Musicians, Music Teachers, and Their Fees

Disclaimer:  This is not intended as business advice. The author’s intent is to provoke thought and discussion amongst musicians and music educators with respect to their fees and fee structures. Any business decision taken by the reader should be done only in consultation with the appropriate business and financial professionals. The author of this blog assumes no liability, financial or otherwise, for business and/or personal decisions made either as a direct or indirect result of reading the information in this blog. All rates mentioned below are approximations that are used to illustrate points only. They do not describe any actual or specific rate for any particular current operating enterprise and are to be considered as illustration, and should not be used to hold any particular business enterprise to these rates. I had been planning to write this at some point, but not quite yet. I had other topics that I was considering, but lately, there have been numerous social media posts regarding musician fees, contracts, music teacher rates, and the associated comments regarding this topic on other people’s timelines. Music teachers are now starting to line up their students for lessons starting in September, so maybe now is the time for me to write this.

This past winter, I spent some time researching and analysing music teacher rates and sessional musician rates. Given my years of experience doing project management in my engineering career and dealing with various service companies and looking at their fee structures, I did a very comprehensive review. I am looking to expand my teaching studio and this was part of investigating the feasibility of doing so.

When doing this analysis, I took the perspective that the music teacher was an individual practitioner in their own teaching studio and did not have a formal music school per se. This teaching studio was regarded as a business enterprise, not just a side gig where income mattered little. I extrapolated back to the late 1980s and looked at various teaching rates over the decades. I also looked at the rates for other professions, and examined the full compensation package for a typical employee at a professional firm. I also looked at the rates charged by dance studios and recreational hockey. I did a search on musician union rates in Canada to see how they compared to rates charged by a teaching studio. This blog illustrates what I have discovered. As mentioned in the disclaimer, all numbers are approximations and used for illustration purposes. This blog is meant to provoke thought among musicians and music educators, who have studied and worked hard to perfect their craft.

In my younger years studying piano privately with teachers, I actually knew piano teachers who were able to support themselves. Now, it is common to hear music teachers being told to go and “get a real job”, or they are unable to cover their expenses with the lessons that are offered. There are always many factors involved in this. I am not going to get into all those factors, which include context, market demand, etc. I am just going to look at the rates only.

If you are running a teaching studio, or even operating as a freelance musician, and are expecting to be a viable business, it is important to understand the basis of rates and fee structures. How are you charging your clients? 

Compensation Expectations for Other Professionals

Before I get into charging for music teachers, and of course, freelance musicians, I want to step into my other professional realm and talk about engineering and construction firms as I have direct knowledge of how they charge clients versus what an employee gets paid. I also know first hand how an employee expects to be compensated as fair compensation. I will include this as part of my illustration and discussion.

When you hire and engineering or a construction firm to complete a project, and similarly, this would not be much different for marketing, law firms, etc., you would receive a rate table or something similar which outlines the hourly rates, and other charges, that would end up on your bill for the end of the month or project, depending on the invoicing terms that are decided in the contract. There are various types of contracts, which I won’t get into here and could affect the cost for a project. For this illustration, I’m going to go with an hourly charge rate for a project assistant. This is all fictional and by no means does not reflect any one particular organisation or one individual’s corporate charge rate.

I would like to point out that while these rates are fictional, they are not that exaggerated. If anything for a project assistant, the demonstration rate may be a little low. Almost fifteen years ago, I worked with an internationally renowned technical specialist who worked for a global firm that had a charge out rate in the range of $400/hr. This was a mechanical engineer. I suspect that if that gentleman is still working, his company likely charges considerably more than that for his services currently. Charge out rates for engineers are likely to run ~$150/hr and go up from there depending on experience level. As I am going to demonstrate, the firm will charge those rates, the engineer’s paycheque will not be in that range.

So, now for my hypothetical case of the project assistant that I will use to demonstrate the difference between a charge out rate versus a wage rate. Music professionals when establishing their rates should understand the difference between the two types of rates.

If the company is charging $150/hr for a junior engineer, that would be $312k/year. Currently, a starting salary in Alberta for a young engineer is more in the ballpark of $80-$90k/year. What makes up this discrepancy?

