How much should you pay your tutors? Should you pay a salary or an hourly rate?

As you might expect, there isn’t a one-size-fits-all answer. First, let’s consider some assumptions about pay.

Assumption #1: If I advertise higher pay, then higher-quality tutors will apply and I will retain them longer.

This certainly sounds like a fair assumption. However, one thing to consider is that higher pay won’t likely dissuade lower-quality tutors from applying. Higher pay will likely result in more applicants across the spectrum of good and bad tutors.

Which brings up an important point: How do you know which tutors are of high quality—and maybe more important, how can you capture them?

Offering higher pay means that you will need to more accurately and more efficiently differentiate between mediocre and great tutors. Companies who pay more, but can’t consistently identify the best candidates end up significantly overpaying their tutors.

Assumption #2: Pay is the most important factor in securing and retaining high-quality tutors.

According to a study in 2010, pay only correlated to job satisfaction at about 15%; pay, therefore, is “only marginally related to satisfaction” (2010, Judge et al.) Furthermore, social science studies have shown that greater pay can actually be demotivating, negatively impacting intrinsic motivation.

So what’s the answer?

Offer lower pay, because it doesn’t matter? That will likely not produce your desired results either.

A question to ask is this: why do employers overemphasize pay?

Why do employers overemphasize pay?

In short: it may be easier to offer higher pay than to implement other policies (outside of compensation) that impact job satisfaction.

So: how should you pay your tutors to secure and retain high-quality tutors?

So, we want to solve the problem of how to choose a pay rate that maximizes both of the following:

  1. Your tutors’ job satisfaction
  2. Your overall profitability

To address this problem, you need to shift your perspective.

Think of your tutors as customers.

How do you set your tutoring prices? Do you assume that you need to offer the lowest market price to be competitive? Given that only one business can be the lowest, you likely don’t have the lowest prices.

Prices for tutoring vary widely based on location and market demographics. However, even within local markets, prices vary considerably. How is it that some companies can charge up to 100% more than their competitors? Why wouldn’t the customer simply seek out the least expensive option?

Of course, the answer is that price is only one factor the customer is considering. As a service provider, you present a value proposition to the customer.

In fact, if quality of services is important to the customer, then higher prices can actually be a positive signal. Lower prices, in contrast, can signal low quality. (Think about how you choose an upscale restaurant for a nice occasion. You would specifically look for higher prices as a signal of higher quality food and service.)

The point is that pay, like prices, is only one of the factors tutors consider when accepting and staying with a tutoring company. If you think of your tutors as customers, then pay should only be one factor. You must consider other factors that influence your tutors’ job satisfaction if you want to retain high-quality tutors.

Some of these factors might include:

  • Do you make it easy for tutors to do their job?
  • How quickly do you respond to the tutor’s needs?
  • Do you treat your tutors fairly and with respect?
  • Do you provide both constructive (and importantly positive) feedback and recognition?
  • Do you provide good administrative technology and support materials?
  • Do you instill a sense of purpose in their work?
  • Do you provide mentoring and coaching to your new tutors?
  • Do you foster community-building within your organization?

This is not to say that you need to do all of these. It is to say that you should consider your overall value proposition to your tutors, not just pay, to recruit and retain great tutors.

The bottom line

As a business owner, you are in the business of creating value. The more value you create for both your customers and your tutors, the more profitable your company will be.