| When publishing a magazine, a primary source of | | | | would be a fair deal for both of us. |
| income is advertising to clients who want to reach | | | | You can use this idea in a similar fashion in your |
| and sell to their reader demographic. Occasionally, an | | | | martial arts school. Say a student is halfway through |
| advertiser will want to cancel the contract. In the | | | | a 12-month agreement at $100 per month and stops |
| publishing world, the process for doing this is called | | | | coming to class and paying. You can offer the |
| "shorting the contract." | | | | student the opportunity to make the agreement |
| In exchange for committing to a set number of ads, | | | | good by letting him buy out the balance at a |
| the advertiser was given a discount for each ad. | | | | 40-percent discount. |
| Shorting the contract meant that the ads the guy | | | | In this example, he has $600 left, so a 40-percent |
| ran would be re-billed at the one-time rate and, if he | | | | discount would be $240 off, leaving a new one-time |
| paid the difference, we would release him from the | | | | balance of $360. He would be allowed to return to |
| contract. | | | | class with all privileges and will also avoid having the |
| For instance, if he committed to 10 ads at $2,000 | | | | billing company breathing down his neck (good |
| each and cancelled after five, he would have paid us | | | | motivation). |
| $10,000 of a $20,000 contract. However, had he | | | | You may have to send a portion of that to the billing |
| purchased those ads one at time, the cost would | | | | company (they will usually take it as a credit on your |
| have been $2,200 each. So, if he wants out of his | | | | next check), but it's worth it. You got money that |
| contract, he would pay the difference between five | | | | you most likely would not have, and your student is |
| ads at $2,000 (what he paid) and the single run price | | | | back in class and appreciative that you were willing to |
| of $2,200. This would be $200 x 5 = $1,000. He | | | | help him through a jam. |
| would pay the $1,000 to "short out" his contract. It | | | | |