In my example, the project assistant’s name is John and he works for the fictional company, My Engineering Firm. John’s company charges him out at $120/hr, but John only gets $40/hr in his paycheque. John gets 4 weeks of paid vacation per year. His company provides a comprehensive benefits package that includes medical insurance, accidental death and dismemberment insurance, life insurance, a company savings plan, and RRSP matching, which is more commonly done than a traditional pension plan. Additionally, John is working to become a Project Management Professional (PMP), which is conferred by the Project Management Institute (PMI). When he was hired on, he negotiated that the company would cover his annual dues as well as pay for the training required to qualify as a PMP. All this is a handsome compensation package. It is also a reasonable expectation that all this be part of John’s compensation.

The question is now, how much money is John’s employment costing the actual company? The money for his benefits and training all have to come from somewhere. The company makes money by charging out John’s services. So, the company has to charge enough to be able to afford to compensate John for everything lined out in his employment contract. Now, I will break these down, making some really wild guesses as I do not know for certain how much some of these elements cost, but it will work for this demonstration.

Vacation Pay:  As mentioned, John has 4 weeks of vacation every year. The firm works 40 hours per week. The firm has to cover the full charge out rate as this is the amount of money lost on John’s behalf while John is away. (I am putting the annual totals in bold type as I will use those in a later final calculation.)

Cost to the company for John’s paid vacation: (40 hours/week) X ($120/hour) = $4,800/week

Total annual cost to the company of John’s paid vacation:  ($4,800/wk) X 4 weeks = $19,200

On top of that, there are 11 statutory holidays that John’s company observes, where John gets paid for the day off. There are statutory holidays that are government mandated, but there are also others that a company can choose to observe as it is standard practice.

Cost to the company for the stat holidays: (11 days) X (8 hours/day) X ($120/hr) = $10,560

Sick Days: John’s company used to offer only 15 paid sick days, but with COVID-19 causing hardship among their employees, management increased this benefit to 20 paid sick days.

Cost to the company for John’s sick days: (20 days) X (8 hours/day) X ($120/hr) = $19,200

John may not use up all those sick days, but the company has to be sure that there will still be enough money in the bank to cover those days when he calls in sick, in the event that he is unfortunate enough to need all 20 days.

Medical & Dental Insurance: In this hypothetical case, the company’s insurance premium for John’s medical and dental insurance costs them about $200/month. So annually, this benefit is costing this company $2,400.

Disability Insurance: In this hypothetical case, the company’s insurance premium for John’s medical and dental insurance is costing them about $60/month. So, annually, this benefit is costing the company $720.

Accidental Death and Dismemberment Insurance: The company’s insurance premium for John’s accidental death and dismemberment insurance is costing them about $40/month. Annually, this is costing the company $480

Life Insurance: John’s company life insurance policy pays out the equivalent of one year’s salary in the event of his death. John’s annual salary works out to $83,200. The monthly premium the company pays for this policy is $70/month. Again, this is all hypothetical and I truly do not know what the insurance rates would actually be. In this hypothetical case, the company life insurance policy would cost $840 per year.

Company Savings Plan: As a lovely, unexpected perk, John’s company offers a savings plan where they will match John’s contributions to it up to a maximum of $8,000 per year. Since there is no guarantee that John will contribute that much, the company still needs to ensure there is money in the bank in the event that he does. So, the extra $8,000 is added to John’s overall cost to the company.

RRSP Matching: In Canada, company pension plans are not something that is seen much anymore. Instead, RRSP matching is done instead. The employee contributes to their RRSP and the company puts a matching amount into the employee’s RRSP. For those living in the US who may not know, the Canadian RRSP is the same as the 401K. John’s company matches with 4%. So, 4% of John’s weekly salary is $64. For the year, this will cost the company $3,328.

Canada Pension Plan (CPP) & Employment Insurance Employer Contributions (EI): In Canada, employers and employees have to pay into the CPP and EI funds. Half comes out as a deduction on the employee’s paycheque and the other half is paid by the employer on the employee’s behalf. The employer’s portion for 2024 is looking something like approximately $5,300. For the exact amounts, please refer to the appropriate resources and DO NOT use this number for payroll purposes. This is the number I am going to use in my illustration.

