I, too, am contemplating raising rates, since it's been a long time since I've done so. Just curious.. How do most of you approach this when you inform parents? Just matter of fact, or do you give justification (i.e. increased costs of music, gasoline, paper, utilities for running the studio, etc.). I'd love to have suggestions for wording the letter I'm going to send.

I don't justify it. I merely send out a notice that says, "Tuition for 2012-2013 is $XXX." They mark their payment choice and return it with a signed copy of the studio policy. I keep the tuition agreement separate from the studio policy.

Arlene says it well! Plus, if you make small increases each year, rather than a big increase every X number or years, it is so much easier for you. So do the big increase this year, then start doing smaller ones each year. The cost of living keeps going up, so your rates should go up, too.

Thanks for the helpful suggestions! I plan to do exactly what you suggested.

Re: Tuition increase

Cardinal Rule of Increasing Fees:

Never state that it's an increase; they can figure that out for themselves.
Never offer any justification whatever for increasing prices. Look at what
businesses do - when going to the grocery store, nobody ever tells you, by the
way your favorite cereal has increased $1 per box.

Just state what the fee is. Let the chips fall where they may.

I've found the more you charge, the more in demand you are. People generally
believe that cheaper prices = inferior product.

What would most consider to be a reasonable increase? I realized I'd priced myself a bit too low, so the increase I proposed is $5 per lesson more if paid by the month, and $2.50 more per lesson if paid by the trimester. I also allowed for an annual rate (which is only $1.50 more than my current rate). My thoughts were to see what plan most people decided to go with, and then decide whether I needed to make further adjustments. Since this is my first year part-time (as opposed to hobbyist), and next year will be my first full time year, I thought a small increase also signified increasing my professionalism. I just don't want to price the average middle class family out of the market. Thoughts?

The most I ever increased at a time was $10 per month, and that was way back, when I was going from $45 per month to $55. I had 2 families drop because of the fee increase. It was not a big loss, although I enjoyed their students. $55 a month was only a small iincrease for famiies that were very well off. I decided if they were only looking for a cheap fee, rather than the quality lessons I offered. I began to learn that there wil always be students to take their place, usually more committed students. I had one other mom call me to complain about the fee, so I said I would really miss her daughter, but she interrupted me and said she was still going to take lessons, she just had to get that off her chest. I'm telling you this so you are prepared to have some objection no matter what fee you set. I probably wouldn't increase $20/month. View this as taking a few years to catch up with where you should be. I'd try to be content with $10, then raise by $3 to $5 a month each year after that.

Another related topic: Scholarships (or bursaries). For those who offer them, how do you go about it? Do you self-finance, such as offering lessons on a sliding scale? Get local businesses involved? Other? I am not running a charity--or intending to do so. But I also don't want to cater only to the upper middle class and wealthy.

Who charges $55 a lesson? I don't see that

People, you need to read. I said I went to $55 a month! At least go back and re-read if you missed it.