix and match your services to make
your MAR it does provide some grounding for your decisions.
Language schools generally provide a more mass-market service, which then comes at a massmarket rate for teachers. What if you want to upsell your service? Table 1.3 below shows a heatmap of the different percentiles for different services (horizontals). There are two moves that could
squeeze extra cents out of your service: horizontal and vertical.
Horizontal niche moves
What if you've calculated your MAR and your conclusion is that you want to work less and
potentially earn more. One move you could make is to move from the mass market service to
something more specific, in other words a niche move. In table 1.3, percentiles 10-90 for each
type of language school and direct client teaching are shown. In Berlin for example, a move from
LS BE to D BE would yield a return of 13 (from 20 to 33) per 45 if we take the 50th percentile
as an indicator. A move from LS ESP to D ESP would yield a return of 10.5. Going it alone isn't
always as simple as calculating the potential increase of income. While not the only step to take, it's
one of your first.
Vertical value adding moves
Let's say you already work with some D BE clients, but you feel like you could be low-balling
yourself. A vertical move from the 50th to the 80th percentile in Munich would mean a change from
25.75 to 38. Again, adding value is a tricky concept and anyone with direct clients will know all
too well that bumping up your price that much might do more harm than good.
1.3 Verticals and Horizontals for all German cities
Berlin

Flat
D
LS
LS
D ESPD BE
D SS
LS SS LS BE LS EP
D
Coaching
ESP
GE
15.8 20.3 22.5 17
17 17
17
14
14 12.85
14
20.3 23.8 25.3 22.5
19.2 21.4
17
14
17 16.4
14
27.2 27.7
29 27.2
22.5 22.5
17 15.8
17
17 16.4
29 30.6 31.4 33
22.5 28.8 18.2
17
17
17
17
33 33
33 33
32.5 35.5 22.5
17
20
17
17
33 36 39.8 38
43.5 39.8 22.5 20.5 22.5
17 22.5
38 38.9 46.5 42.5
47 44 23.2 23.9 23.55 17.9 23.2
41.8 41.6 48.6 47.5
50.8 49.4
26
26
26 20.5
26
53 46.7 66.5 48.6
54.2 57 27.2 28.4
29 23.15 27.2

1-1 D 1-2 D 2+ D
10
20
30
40
50
60
70
80
90

14
17
17 18.8
22.5 22.25
23.2 23.8
26
31
29
37
31.4 38.45
38 44.5
47.5 47.5

D
D
LS
LS LS
D BE
D SS
LS SS LS BE
ESP
Coaching
ESP
EP GE
33.5 32.6 25.75
34.5 34.5 22.5 22.5 21.75
21 22.5
38 36.2
29
36
36 22.5 22.5 22.5
22 23.2
38
38 33.5
37.5 37.5 22.5 22.5 22.5 23.2 25.3
38
38
38
38
38 23.9 23.2 22.5 24.6
26
42.75
38
38
38
38
26 24.25 24.25
26
26
47.5 41.8
38
38
38
26 25.3
26
26 27.8
47.5 45.6 42.75
41.75 41.75 27.4
26
26
26 29.8
47.5 47.5 47.5
53
53 31.6
26 30.2 27.4 32.2
47.5 47.5 47.5
64.25 64.25
35
26 34.5 30.2
35

Frankfurt 1-1 D 1-2 D 2+ D Flat D

10
20
30
40
50
60
70
80
90

Munich

27.8
29.8
32.2
35
38
38
39.9
45.6
47.5

32.6
36.2
38
38
38
41.8
45.6
47.5
47.5

29
30.8
36.2
38
38
38
39.9
45.6
47.5

Flat D
D
LS
LS LS
D BE
D SS
LS SS LS BE
D
ESP
Coaching
ESP
EP GE
20 29.9 22.7 18.5
23.6 23.6 16.4 15.8
17 15.2 16.4
20 30.8 25.4
20
27.2 27.2 18.8 17.6
20 16.4 18.8
20.5 34.4 30.8
22
36.2 36.2 20.5 19.4 21.25 17.6
20
20.5 32.6 30.8 22.5
34.4 34.4 21.5 20.5 22.5 18.8
20
21.25 33.5 33.5 25.75
38 38 22.5 21.25 22.5
20
20
22 34.4 36.2
29
50.4 47.4 22.5
22 22.5 22.6
21
24.05 35.3 39.5 33.5
62.8 56.8 22.5 23.55 22.5 25.2
22
28.7 36.2
44
38
75.2 66.2 24.6 26.7 22.5 27.8 24.6
33.35 37.1 48.5 45.5
87.6 75.6 28.8 29.85 27.75 30.4 28.8

1-1 D 1-2 D 2+ D
10
20
30
40
50
60
70
80
90

21.25
22.5
25.3
26
27.5
29
33.5
38
51.75

15.8
17.6
20.5
20.5
21.25
22
24.05
28.7
33.35

Flat
D
LS
LS
D ESP D BE
D SS
LS SS LS BE LS EP
D
Coaching
ESP
GE
35.5 42.5 31.8 31.4
45.4 39.35
21 20.5 21.25 23.2 21.25
38 42.5
35 34
48.3 40.7
22
21 22.5 23.9 22.5
38 42.5
37 37
51.2 40.7 22.25 21.5 22.5 24.6 22.5
38 42.5
38 38
54.1 43.5 26.4
22 22.5 25.3 22.5
40.25 42.5 40.25 38
57
45
29 22.5 25.75
26 25.75
42.5 44.6 43.5 40.7
57 46.5 32.6 23.8
29 26.6
29
42.5 46.7
47 43.5
57 48.45 36.2 25.1
29 27.2
29
42.5 48.8 47.5 46.5
57 51.3
38 26.4
29 27.8
29
47.75 50.9 49.15 49.7
57 54.15
38 27.7 33.5 28.4 33.5

Cologne 1-1 D 1-2 D 2+ D

10
20
30
40
50
60
70
80
90

27.7
29
29
30.8
38
41.6
42.5
42.5
44.6

28.8
34
37
38
38
40.7
42.5
42.5
46.7

Being a multi-sided teacher for a multi-sided market

Some teachers have a lot of success using a 'multi-sided' teaching model. With a MAR calculated,
there's nothing to stop you from experimenting with different horizontals to make your target. Have
direct 1-1s, BE 1-1s, GE EP and some D SS to make your living. Diversification is a powerful
weapon against a crowded and depressed market. If one horizontal starts to dry up, connect another.
When one becomes less profitable, start exploring a new one or look at how to move up a vertical.