Earning potential with a tutoring side hustle

From: alexhormozi

Test preparation and tutoring present a significant business opportunity, especially for students, offering the potential to earn substantial profit with flexible hours [00:00:00]. This type of venture can yield $1120-$1150 per day in profit while working only four hours [00:00:03]. It was considered as one of the top three businesses before a gym venture was chosen [00:00:18].

Business Model: Selling Outcomes, Not Just Tutoring

The key to success in this business is to focus on selling the outcome of tutoring rather than just the service itself [00:00:28]. This means emphasizing how improved test scores can lead to:

• Better job opportunities [00:00:32]
• The ability to pass crucial tests [00:00:34]
• Admission to better schools (college or business school), which significantly impacts networking opportunities, company recruitment, and average salary/earning capacity [00:00:43].

Standardized tests are particularly valuable targets because a better school can lead to a material difference in future opportunities and income [00:00:38]. College itself was historically positioned as a “biz op” where attendance would result in higher earnings [00:00:53]. This highlights the importance of learning in increasing future earning potential.

The Semi-Private Tutoring Model

Instead of the common one-on-one approach, the most profitable model for a tutoring service is semi-private (one-to-many) tutoring [01:04].

• Profitability: This is one of the most profitable service models because you can charge two-thirds of the one-on-one rate but serve eight times as many people [01:11].
• Group Size: A group of eight students still allows for a small group setting and personalized attention [01:20]. Students can take turns solving problems, making it efficient [01:24].

Earning Comparison: One-on-One vs. Semi-Private

Consider a typical four-hour workday:

• One-on-One (typical model): At $60perhour,fourhoursyields$240 [01:27].
• Semi-Private (one-on-eight): Charging $35perstudentwitheightstudentspersessionearns$280 per hour [01:36]. For four hours, this totals $1120-$1150 [01:39].

This semi-private model allows for earning four and a half times more money per unit of time compared to the one-on-one model [01:41]. Even with a lower per-person rate ($35vs.$60), the aggregate income is significantly higher [01:49]. A skilled tutor using this model could earn more than a doctor without incurring school debt [02:03].

Operational Considerations

• Location: Tutoring can be done at free libraries, eliminating overhead costs [02:15].
• Pricing: $35persessionisanaffordable"sweetspot"formostpeople<aclass="yt-timestamp"data-t="02:27">[02:27]</a>.Thispriceisjustifiedbythepotentialforstudentstoearn$100,000 more per year by attending better schools [02:31].
• Payment Structure: Encouraging pre-payment for sessions is advised to move away from transactional, time-based billing [02:37].
• Curriculum & Methodology:
  • Focus on the goal (e.g., increasing test scores) and the number of problems required to achieve it [03:03].
  • Research shows that test scores (like SATs and GMAT) are directly proportional to the number of problems solved [03:27]. This is a clear input-output equation [03:35], making the process highly repeatable [03:24].
  • The speaker personally used this method to score highly on the GMAT by solving every available problem book over four months [03:40]. This highlights the importance of developing skills through practice.
  • A suggested curriculum structure involves a three-day cycle for Class A and Class B, with a makeup day [03:07].

Marketing and Client Acquisition

This business requires no capital outlay, rental space, or build-out [04:14].

1. Leverage Your Network: Contact people you know (friends, family, former high school classmates) via direct messages or in person [04:17]. Share your own success story (e.g., improving your score from X to Y) [04:27].
2. Offer Free Sessions: Provide a free “assessment” session that includes an easy win for the student and transitions into a sales pitch for your method [04:49].
3. Accountability: Implement a “homework bill” where students are charged if they don’t complete assigned work, increasing their motivation [05:07].
4. Solicit Feedback, Testimonials, and Referrals: After free sessions, ask for feedback, testimonials, and referrals [05:17]. These “big three” are crucial for growth [05:22].
5. Utilize Testimonials: Post testimonials online and use them to attract new clients. Offer discounts (e.g., half off) to early adopters who engage with your content [05:29].
6. Broader Outreach: Reach out to people you don’t know and consider running ads later [05:48].
7. Target Niche Groups: Approach sports teams where students might need specific scores for scholarships [05:56]. Word-of-mouth spreads quickly within these groups [06:07].

It might take about six months to build a student base capable of generating $1000-$1100 per day [06:16]. This path can lead to top one percent earnings without the debt and time commitment of college [06:30].

Scaling Up (Super Saiyan Version)

To achieve even higher earning potential and reach a million dollars a year, the business can be scaled by leveraging other people [06:39]. This is where scaling a tutoring business becomes truly lucrative.

1. Hire Tutors: Once your process for attracting students and increasing scores is templated, hire other teachers [06:45].
2. Profit Margin: Pay teachers around $50perhour<aclass="yt-timestamp"data-t="06:51">[06:51]</a>.Sinceyourper-hourearningswitheightstudentsare$280, you keep the significant spread [06:53].
   • Many teachers are happy to work for $50/hour, as it can be more than their regular job salary [06:57].
   • This model allows for service-based margins of 80% or higher [07:01].
3. Focus on Growth: By delegating the tutoring, you free up your four hours per day to promote, market, sell, and recruit more teachers [07:21].
4. Building Pipelines: Develop pipelines for both student acquisition and teacher recruitment [07:27]. Ask current teachers for referrals of other good teachers [07:31].
5. “God Mode” Scaling: Employ four teachers simultaneously [07:43].
   • If each teacher is leading an eight-student group earning $280/hour(youtake$230/hour from each teacher’s session after paying them $50),yourtotalhourlyprofitbecomes$1100-$1120($280 x 4) [07:47].
   • For a four-hour half-day, this translates to $4400 in gross profit [07:54].
   • After paying four teachers $200eachforfourhours($800 total), your net daily profit is $3600 [07:58].
   • Earning $3600perdaysurpassesthe$3300/day needed to make a million dollars a year [08:05]. This means achieving million-dollar annual income with just four part-time employees [08:11].