John’s Benefit Subtotals:

So, after all that, what do these additional costs for John’s benefits add up to? I have included this in the table below to make it easier to see.

Benefit Description	Benefit Cost to John’s Company (on an annual basis)
4 Weeks paid vacation	$19,200
11 Statutory holidays (paid to John)	$10,560
20 Paid sick days	$19,200
Medical & dental insurance	$2,400
Disability insurance	$720
Accidental death & dismemberment	$480
Life insurance	$840
Company savings plan	$8,000
RRSP Matching	$3,328
CPP & EI Employer Portion on John’s behalf	$5,300
Subtotal	$70,028

So, looking at the table, where I have summarised the additional cost to the company for John’s benefits, it will cost the company an additional ~$70k as well as the $83k that they pay out to John in wages. John’s employment with the company up to this point is costing the company ~$153k.

When John was hired, he had negotiated training and professional fees as part of his overall compensation. I did not include that in this, but the company would likely add a loss of a few days per year for John to attend company mandated training. I did not include that in this calculation, so we can just assume it is part of the company overhead costs, which I will get to. 

For John’s training and professional fees, however, the company is going to assume the annual cost of his PMP fees, which for this hypothetical case are $600 per year. The training that John needs to complete to get this certification is going to cost $5,000. Although this exact amount may not happen in subsequent years, John is required to take additional training to keep his PMP current, so to budget, the company will carry that $5k through annually for his certification. In addition to the training fees, it is expected that John will be absent from the office, so will be unbillable, for 5 working days of the year. John will still receive his wage for those days, so the lost billable time will add an additional $4,800 to John’s overall annual cost. So, John’s negotiated extras will cost the company $10,400 per year.

John’s Total Annual Benefit Costs:  $70,028 + $10,400 = $80,428

So this means that John’s employment as a project assistant is costing My Engineering Firm on an annual basis:

John’s Annual Wage (paycheque)	$83,200
John’s Benefit Package	$80,428
Cost of John’s Employment for My Engineering Firm on an Annual Basis	$174,028

That is a lot of money. And this is a hypothetical situation, but at the same time, I’m not sure that I am that far out with some of my assumptions.

So, now, let’s take a look at how My Engineering Firm is going to have to charge to recuperate these costs, and make a profit.

My Engineering Firm makes money by charging an hourly rate for their project professionals. So, to cover John’s compensation package, they need to figure out how many hours John will conceivably be working during the year. The company works a forty hour week from Monday to Friday, which works out to the maximum possible number of working days to be 260. With his vacation and the statutory holidays, John is likely to be working a maximum of 228 days per year. However, there are those 5 days of training that he negotiated for his PMP, so that whittles his working time to 223 days per year.

So, how do we convert John’s cost to an hourly rate? Just for illustration, I will just calculate for the benefit portion only and then add it to his wage rate.

John’s Benefits as an hourly rate:  ($80,428/year) / ((223 days/year) X (8 hr/day)) = $45/hr

While John’s wage may only be $40/hr, his benefits bring his total cost as an hourly rate to $85/hr. John’s company charges him out at $120/hr. With $85 of that hourly rate going to John, that leaves $35/hr for the company.

What about that remaining $35/hr for the company? Is that pure profit? The answer is no. The company still has to cover the costs of office space, corporate insurances such as liability and insurance for the office space, marketing, bank fees, accounting, legal, invoicing, telephones, IT services, payroll personnel, human resource personnel, training, executive salaries, etc. Corporate taxes will also need to come out of that remaining $35/hr from John’s rate. Now, these overhead expenses will be split out and covered by the various professionals that are direct billed to the clients, so it is not all on John’s services to cover everything from his rate alone as a project assistant. Of course, there will be a percentage of John’s services that will contribute to company profit. All of this would be worked out by the company accountants and financial experts.

How Does This Translate to a Music Teaching Studio or Freelance Musician?

