Originally Posted by
PRS Guitars
I also would advise students to avoid paying $40 per hour (or whatever rate) for a CFI that only gets $8. If the school is keeping more than a few dollars per hour that's a red flag.
My accountant is constantly after me about our pay rates. He says typically a company should pay 1/3 of their billable rate to the employee, 1/3 goes to ss, medicare, unemployment insurance (state and federal), workers comp insurance, benefits, and overhead. Finally, 1/3 should go to the business as profit. I didn't go to business school so I don't know if this is just his opinion or common practice.
At $60/hour, that would leave $20 for the employee pay rate.
We pay more than that for our full time instructors, and also provide benefits like paid holidays, paid time off, and health insurance. So at my school, we make about $10/hour profit off of our full time instructors if they have a good month, less if a slow month.