Saturday, May 8, 2010

Poll: What is an appropriate tutoring rate?

I often get requests to tutor students in math-intensive subjects. I love teaching and I usually enjoy tutoring, so I like having the opportunity to help someone with the subjects I love (economics, statistics, "mathy" subjects, etc.).

Although I love tutoring, I don't love setting a price. On one hand, my time has an opportunity cost and if I don't set the price high enough, I will have too much tutoring demand. At the same time, it feels pretentious to tell someone that my time is worth $X per hour (imagine that X is a large number). When I tutor, I like to state an appropriate price without appearing pretentious. But, that's difficult. It's just one of those uncomfortable social situations.

I bring this up because I recently discussed tutoring of MBA students with one of my fellow graduate students (to remain unnamed). He told me that he charged $100/hour and was still able to retain a bunch of tutoring clients (FYI: At that rate, I'd gladly offer my tutoring services).

Given that background, here's the poll question this week:

What is an appropriate tutoring rate?

(a) $10 -- $20/ hour
(b) $25 / hour
(c) $50 / hour
(d) $100 / hour
(e) > $100/ hour

As stated, this question is somewhat ambiguous (some tutors are "worth" $10/hour, some are "worth" more). To make it more concrete, imagine that you're giving me (an economics Ph.D. student at University of Chicago) advice on what rate I should charge.

That's the poll. Vote early, and often, and on the sidebar. Tell your friends, classmates, professors, and tutors to vote. I'm interested in hearing what you have to say.


  1. I will state the obvious. Take whatever the market has to offer in order to maximize profit. Raise (or lower) it until you don't have to deny any customers service.

  2. Tony

    You are an economist at one of the top economic schools in the country so you really should know better. There is no "appropriate" price for tutoring. Two people reach an agreement on price that each is willing to pay/receive and that is the price for that transaction. The price will likely be different for different students and tutors. Duho!

    I'm also stunned that you think you have to increase your price for tutoring to cut down how much tutoring you do. If you are willing to tutor for $10.00/hr you can limit your tutoring by just accepting how ever many students you want. Duho!

    I really don't mean to be disrespectful, but either your poll questions have another agenda or you don't think things through before you ask. Or I'm a lot smarter than some of the students at the most highly respected economics programs in the country. I started that last sentence to be a joke, but maybe it isn't.


  3. Fletch,

    As always, thanks for the comment.

    You raise a good point that I didn't explicitly develop in my poll post: I have another option to raising the price. I can ration tutoring demand by refusing (or not soliciting) clients. In fact, that's usually what I do.

    When I discussed the tension between observing my opportunity cost and appearing pretentious, I meant to highlight the social awkwardness of setting a price when there is a range of prices that could prevail. I didn't mean to convey confusion about what methods are available to deal with scarcity.

    I understand the "economics" of setting the price. That is, my willingness to accept has to be below the student's willingness to pay. Otherwise, the transaction doesn't take place, The price is somewhere between my WTA and and the student's WTP. As you point out, that's obvious.

    To me, what isn't obvious is how to get over the awkwardness of setting a price. You may be an expert at setting prices in the real world, but that is a skill that is distinct from understanding the simple economic concept. It takes finesse and tact to set a price in a professional manner. And, in some sense, part of the professionalism is embodied in the number that is put out there.

    I think the problem you have with my poll questions is that they really aren't about economics. They're about how to feel about economically-related subjects. Economics is a mode of analysis that yields precise answers, but precise answers make for lousy poll questions because they are too cut and dry.

    If I asked a question that was actually about economics, there usually would be one answer that was correct. I think it's more fun to have a variety of answers that people can choose so that people do not have to feel like they are being graded for their thoughts in this forum.

    I'm sorry that this poll question rubbed you the wrong way, but I hope that you can understand my perspective in posting it.

  4. Tony

    Ah, you did have another objective. That isn't a bad thing as I may have unintentionally implied. After a fair amount of formal economics education and a number of decades observing economic activity I see things from a different perspective. Perhaps there is a lesson there for both of us. Life experience does make a difference in what information we have to evaluate or look at things. Not good or bad just a difference.

    The awkwardness of a transaction is very different than what I was seeing in your question. It is an interesting topic. Perhaps it is an economics question after all. It shows some of what goes into all economic decisions which are always made by people.

    I really appreciate your replying to my thoughts. I do study economics some formally and some informally and appreciate the discussion. It seems to me that terms such as "appropriate" or "should" are not helpful in understanding economic activities. They imply specific objectives when objectives are often quite different among different people.

    Good luck in your economic pursuits.


  5. Thanks Fletch.

    Out of 38 votes,

    4 said $10 - $20 / hour
    11 said $25 / hour
    13 said $50 /hour
    7 said $100/hour
    3 said "more"


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