The costs of not using a payments platform

Jennifer Hudson
January 10, 2020
Time is money

How you take payments for your classes, videos and any other offerings is one of the most important aspects of your business.

It can really mean the difference between just 'spinning your wheels' (not being able to earn much revenue and always being stressed out), and running a successful teaching business that's easy to manage.

In a nutshell, it boils down to two things. You want to:

  1. streamline payments to make things be as easy as possible for you, so you can devote your time and energy to teaching and growing your business.
  2. make sure that it's super easy for your clients to pay you — because even the slightest amount of hassle for them will cost you.

Below, we'll clear up some misconceptions about taking payments. Hopefully, you'll be convinced that streamlining things and taking online payments with Ubindi is the way to go.

Yes, you pay some small fees when you accept credit cards... "free online credit card processing" doesn't exist.

But independent teachers have to deal with so many class registrations, memberships, class passes... it adds up to a lot of work and the costs of not using a proper payment system are far greater than those transaction fees.

Getting paid upfront is a must

When clients register for a class with you or access one of your videos, they should pay at the moment they book.

That's the way any reservation works, except perhaps at a restaurant. The same way people pay when they book a flight, or when they pay for a purchase at Amazon for it to become an actual order.

Most teacherpreneurs see this as a 'no-brainer'...  but maybe you're skeptical? Here then are 5 reasons why you really should set payments for class bookings up this way:

1) Valuing your time as a teacher

In business they say "time is money". That's not just a silly saying — it's totally true!

The time you spend doing something is time that you can't use to do something else, obviously. In business lingo this is called 'opportunity cost', and no matter the size of your business, it is something you should always keep in mind when making decisions.

So the time you spend chasing up payments is time that you can't use to grow your business or maybe even teach an extra class.

A simple example of 'opportunity cost' for a teacher would be to travel 2 hours to teach a 1 hour class — it's easy to see that whatever you're earning with that class, you are working 3 hours for it. And that's without counting gasoline or other travel costs.

When running your teaching business, a common misconception is that anything you do that doesn't actually cost money is free. Not so! Time is money, and you do need to put a value on your own time .

That so-called 'free' time you spend on various things can be quite pernicious, because it's often hard to track.

If it simply took up, say, one morning per week, it would be easy to measure. But often, it's the many little things that add up. You'll spend 5 minutes on this, 3 minutes on that... rinse and repeat 40 times, and it adds up to 5 hours!

Imagine you could earn $100 instead of $90 — but you had to spend 5 hours to get that extra $10. Would it be worth it?

Sure, an extra $10 is nice... but during those 5 extra hours, you're working for $2/hour to earn that money. When you could be doing something else that's much, much more productive.

Now let's consider a concrete example related to payments. Say that you charge $10 for a class on Zoom. Ubindi makes it easy to take payments for Zoom classes... but you decide to let your students register for class for free, and to avoid paying any fees you ask them to pay you with Venmo or PayPal.

What are you really saving, and what is that costing you? Well, here's what a typical workflow of what one class booking entails for you:

  1. your client registers, you get an email confirmation
  2. you go to Ubindi, find the client, send them an email with your Venmo information and ask for payment to "confirm" their spot
  3. a day later there's still no payment... (maybe check Venmo, just to make sure)
  4. you go to your Ubindi and email the client again, reminding them to pay (awkward!)
  5. after a few more hours, the client reads their email and you get paid. Yay!
  6. you then open an Excel spreadsheet, make a record of the client's name, payment and date
  7. you again visit your Ubindi student list and send the client a confirmation that their spot is confirmed, and maybe send a receipt as well.

Added all up, these different actions took about 10 minutes. For one class registration!

Now, if instead you simply let your people pay for their Zoom class with a credit card, after fees for the same $10 class you'd be paid $9.21 (if your students are using class passes, it's more like $9.50... but let's be pessimistic).

With Venmo, you get the full $10 as long as you're a little dishonest and don't use a business account (which again has lots of fees). OK — so you worked 10 minutes to earn an extra 79 cents.