Let’s now bring the discussion back to a musician or music teacher. So many times I have heard people comment on the supposedly high rates that a music teacher or a musician will charge and say that they do not make that much money so why is the teacher (or musician) gouging them? I believe that I have just demonstrated that if the individual is an employee working at a company, in all likelihood their actual cost to the company is far greater than just their paycheque. Their wage may be $40/hour, but their actual cost to the company may be $85/hour. Not only that, they expect to be compensated accordingly as they feel that their services demand that level of compensation.

The music teacher is also running a business with their teaching studio, whether it is home based or they rent an additional space. The freelance musician is also running a business that incurs costs. In both of these instances, the music professional should be charging so that these costs are covered just as an engineering, construction, or legal firm would. For a musician to charge $80/hr for their services, they are actually lucky to end up with $20/hr in their pocket at the end of it, maybe even less depending on their business expenses. Like My Engineering Firm, music professionals also incur costs for advertising, bank fees, IT services, insurance, equipment repairs, double CPP and EI payments as they need to cover employer and employee portions as a self-employed person, and training time. They do have some specific expenses that pertain only to being a musician. But overall, there are still similarities to other forms of business.

What should music teachers and musicians be charging? What is reasonable? What is realistic? This is where I start to look at some historical numbers and start comparing charging rates for other service providers.

Historical Rates and Rates for Other Personal Services

The one comment I am going to get is that my example uses a project professional, which is not someone that an average joe would hire or engage on any frequent basis. Yes, I did use a project professional, but I am going to show that a charge out rate for personal services, if you want to classify a music teaching studio as such, is not that crazy.

I started teaching music lessons in the late 1980s. At that time, I was studying privately with a lovely lady who had just retired from the Royal Conservatory of Music in Toronto. She charged $40/hr for her lessons. I remember this distinctly because I set my starting rate at $20/hr, which was half her rate, because I was a student. Minimum wage on PEI around that time was approximately $4.25/hr to put things in perspective for that time period. I remember in the early 1990s, my friends and I were working at the lobster cannery for just over $6/hr, which was considered a good wage. When I was growing up, music education was important to my parents, so they paid the lady’s high fees for the weekly hour long lessons.

As for my rate, I did charge half as I was a teenager. I lived at home with my parents and my overhead at the time was very minimal. It was a part time job for some pocket money. There were very different goals attached to the venture.

Fast forward to the early 2000’s and I now have more insight into professional wages. Starting wages for engineers in the late 1990s/early 2000s worked out to roughly $24/hr. So, looking at the calculation illustration, it would work out that a company would likely charge my services out somewhere between $60-$70 per hour. Minimum wage in Ontario at that time was roughly $12/hour. One of the local piano teachers who I studied with charged ~$60/hr at that time. So, she was clearly charging a charge out rate and not a wage rate for her services.

Nowadays, a junior engineer working “at site” in Fort McMurray, Alberta would roughly get somewhere around $43/hour. The oil companies also provide an uplift for living in Fort McMurray, so it would actually work out to about $50/hr in their paycheque. With the rough calculation of the charge out rate being approximately 3 times the employee wage rate, this would work out to a charge out rate of $150/hour. This is all in line with the historical examples that I have included here.

What makes sense for a reasonable charge out rate? There is always the argument of affordability and what people will pay. If your service is important enough to the client and their values, then the client will find a way to pay. However, it is exceedingly rare that a client will ever offer more than what you will ask, so the trick is to be sure to ask the client for what you really want. Additionally, do not expect any of your clients to approve of any rate increases that you may need to implement to cover increasing costs. Client approval of increasing rates is also exceedingly rare. However, you just need to remember, an employee gets regular wage increases.

To address the reasonable charge out rate question, I started to look at rates for other personal services that cater directly to an individual versus a corporation. When I was at one of the local salons a few weeks ago, I looked at the rates for a 15 minute appointment with an æsthetician. I looked at the rates for a 30 minute appointment with their hairdressers. In both instances, the salon was charging approximately $160/hour for their personal services. I had someone comment that you don’t go to the salon weekly. I may not, but I remember both of my grandmothers were at the salon weekly getting their hair washed and set.

The last time a plumber or other tradesperson showed up at my house, their respective companies charged $170-$180/hr per individual tradesperson. In fact, one of the companies had a 2 hour minimum call out for a pair of tradesmen (in this case, they were actual men). So, the service call was $680. Shop fees for some of the local auto mechanics can range from $170/hr to $230/hr. The average individual pays these fees for these kinds of services in Fort McMurray.

