In the Spotlight:
How to Create a Studio Budget

Heather Smith, NCTM

MTNA Business Digest, Volume 4, Issue 4

July 2025

More Than Just Numbers

Running a private studio is both an art and a business. While most teachers spend years refining their pedagogy, far fewer devote time to building a financial structure that supports their work. Without a working budget, even experienced educators can find themselves stretched thin, unsure where their income is going, or reluctant to raise rates. A clear financial plan offers more than just numbers. It provides direction, stability, and the confidence to grow your studio with intention.

Step 1: Set Your Income Goal

Many teachers begin by asking, “How much should I charge?” A better starting point is, “How much do I want to earn this year?” Once you have that figure, you can work backward to determine the tuition rate required to meet your financial goals.

For example, if your goal is to earn $60,000 after expenses, and you plan to teach 40 weeks per year, you need to generate $1,500 each week. Teaching 25 lessons per week would require an average of $60 per lesson, before accounting for expenses such as professional development, equipment, or taxes.

It is also important to consider the range of income streams available to independent music teachers. In addition to private lessons, many teachers earn revenue through group classes, accompanying, adjudicating, selling educational materials, or teaching theory. Outlining these sources and estimating their potential contributions allows for a more comprehensive and strategic approach to budgeting.

Many teachers work part-time while balancing other professional or family commitments. If your goal is not full-time income, the same budgeting process applies, but with a scaled-down target. For instance, a teacher aiming to earn $30,000 per year while working 20 weeks can calculate what weekly income is needed and plan tuition rates accordingly. Whether full-time or part-time, aligning your teaching schedule with your financial goals is essential for long-term sustainability.

Step 2: Know Your Expenses

It is difficult to make sound financial decisions when you are unsure of your actual business costs. Many teachers are surprised by how much they spend annually. That uncertainty can lead to undercharging, overworking, or missing opportunities to invest in meaningful studio growth.

Start by creating a spreadsheet or using accounting software to track your expenses. Categories might include:

• Professional dues and memberships (MTNA, local chapters, journals)
• Marketing and outreach (website hosting, flyers, business cards, ads)
• Piano tuning and equipment maintenance
• Technology and software (QuickBooks, Zoom, notation tools)
• Recital and event costs (venue rental, programs, refreshments)
• Office and teaching supplies
• Professional development (conferences, certifications, webinars)
• Liability insurance, business licenses, and permits
• Banking and credit card processing fees
• Gifts for students or collaborators
• Continuing education and training

Creating a studio budget that includes both actual and projected figures helps you understand not only what you earned and spent but also how to make more informed choices moving forward. Tracking these numbers allows you to assess your business’s financial health throughout the year. For example, if 70% of your revenue is consistently going toward expenses, it may be time to reevaluate your pricing, schedule, or spending habits (How & Smith, n.d.).

One helpful practice is to separate business and personal expenses from the beginning. This can be done through a dedicated business bank account or careful bookkeeping categories. Clarity in this area simplifies tax preparation and helps you avoid underestimating what it truly costs to run your studio.

For example, one teacher realized through monthly expense tracking that she was spending far more on professional development than she had budgeted for. By adjusting her annual plan, she was able to allocate funds more effectively and still attend the events most valuable to her work.

For teachers who work from home, it may also be possible to deduct a portion of household expenses. Items such as utilities, mortgage interest, internet service, property taxes, and qualified repairs can sometimes be partially deducted, depending on the percentage of your home used exclusively for teaching. To ensure accuracy and compliance, it is best to consult a qualified tax professional.

Step 3: Create a Real Operating Budget

A budget is not simply a record of past expenses; it is a strategic plan for the year ahead.

By tracking your actual income and expenses from the previous year and projecting monthly figures for the coming year, you gain a clearer picture of your financial position. This allows for more deliberate planning and reduces the guesswork in daily operations. Budgeting tools, such as spreadsheet templates, can help organize your financial data and reveal trends that inform better decisions (Danyew, n.d.).

Calculating your break-even point is another essential step. Divide your total fixed monthly expenses by your average lesson rate to determine the minimum number of lessons or students required to cover your costs. This analysis is especially helpful when evaluating potential program expansions, tuition adjustments, or new facility expenses (U.S. Small Business Administration 2024).

Your budget should also leave room for the unexpected. Whether it’s a sudden need to repair your piano, replace a computer, or accommodate a temporary drop in student enrollment, planning a modest contingency fund can help you stay steady. Many teachers find it helpful to add a small percentage, such as 5–10% of total expense as a buffer for unplanned costs.

It is a sound business practice to update your projections monthly based on actual expenses from the prior month. If enrollment is stronger than expected or certain costs have increased, adjusting your plan ensures your decisions remain grounded in current data.

Monitoring and updating your budget on a monthly basis, rather than annually, provides insight into seasonal fluctuations, slow periods, and opportunities for growth. Identifying these patterns helps you plan ahead and make well-timed investments in professional development or studio improvements.

Step 4: Include Your Salary

Your salary should be a central part of your financial plan, not an afterthought. Consistently paying yourself a livable wage is one of the clearest indicators that your studio is operating sustainably. If your business is not generating enough income to compensate you adequately, it may be time to reevaluate the financial model.

Begin by identifying the amount you need to earn each month to meet your personal and household obligations. That figure should be integrated into your overall studio budget as a planned salary or, if you operate as a sole proprietor, as a regular withdrawal designated for personal income.

When teachers understand their financial requirements clearly, they are in a stronger position to set appropriate rates, manage expenses, and avoid underpricing their work (Miller n.d.).

Step 5: Revisit and Adjust

Budgets are living documents. If you only review your budget once a year, you may miss important developments. Students come and go, expenses increase, and priorities shift. Your budget should reflect those changes in real time.

Build a habit of reviewing your finances monthly. Compare your projections with actual results and ask:

• Are my expenses increasing?
• Am I consistently paying myself?
• Do I need to raise tuition rates or adjust my schedule?
• Is there a service or offering I should phase out or expand?

Regular reflection helps you identify patterns and make informed decisions. It also builds confidence. When you know your numbers, you can speak about your rates, offerings, and schedule with clarity.

Final Thoughts: Budgeting as a Tool for Growth

Start by creating a studio budget that fits your current needs. Budgeting does not have to be complicated. Start with what you have, stay consistent, and make adjustments as you go. With a clear financial plan, you can lead your studio with confidence and make decisions that support both your teaching and your long-term goals.

Budgeting is not about restriction. It is a strategy for protecting your time, your income, and your long-term goals as an educator and business owner. It is one of the most effective ways to strengthen your business and protect the career you have worked hard to build.

References

Danyew, Ashely (n.d.). Music program budget worksheet. https://www.ashleydanyew.com/library/music-budget-worksheet.

How, Deborah and Heather Smith. n.d. A Pianist’s Guide to Studio Management. Frances Clark Center. https://pianoinspires.com/course/studio-management/

Miller, Andrea. n.d. “Budgeting Basics for Music Teachers.” Music Studio Startup. https://www.musicstudiostartup.com/creating-a-personal-budget/.

U.S. Small Business Administration. 2024. Break-even point calculator. July 19. https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs.

Heather Smith, MM, MBA, NCTM, was the MTNA Secretary-Treasurer and served on the Foundation Fund Development Committee and currently serves on the MTNA Business Network. She is the director of development and advancement for the Frances Clark Center.