Now multiply by 20 students per class to find that you've spent well over 3 hours dealing with payments for a 1 hour class, and as a result earned an extra $15.80 — which comes down to $4.74 per hour.

Is that what your time is worth?

Ask yourself: what else could you do in those 3+ hours that might meaningfully move the needle on your teaching business?

Well, here are some ideas: you could engage your students and motivate more of them to come to class. Or maybe attract some new clients to grow your business with external marketing. Some other ideas:

  1. Email students to remind them about your referral program
  2. Add some new videos to your video library page
  3. Create a special limited time offer for a monthly membership and promote it

Any one of these things is very likely to earn you much more than $15.60.

So when you factor in the value of your time and those opportunity costs, any fees that come with automatic online payments should be understood as an investment that will pay you back ten-fold.

But that's not the whole story yet — because that Excel spreadsheet (where you were keeping track of payments for people who registered for class)? It's not in sync with your registration list on Ubindi. And that means you still have to spend more time keeping organized...

2) Making more money as a teacher

Asides from loosing time ( = money), you actually loose actual money without an automated payment system where people pay you upfront.

Can you be 100% sure that the person showing up for class has paid already? Or do they still owe you money?

Even if you keep meticulous and tedious notes somewhere, you can't be on top of it all, all the time.

So it's inevitable that sometimes you'll loose some money, simply because something fell through the cracks somewhere.

Even worse, you'll also have to deal with some "can I pay you later?" situations. That's yucky, and makes for even more work. A real business cannot operate this way. And even if you're teaching as a side hustle, you're still running a business!

One more point about earning more money: an automated booking system can generate some additional, "new" revenue for you too.

How? By allowing you to offer memberships, i.e. subscriptions where your clients are billed automatically every month. These can not only boost your bottom line, they're also really nice and convenient for your clients.

And speaking of clients, there's yet another important consideration: what's your class booking system like for them ?

3) Making life easy for clients

If you've cobbled together a system where you ask clients to reserve a spot in class on Ubindi, but then you ask them in a separate communication to pay you with Venmo or in some other way... well, maybe that works fine for you ... but you should realize that it's a pretty big hassle for them.

In general, you want things to be as easy as possible for your students, but that's  especially true for the booking and payment process.

Like you, your clients are busy people too! They expect a smooth experience when it comes to booking a class with you, just like they do with Amazon or any other business.

welcome new student

If people have to click several different things, enter information into different forms in multiple places, or deal with several emails or messages from you... well then your booking "system" generates a lot of friction for your clients.

Friction that's not just a one time thing — but every time they book a class! As a result, they will not be so enthusiastic to register for their next class. Even if it's just subconscious.

A convoluted booking process will affect your client's overall perception in cascading ways... they might get an impression that you're somewhat of an amateur, not a real professional.

This can in turn influence how they perceive the quality of your classes, and their likelihood to recommend your classes to other people.  

It can even affect your ability to set decent prices for your classes, videos, and any other offerings.

Eliminating small hassles for students ultimately makes a big difference in the important areas of your teaching business: client engagement, client retention, getting referrals, ability to set pricing,...

Instead of involving your clients in a tedious and boring payment process, you should strive to give them a great experience that's all about learning and the wonderful things that happen in the classroom.

An experience where "booking & payment" is seamless and barely noticeable. Makes sense?

Still not convinced? Wait, there's more...

4) No-shows, refunds and your cancellation policy

Without advance payments, you'll suffer from higher numbers of "no-shows" (where people register for class but then they don't show up).

It's just common sense: if someone hasn't paid for anything, then it's no skin off their backs to simply not show up... they have nothing to lose!

This is particularly a problem if the number of people you can accommodate in class is limited — 'no-shows' can make you lose some money while simultaneously frustrating other clients.

People who would have loved to come to class if there had been a spot available are frustrated. And you're frustrated because you could have gotten more bookings. In short, 'no-shows' really are unpleasant for everyone.

So maybe you want to set a cancellation policy, where people can't just cancel their booking at the last minute. But taking class bookings without payment pretty much makes it impossible to maintain any kind of cancellation/refund policy.

