Performance Payroll Rule: Percentage of Performance Pay Rates (Simple)

Union offers a unique payroll rule called the % of Performance Revenue, designed to align teacher compensation with the actual revenue generated by their classes. This model provides a more sustainable and accurate way to pay instructors, especially in comparison to traditional flat-rate or per-head payment models. By tying teacher pay directly to the revenue their classes bring in, this model ensures that both the studio and the teachers benefit from the true value of their work.

To create a more balanced and appealing payroll rule for businesses that prefer a guaranteed base rate per class, you could consider the following two scenarios:

Payroll Rule Scenario 1: Lower Base Rate with Higher Percentage of Revenue

• Base Rate: $15 per class
• Percentage of Revenue: 25% of total class revenue

Payroll Rule Scenario 2: Higher Base Rate with Lower Percentage of Revenue

• Base Rate: $25 per class
• Percentage of Revenue: 10% of total class revenue

Let's take a look at these two payroll rules against a class revenue breakdown where the performance settled revenue was $74.32.

Payroll Rule Scenario 1: Lower Base Rate with Higher Percentage

This is ideal for businesses that want to encourage teachers to drive class attendance and engage with students. It also protects the studio by tying a significant portion of pay to revenue.

• Base Rate: $15
• 25% of Revenue: $74.32 * 25% = $18.58

Total Pay: $15 + $18.58 = $33.58

In this scenario, the teacher is guaranteed a base pay of $15 per class, with the opportunity to earn an additional $18.58 based on the class’s performance. This model encourages teachers to promote their classes, as they directly benefit from higher attendance and revenue.

Payroll Rule Scenario 2: Higher Base Rate with Lower Percentage

This path is better for those who prefer income stability, as it offers a solid base pay regardless of class size and still offers a modest bonus tied to revenue.

• Base Rate: $25
• 10% of Revenue: $74.32 * 10% = $7.43

Total Pay: $25 + $7.43 = $32.43

Here, the teacher receives a higher guaranteed base pay of $25 per class, with a smaller percentage of the revenue as a bonus. This approach is attractive to teachers who prefer a more stable income, even if the class revenue fluctuates.

When setting up a payroll rule, businesses should consider their financial health, class attendance trends, and teacher expectations. A combination of a guaranteed base rate and a percentage of revenue can create a fair and motivating pay structure that aligns with both business objectives and teacher satisfaction. For a more detailed example, please visit our support article here and learn more about why Union suggests moving to a percentage based pay rate model.