Although it might have a say in how long you remain one!
My article, Should I Become A Driving Instructor is quite popular – 25,000 views since I published it. It is a very long article, and some people probably don’t have the attention span to read it all, but in it I explain how an ADI’s finances work.
It’s quite simple, actually. You charge money for lessons, and you spend money to get a car, run it, keep it on the road, and keep your business afloat. What’s left over is your wage before tax and National Insurance. Anyone higher than a squirrel on the evolutionary scale will use yearly figures for comparisons, and not short-term spikes in their earnings as a guide to future profits. I mean, over a typical financial year my monthly hours worked might look something like this.
It is equivalent to an average over 52 weeks (we call that ‘a year’) of about 30 hours of lesson per week. I have done busier years than this, and I have done quieter ones. And I have had more erratic ones But this is typical – an ‘average’, if you like.
My current lesson rate is £29 per hour. So my takings for the year – my turnover, which is how much money I take from pupils – would be £45,240. But not all that money is my wage.
Right now, doing a week like that would cost me about £80-£100 or so in fuel costs (which varies depending on the cost of fuel at any given time). Over a full year, I’d have to spend about £5,000 on fuel just to be able to give these lessons.
Then there is how much it costs me to have a car in the first place. Let’s consider this in my world – and not the one populated with unicorns prancing across candy cane fields under a sky full of rainbows. The absolute minimum cost to anyone is going to be at least £30 per week to keep a car on the driveway – and that’s for an older car which never goes wrong, which in all honesty is in unicorn territory. Over a year, that would cost you over £1,500. A newer car, or one which is leased or on PCP, or from a franchise, would cost at least £80 a week (over £4,000 a year), and up to £200 a week (over £10,000 a year).
So if you subtract the fuel cost and the yearly cost for keeping even a perfect banger which never goes wrong on the road, your theoretical wage would be £38,700. Realistically you will have a proper car – one that still reflects sunlight and has at least something inside it which is electrically powered – and your theoretical wage would be more like £30,200-£36,200.
There are other overheads you need to subtract from that, but let’s stick with this theoretical set for the purposes of this discussion.
Now, just for a moment, let’s take a totally separate path. IF I charged £50 an hour, my theoretical wage would leap to around £67,000. IF I charged £100 per hour, it would be as much as £145,000. But reality has a big say in all this.
In 2016, a survey showed the average lesson price in the UK was £24 per hour (mine was £25), with a higher range of £28, and a lower one of £23. In 2020 – and without knowing what effect COVID-19 has had yet – these figures are typically about £5 higher. I stress, these are averages, and at any time there are always some people who are charging either well below or well above the average. But when I say ‘well above’ or ‘below’, were talking a few pounds – not tens of pounds. Anyone charging double that is not doing normal lessons with normal people.
I recently saw someone claim that it was possible to ‘earn’ £74,000, and they even cited an example of someone who ‘had done it’, and that they did so working 36 hours a week over 48 weeks. Straightaway there is a problem, because 48 weeks isn’t a full year, and 36 hours per week over 48 weeks actually equates to a weekly average of 33 hours per week. That would means someone ‘earning’ £74,000 would be charging the equivalent of £43 per hour which is almost double the normal lesson rate. Alternatively – and without knowing the full details – another way of looking at it is that £74,000 over 48 weeks scaled to a full year equates to £40 an hour at 36 hours per week. This is what happens when the clueless start throwing random and incomplete figures around.
The second problem is that they are not ‘earning’ that at all. That is their turnover, which the person who made the claim admitted to later, though not initially when they were in full-on bragging mode. Turnover is absolutely meaningless unless you have someone’s detailed accounts. The worrying thing is that supposedly professional people are bandying these figures around for purposes best known to themselves, but they are totally ignorant to what it is they are actually pushing.
Someone charging anywhere near £43 an hour is not going to be driving a banger with faded paint. They will not be giving normal lessons to normal people – there will be some unique selling point (USP) they are involved with, or they will only be covering a special area with very rich clients. And if they have a cat in hell’s chance of sustaining that model from year to year even in those circumstances, they will be highly experienced to the extent they can get away with it. If they are inexperienced (or bad) instructors, even posh and rich people will tend to realise any shortcomings sooner or later.
Taking overheads into account, the person they mentioned would have been ‘earning’ at least £10,000 less than that £74,000 – even without knowing the full story. If they were using a high-spec or specialised vehicle – which is likely if the hourly rate really was £43 – it could have been £20,000 less, or even more. So it is misleading, and unprofessional to push a high figure like this as a potential salary. It is no better than me quoting a friend of mine who charges £60 an hour – he’s a plumber.
The bottom line is that most ADIs – the vast, vast, vast majority – cannot possibly charge £43 and hour. That majority is so vast that individuals who can get away with it for whatever reason are irrelevant. Furthermore, the vast majority of ADIs struggle to maintain even 20-30 hours, and that’s especially true right now. You can see my real world example, which dips between about 80 hours and 160 hours per month over a year (20-36 hours a week) even when there’s no pandemic to deal with. Back in the last recession, you could easily halve those figures for many people, and at the opposite end I once did a year where I was averaging 40 hours a week – which nearly killed me. I would never quote that year as in any way ‘typical’ – because it wasn’t, it isn’t, and it shouldn’t be. It happened by accident, and I deliberately pulled back as a result of it, hence ‘30 hours’.
You see, that’s another complication which the person boasting these figures missed. In terms of workload, an average of 36 hours over 48 weeks is precisely that – for 48 weeks, the instructor would be delivering that number of lessons. And that is hard to do, especially if it is week in, week out. If they worked 7 days a week, they’d be doing 5 hours every day (the person who made the claim said they were ‘doing 2 hour lessons’, which doesn’t quite fit). A 6-day week would be 6 hours a day – which does fit. And no cancellations, urgent appointments, or family issues? It’s unicorn territory even with that. But whatever, financially it has to be gauged over 52 weeks to make any sense in salary terms.
And I stress again the phrase ‘theoretical earnings’. In reality, an ADI has other overheads he or she will have to subtract from their turnover before they can call it their wage. These will vary for each individual – with the likelihood that someone charging £43 per hour and getting away with it will have a lot more to pay out than everyone else.
If you’re thinking of coming into this business, do not listen to poseurs who quote these outlandish figures. If there is any confusion between ‘turnover’ and pre-tax profit when they comment, walk away and blacklist them. They do not have a clue – no matter what title they give themselves.
A decent instructor teaching normal pupils should be looking to earn a proper wage somewhere around £25,000-£30,000 in 2020 (COVID-19 and Brexit effects notwithstanding) – if they’re doing an average of 30 hours and if they’re charging around £30 an hour. You can worry about USPs, rich clients, and doubling your fees later.
Oh. And ‘turnover’ is not your ‘wages’ or ‘earnings’.