# The floor per lesson and per Club member > Tutor payout, payment fees, video and AI cost set the lowest price that still pays, per lesson and per subscription month. - Course: [Pricing: Set, Package and Raise Your Prices](https://productovi.com/courses/pricing.md) - Module: How low can the price go, and how high could it reach? - Lesson 2/32, ~24 min - Source: https://productovi.com/courses/pricing/the-floor-per-lesson ## One number per subject **Alex Tutor:** Back on Klasna's growth team. Last time the floor was an idea; today it gets numbers. **Nazar:** Give me one number per subject: the lowest price per lesson we could ever sell at. Then I'll know how much room I have. **Hanna:** English first. Each lesson the tutor gets 390, video and AI cost 30, and the payment provider keeps 2.5% of whatever the family pays. **Sofia:** So 390 + 30 = 420, plus 2.5% of 420, about 430.50? **Alex Tutor:** Close, but the fee is a share of the **price**, not of the cost. At the floor, what Klasna keeps after the fee, 97.5% of the price, must cover the 420. So the floor is 420 / 0.975 = **430.77**. $$ P_{floor} = \frac{T + V}{1 - f} $$ *P floor: lowest price per lesson; T: tutor payout; V: video and AI per lesson; f: payment fee as a share of the price (0.025).* > **Exercise:** What is the floor per **maths** lesson? The tutor gets 420, video and AI cost 30, the payment fee is 2.5% of the price. In UAH, to two decimals. ## Why divide, not add **Sofia:** The difference is 27 kopiyky. Does dividing instead of adding really matter? **Alex Tutor:** On a 2.5% fee, barely. But the same habit breaks bigger numbers: a marketplace that keeps 20% of the price, or a reseller's cut. Fees taken from the price always go in the denominator. **Hanna:** With a 20% cut and 420 of costs, adding gives 504. The real floor is 420 / 0.8 = 525. Every lesson sold at 504 would lose 16.80. **Nazar:** Good to know before anyone signs us up with a marketplace. > **Exercise:** A course is sold through a partner who keeps **20% of the price**. Direct costs are 800 per sale. Which floor is right? ## How much room above the floor **Nazar:** Our cheapest English price is the 32-lesson package, 580 a lesson. Is that dangerously close? **Alex Tutor:** Measure it two ways. Contribution per lesson: what's left after the fee and the direct costs. And the distance to the floor in hryvnias and in percent. > **Exercise:** The English floor is 430.77 per lesson and the 32-lesson package sells at 580 a lesson. How far above the floor is that price, **in percent of the floor**? To two decimals. **Sofia:** Distance first: 580 − 430.77 = 149.23, that's 34.64% above the floor. **Hanna:** Now the contribution. That's the number I care about: it pays the team, the office and marketing. > **Exercise:** What contribution does one lesson from the **English 32-lesson package** (580 per lesson) leave Klasna? Tutor 390, video and AI 30, fee 2.5% of the price. In UAH. ## The office stays out **Leo:** Hold on. A lesson also uses the office, the platform team, my salary. Shouldn't a real floor include its share? **Hanna:** Those costs don't change if we sell one more lesson or one fewer. Spread them per lesson and the answer depends on a guessed volume: sell fewer, the "cost" rises, the price goes up, you sell fewer still. **Alex Tutor:** Fixed costs are covered by contribution times volume; that's break-even, from the finance course. The floor answers a narrower question: does one more sale pay for itself? **Alex Tutor:** One refinement for later: if a tutor's hours are full, a new product must also replace what those hours earn elsewhere. Hanna calls that a **target floor**; you'll use it in the case. > **Exercise:** Adding each lesson's share of the office and team salaries makes the floor more accurate. **Alex Tutor:** Hanna mentioned a target floor. When does it matter? > **Exercise:** A tutor's teaching hours are already full. Klasna wants to launch a new course that would use some of those hours. What must the new course's floor cover besides its own per-sale costs? ## The floor for a subscription **Nazar:** Now my Club: 450 a month, or 4,320 a year, which is 360 a month. Speaking-club hosts cost 55 per member-month, the AI practice partner 40 on average. **Sofia:** Direct cost 95, so the floor is 95 / 0.975 = 97.44 a month. Both plans are far above it. **Alex Tutor:** Far above on average. But the AI partner is billed per use, in dollars, and it's already 42% of the direct cost. "On average 40" hides members who practise every evening. **Hanna:** We'll look at that spread when we redesign the Club. For now, the annual plan: what does it leave per member-month? > **Exercise:** What contribution per member-month does the **annual** Club plan leave (4,320 a year, direct cost 95 a month, fee 2.5%)? In UAH. **Alex Tutor:** One more check on the Club average. > **Exercise:** Klasna Club costs 450 a month, or 4,320 a year (360 a month). Its floor of 97.44 per member-month is built on an average direct cost of 95, of which 40 is an AI practice partner billed per use. Both Club plans are far above the 97.44 monthly floor, so no individual member can cost Klasna more than they pay. ## Your turn: a 99-hryvnia month **Nazar:** Idea for the autumn: the first Club month for 99. It's above the 97.44 floor, so it can't lose money, right? **Sofia:** At 99 the month leaves 99 × 0.975 − 95 = 1.53. Technically above. **Alex Tutor:** Technically. Write Nazar what the floor does and doesn't tell him here. Think about the members behind the average, and about what a price at the floor earns. **Hanna:** And keep it short. Nazar reads on his phone. > **Exercise:** Nazar wants to sell the first Club month for **99 UAH** because it is above the floor of 97.44. That floor comes from an average direct cost of 95 per member-month (40 of it an AI practice partner billed per use) and a 2.5% payment fee. In 3–5 sentences, tell him what the floor does and doesn't tell him about this offer. > **Key ideas** > > - **Floor = (direct costs per unit) / (1 − fee share).** A fee taken from the price goes in the denominator; adding it to the cost understates the floor. > - Klasna's floors per lesson: English 430.77, maths 461.54, programming 508.72; the Club 97.44 per member-month. > - The distance to the floor is not the contribution: the fee also takes its share of every hryvnia above it (145.50 per lesson on the English 32-pack). > - Fixed costs stay out of the floor; contribution × volume covers them (break-even). > - An average per-use cost hides heavy users. A price at the floor earns nothing; it is a limit, not a target. **Alex Tutor:** Next: a different business. Dana's own practice, where the scarce cost is her time. - Previous lesson: [Three anchors: cost, alternative, value](https://productovi.com/courses/pricing/three-anchors.md) - Next lesson: [Dana's floor: a rate from real hours](https://productovi.com/courses/pricing/danas-rate-floor.md) --- Productovi Learning. Free, no sign-up needed to read.