I did a quick internet search for sessional musician rates. I do not remember where I saw it and I can’t seem to find it again, but I saw somewhere that the rates for members of the Edmonton musicians’ union in 2021 were approximately $128/hour, with the hiring party paying an additional 18% directly to the pension plan on behalf of the musician. This essentially works out to $150/hour for a rate. Additionally, there is a minimum call out time of 3 hours, so even if the musician only plays for 20 minutes, they get paid for 3 hours, which is similar to the trades example in the previous paragraph.

I also found another site that stated that a few years ago, the city of Hamilton, Ontario was committed to paying all musicians a fair rate, starting at $150/hr, so that the musician will be able to have a living wage. Since it used the word “starting”, it allows the musician to charge what they are worth for their services.

So, this was for sessional musicians, which historically are usually a bit higher than a teaching musician, but if you are committed to doing this for your occupation, you still need to be compensated fairly. The training for a teaching musician is not that different from the training required for a sessional musician, and I would argue that there is potentially more training involved in providing music education. I fail to see the logic in a possible compensation gap between the two jobs.

Finally, I took a lot at other recreational activities and what fees are charged for those. It is not often that you hear of dance teachers being told to close their studios and get a real job. I have heard that being said to private music teachers before. I took ballroom dancing in Knoxville, Tennessee in early 2001. At that time, the dance studio that I was attending charged $85/hour for private one on one dance instruction. Couples and group instruction of course were correspondingly less, which is what you would expect. But, one on one individual attention was $85/hour. Additionally, dance students were required to pay extra for shoes, costumes, venue rentals for recitals, etc. These additional costs and fees are still very common for most dance studios.

Dance studios typically offer classes with multiple students, so the student numbers help to bring costs down to parents, while allowing the studio to be able to pay their teachers a decent wage. I did look at the Fort McMurray dance studios and doing some quick calculation, they definitely can make their business model work. Group classes really can generate a considerably greater amount of cash.

Hockey parents spend thousands of dollars a year for their kids to play hockey. I remember hearing at work about one parent shelling out $30k per year as their kid was a teenager showing promise. And that did not include the kid’s gear! Hockey is also a group instruction/group coaching situation. This allows the costs to be dissipated amongst the participants. 

I played hockey as an adult in a lady’s recreation league in the early 2000s. Ice fees started at $400 per year and increased over the years to my final year costing $600/year. This did not include coaching or skills development or any other such thing that most parents pay to have their kids experience. Nowadays, I am hearing that ice fees alone can run to $3000 per year, depending on where you live and the demand for hockey. So, the additional participation would only add to that $3k.

Most private music teachers teach one on one. This means that there should be an extra cost for such individualised attention. In addition to the time spent with the student in the lesson, there is time spent on lesson prep, scheduling, lesson follow-up, invoicing, student onboarding which all takes additional time. Time is money and so either the hourly rate for the time spent with the student has to build in this time or there should be an additional administration fee charged. In the last while, I started tracking the time spent on my students outside of the actual lesson. It was averaging out to be 20 minutes per week. In any other service company, the cost of “non-productive” time would get passed onto the client. This is something that a music teacher also needs to consider being compensated for.

To Conclude…

I believe a person has the right to have the expectation to be compensated fairly for their work. Musicians and music educators have the right to set their rates accordingly. Of course, market factors and social context can and will influence the rates for any and all business. These do not negate the right for any person to ask and expect fair compensation for their services in their chosen profession. This blog post did not cover all aspects that could and do influence fees that a music professional charges. It was intended to provide context to what might be considered fair compensation. It was intended to provoke discussion around fair compensation.

To finally end this very long post, I would like to quote a couple of people. The first one is a music business coach who I have heard say more than once: “Charge what you need to charge.” The second one is what I had another private music teacher once tell me: “It has to be run as a business in order for it to work.”. And lastly, I would like to add to those two pieces of advice: “Employees get wages and benefits. Ensure you charge enough to have the equivalent compensation and cover your business expenses. You have earned the right.”