Test Prep Company

January 18, 2005 5:29 PM

So I would like to start a test prep mini-business in an area vastly underserved by test prep companies. Is my idea feasible? [+]

I'm Kaplan certified and have extensive test prep teaching experience (though my non-compete expired six months ago, woohoo!).

I'm also in an area 80 miles away from the nearest Kaplan or Princeton Review.

Princeton Review and Kaplan each charge roughly $900-1000 for an SAT course with 36 classroom hours. Additional private tutoring is $100-150 an hour.

I was thinking I could charge about $350-400/class/student for an equivalent number of hours and charge $35-40 for an hour of one on one tutoring. I think each course would be about 20 hours of extra work in addition to the classroom stuff (grading, figuring out lesson plans and which kids need help in what subjects). But even so, if I could get ten kids per class - which seems likely in a school district with several thousand graduating seniors per year - that adds up to quite a bit of money for not a whole lot of hours of work.

I'd be doing this with one other person who would basically take care of the out-of-class stuff, and we'd do the in-class stuff together.

So, it'd cost less than half the price of the big guys for a smaller, nicer class taught by experienced people.

Am I missing something? Are there any huge hidden expenses I'm not contemplating? I will most likely be able to get a cheap to free venue to hold the classes at, so that shouldn't be much of an issue.

posted by u.n. owen to work & money (14 comments total)

You probably already know this since you taught for Kaplan, but both Kaplan and Princeton Review make a butt-load of money. A super ultra buttload of money.

It might be hard to get people to sign up for your class and shell out that kind of cash for the first round, but once you've established a good reputation word of mouth will bring more students your way. I say, go for it.
posted by bonheur at 5:53 PM on January 18, 2005

If you're planning to advertise as Kaplan-certified, you might be missing a lawsuit waiting to happen.

What is the "out-of-class stuff"? Is that marketing, establishing credentials, reassuring parents, details about the venue (and whether it's likely to be cheap or free once you're using it to make money), collecting money, business licensing, other business paperwork, tax preparedness, insurance, how well your partnership arrangement will hold up and how you'll protect yourself (and each other) ...? That's just what springs to mind.
posted by caitlinb at 5:53 PM on January 18, 2005

Would you be able to provide similar test prep materials? One of the best things about the Kaplan MCAT class is the books that come with it, as they cover every topic in detail, have exercises, answers etc. They're pretty integral to test prep, at least for the bigger tests (MCAT, GMAT etc. ), so assuming you aren't using the books sold by Kaplan or PR, do you have something equivalent to offer?
posted by orangskye at 6:14 PM on January 18, 2005

I offered GMAT tutoring on Craigslist at $30/hr and had many inquiries. I advertised my score, and found that students were willing to overlook my lack of experience. If you can market yourself, I think you can make a good run at it.

This guy offered me serious money. You may want to call him for advice, since I doubt that your market will invade his.
posted by trharlan at 6:54 PM on January 18, 2005

I have similar experience and similar plans, u.n. owen. I had a small business going and then I got married and moved 200 miles from my clients though, so now I'm starting over. There are a few expenses I think you could be overlooking. Mainly, if Princeton Review and Kaplan don't tutor in your area, it's likely that the market isn't great. I live in a seaside town that is densely populated in the summer and very thinly populated for the rest of the year (namely, test times). The high schools are small, so the pool of clients is as well. While that means the big companies aren't interested in marketing and spending their money in these areas, it can still be profitable for a small business, though it's challenging to get the business going. Of course, I don't know if this applies to you.

Another expense to consider involves materials and copyright. The relatively small company I worked for before striking out on my own got busted for photocopying the "10 Real SATs" book. Whatever you do, DON'T distribute photocopied materials you haven't written or gotten permission to use. My bosses assumed no one would notice or care, but they were reported by a disgruntled client!

Anyway, if you do go ahead with this I'd love to hear more about your strategies. My email's in my profile. Good luck! It's certainly lucrative (and, I think, fun).
posted by katie at 7:51 PM on January 18, 2005

They don't because my area has grown like crazy in the last few years. And it's just too small for them - I'd imagine NO ONE here could afford $900 for that. Now, $400, that's different.

Wouldn't be using photocopied materials - I know some pretty good inexpensive SAT guides and they'd be using those. Real, purchased copies. There wouldn't be a copyright issue with using even the Kaplan/PR books so long as I distributed them to each student.

What about advertising as Kaplan-certified would set me up for a lawsuit? Kaplan did certify me, and my non-compete agreement ended quite some time ago. My materials would be set up to disclaim any current affiliation with Kaplan.
posted by u.n. owen at 8:17 PM on January 18, 2005

Oh, and I live in a seaside town where the population is higher in the summer than winter - but the permanent population is rising like a shotgun. The number or graduating seniors is about 2000-3000 a year.
posted by u.n. owen at 8:19 PM on January 18, 2005

Well, you're fine with the non-compete clause, which is obviously important, but I wouldn't advertise that you've been Kaplan certified because that seems risky. Couldn't you just say you "have extensive test prep teaching experience" and leave it at that? Then perhaps when people contact you for more information you might mention that you worked for Kaplan, while avoiding having it in print.

Purchased copies of materials are definitely the safest (and least laborious) way to go. I always do the same thing with my students.

Sounds like you know what you want to do. Now is the time to get out there, since everyone's freaking about the new test.
posted by katie at 8:48 PM on January 18, 2005

Don't forget business insurance, especially since you're going to have people on your premesis.
posted by SpecialK at 9:24 PM on January 18, 2005

I taught with PR for a stint, and there was an agreement that you had to sign that said you wouldn't go running to the enemy (Kaplan, et. al.) for a stipulated amount of time afterward. You mention that your agreement time ended a while ago; double-check just to make sure, then go right on ahead with your business. The only problem I can forsee is that any success might bring the Big Boys in, which would pretty much decimate your business. Until then, have at it.
posted by Civil_Disobedient at 9:35 PM on January 18, 2005

Talk to an IP lawyer. Don't guess or figure what's right. If not for potential lawsuits, but for your peace of mind. You might find you can actually advertise more than you can.

As for business advice, I'd advise against it. My advice is usually taken with a grain of salt, but if I were in your situation I'd plunge some money into market research and see if budget testing actually exists. I bet you Kaplan, et al have already done this research and concluded that no lower-market price point is either viable, or more likely, even exists.

Will people still go to you if you charge $400 instead of $1000? Of course, but why charge less when you can make more charging more?
posted by geoff. at 9:39 PM on January 18, 2005

un owen, I've done a lot of test prep stuff for a few companies and even some test scoring for ETS. I'm out of town for a day or two but wanted to say "ping me about this" before it rolled off the front page. Email/IM in my profile.
posted by jessamyn at 8:01 AM on January 19, 2005

Geoff, doing market research is a lot more money than I can sink in. Almost anything I'd make doing this would be profit beyond initial venue expense (which will be under $500 in any case). If I fail, it'd be cheaper to try and fail than to not try and make a little more.

If I find I'm having too much demand for classes (I plan to cap sizes at ten, possibly twelve), then I raise prices.
posted by u.n. owen at 11:08 AM on January 19, 2005

Ditto the don't-advertise-with-Kaplan's-name advice. They'd attack you for trademark dilution. Just say "extensive experience teaching for a major test preparation company" and you'll be fine. If people ask, you can tell them Kaplan, but don't associate it with your offering in print.

The thing that strikes me as stickiest here is insurance: get real legal advice on making sure you're covered there.

Good luck!
posted by Zed_Lopez at 11:26 AM on January 19, 2005