Sure, you can tell your students that you have a "24-hour cancellation" policy — but what does this actually mean if nobody paid for anything? You can't enforce it!

Imagine someone says they're coming, but then, without letting you know in advance, they don't show up. Will you really chase that up and tell them they owe you money for a class they didn't attend?

That's not going to happen.

OK, on to the last (but perhaps not least) thing to consider:

5) Taxes and avoiding legal trouble

The time savings that come with a proper payment system are not just found in your day-to-day operations.

Come tax time, it can also mean the difference between a 20 minute stress-free exercise or a nightmare of epic proportions.

It could even result in serious legal trouble that you maybe didn't see coming.

For example, on Ubindi you get your own fully functional Stripe account with an amazing dashboard. There, you can download all transaction records with a simple click of a button, and also import them into any accounting program in a matter of minutes (or even seconds).

Stripe will even provide you with completed 1099 tax forms, it's basically all done for you.

On the other hand, if you take payments in several places and in different ways, things get very complicated.

Are cash and cheques moving into your personal bank account? You'll have to sort that out, transaction by transaction.

Tax nightmare

Are you using personal payment platforms like PayPal or Venmo (which are not supposed to be used for business)?

If so, as of January 2022 you should be aware that you won't get away with not reporting these things any longer: in the United States, all of the peer-to-peer payment platforms will report your earnings to the IRS if the total amount of payments coming in throughout the year reaches just $600.

That means with just $600 coming in, where you "saved" $30 or so in processing fees... you are now confronted with having to untangle all Venmo payments (dinner with a friend vs. client pays you for a private) for your tax return. Because the government already knows.

We're all for keeping most of the money we earn, and not getting bogged down in paperwork and bureaucracy.

But by trying to save on fees (and maybe even taxes too?) and taking payments in various "unofficial" ways, you are potentially exposing yourself to a serious liability. The IRS know that you didn't report the income that these personal payment platforms are now reporting about you. Be warned!

Hopefully, we've convinced you that taking payments through a streamlined and robust payment platform is the way to go for your teaching business. Below some frequently asked questions we get:


Should I accept many different payment methods?

You might think that you should be open to accepting as many types of payments as possible: cheque, cash, credit cards, bank transfers... Venmo, Paypal, Zelle... and why not Apple/Google/Samsung Pay?

There are literally hundreds of ways that people could pay you. You could even let people barter and bring you a chicken, or hand you IOU's handwritten on a napkin when they come to class.

At first glance, this seems very logical: if you give clients more ways to pay you, you'll make them happier and maybe even attract some more clients!

But in fact, having lots of different payment types is actually a terrible idea. Yes, some of your clients may express a slight preference for one payment method over another — if you ask them what they prefer— but for the most part, they don't really care about how you accept payment.

If you open yourself up to lots of different payment channels, your "system" will be more of a mess than an actual system.

You will have a hard time understanding your finances, and it will be a major chore just to keep track of things.

And then when it comes to accounting (and taxes, covered above), you will most likely have created a real nightmare for yourself, especially if you combine personal and business transactions in the same or in different accounts.

So a having fragmented and disorganized payments & accounting system really does very little to help you earn more money (the opposite is true). It just creates a massive headache for you.

How can I save on fees and processing charges?

Just because credit card fees are unavoidable, doesn't mean you can't minimize them!

Credit card charges can eat up a sizable chunk of your earnings.. but fortunately, you can get them down to reasonable levels pretty easily. Read more about how to minimize credit card charges here.

How else can I improve my business?

Funny you should ask! Have a look at our course on Udemy:

Business basics for teachers

It's an easy-to-digest 90 minute video series covering all the "must-know" basics for independent teachers, from beginners to seasoned pro's who want to up their game. This course will help you run a sustainable business and covers things like mindset, pricing, tools, marketing, and much more...

If you would like FREE ACCESS to the course, just ask for a code by jumping on the chat at the bottom of your screen  ❤️
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