Are you overpaying or mispaying?

Most studio owners think overpaying is a money problem. It isn't.

This week I had the same conversation with four different studio owners. Different people, different numbers, but the same thing underneath every time. And not one of them was actually dealing with a pricing issue. They were mispaying, paying for a title when they were getting a task, paying for a role they weren't using yet, paying for a feeling instead of a result.

In this episode, I walk you through it the way I would on a coaching call. We start with the circumstance, get honest about the thought creating it, and look at what it's actually costing you to keep operating that way.

In this episode:

Why the dollar amount can never tell you if you're overpaying, and what actually does.

The five feelings that quietly drive every overpaying decision, and how to spot which one is running the show for you.

Why hiring a "savior" sets you and your new team member up to fail.

How you can end up overpaying and under-delegating at the same time.

The difference between full-time and committed, and why buying one to feel the other keeps you stuck.

The one question to ask yourself the next time you reach for your wallet that gets your money back on the spot.

Here's the truth underneath all of it: overpaying was never a money problem. It's a leadership-avoidance problem wearing a really kind face. And the fix isn't to go be stingy. It's to stop using money to buy your way out of leading.

Work with Jackie Murphy

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• Join The Studio CEO Program: https://www.jackiegmurphy.com/studioceo

Transcript

Welcome And CEO Mindset

Jackie Murphy 0:12

Welcome to the Studio CEO, the only podcast that empowers yoga and Pilates teachers and studio owners to step confidently into their role as CEO. If you are ready to show up with passion, take your business seriously, and scale to new heights without burning out, you are in the right place. I'm your host, Jackie Murphy, an award-winning certified business coach with over 12 years of experience inside the yoga industry. I have seen firsthand what it takes to build a profitable and scalable business. Join me as we dive into strategies, insights, and real-world advice that will help you grow your revenue, build a thriving team, and create a business that serves you as much as you serve your students. It's time to embrace your inner CEO and make more money without working more. This is just the beginning.

What Overpaying Actually Means

Speaker 1:50

And it was all about overpaying, paying too much for help. And every single one of them thought it was a money problem. Like, is this number too much? Can I afford this? Is this rate too high? And I kept saying, No, that's not it. The number is not the problem. So that's what we're going to do today. I want to walk you through this the way I'd walk you through it if you were sitting across from me on a call. Stay with me until the end because once you see what's actually going on here, you can't really unsee it. So here's the circumstance. Let's define overpain really clearly because I think we can get it wrong. We think overpain means paying someone a big number, paying a lot, and underpaying means paying a little. And that's not it. Overpaying is a mismatch. It's when what you're paying doesn't line up with the work that's actually done in your business or what the work is actually worth to your business. It's paying for a title when you're having someone complete task. It's paying for a role that you may not even be fully using yet. Or you could actually overpay for a feeling instead of a result. And here's the proof that it's not about the number. You can overpay someone 800 bucks a month and you can underpay someone 5,000 bucks a month. The same dollars, but different mismatch, different situations. So there is a gap between what you're paying and what you're getting. That is it. That is overpaying.

Payroll Benchmarks And The Gap

Speaker 3:36

Now I do want you to know that inside of my programs, I teach my clients that your payroll should never be more than 20 to 35% of your overall revenue per month. Meaning, if you are paying people more than 35% of what you're making every single month, your payroll expense is probably too high. Now, obviously, this is a generalization because you're listening to a podcast. So I can't specifically talk to you in your business, but do take a look at how much per month your average payroll is. And does it fit between 20 and 35% of what your revenue is? Now, that doesn't include your salary. So make sure that you pull that out. So that's not in that payroll number. Let's talk about the gap between maybe paying someone a certain number and then what work, what result, what return you're getting from it. Because the gap, again, isn't coming from the number, it comes from a thought. And here's what's wild. With all four of these studio owners this week, the thought showed up in a different way every single time. But underneath it, there was a consistent thread.

Fear And The 20% Trap

Speaker 4:53

The first client brought to me just fear. The thought is that I can't do this. It won't happen without paying these people. So I want you to picture an owner giving away most of her teacher training revenue to the person who is leading the training, 60, 70, 80%, while she does all the work to fill it. She markets it, she sells it, she has the studio for it, but she's only keeping 20 cents on the dollar. And on paper, you may think, how does that even happen? But it makes total sense once you understand the thought driving it underneath, which is if I don't overpay them, if I don't pay them this much, then they won't do it. And if they don't do it, then the training won't happen at all. So I'd rather have 20% of something than 100% of nothing. That's the math that fear does in your head. And here's the truth. Everyone, listen, working at a yoga or Pilates studio is in demand, has been in demand, and I believe will continue to be in demand. Leading a training is a dream for so many people. So the idea, this fear thinking that no one else would want to do this, no one else will do this, is simply untrue. It makes you believe that you have no leverage and that is not real, and that fear can get really expensive.

The Rescue Fantasy Hire

Speaker 6:24

The second client came to me in sort of a rescue fantasy mindset. Their thought was, oh, I can hire, and then the hire is gonna help grow my revenue. They're gonna come in and they're gonna help me find clients and fix the things I don't really know how to fix myself. And so they were imagining hiring somewhat of a savior. You pay the savior money, and the savior comes in and makes more money in your business. And I had to be honest with this client. I said, just to be very clear, typically a great hire in your business will free up your time. But right now, you're still the one responsible for growing the revenue. Now, that isn't always true, right? Sometimes you will specifically hire someone to grow the revenue in the business, like a sales team or a business manager. That person, their job is to make sure they're bringing in more money. But other hires, more often than not, they are giving you hours back, but they're not going to hand you clients. So you have to make sure that you understand, okay, when I get my time back, then as CEO of the business, I can go market, I can go sell, I can go deliver to clients, and that is how my revenue will grow, but not necessarily from hiring the person. The

Guilt Leads To Underdelegating

Speaker 7:45

third client came to me in guilt. And this one happens because this industry is full of passionate, heart-led, heart-centered people because you care. And it goes a little something like this. Okay, I'm paying them this much, and I don't really want to overwhelm them. I don't want to underpay them either, and I don't want to micromanage them too much. So what happens is kind of wild when you say it out loud. You end up overpaying and underdelegating because you are worried that you might overwhelm the person. You pay someone a real salary, but you keep all of the task, all of the thinking, all of the decisions. You hand them just the buttons to press. Post this, send this, make this. But your brain is still doing all of the energy and effort and the strategy. So maybe you've got like a manager on payroll, but what they're actually doing is more tasky type stuff that could be completed by an assistant or a virtual assistant. And the gap in the middle can be just coming from feeling guilty for asking for more from your current people.

Paying For Safety And Full Time

Speaker 9:02

The fourth thing that came up is all about safety. And this client specifically was thinking, I want to pay people full time. If I bring this person on full time and I pay them enough, then I'll finally feel some of the weight come off of my shoulders. Some of the overwhelm dissipate. And that, my friends, is paying for a feeling, the feeling of being taken care of. Thinking that a bigger salary, a full-time salary, means loyalty, commitment, and dedication. And honestly, sometimes that isn't the case. But we can believe, like if I just hand this whole heavy thing over to one person and pay them full-time, then I get to put it down for a second. The person will deeply care, they'll work really hard and they'll help me. And really, right now, when you're deciding to pay someone full-time or not, it comes down to your revenue. What can your revenue fully support? And understanding that you can pay someone part-time and they can be fully committed. Vice versa is also true. You can pay someone full-time and they can only be slightly committed. Whether you're paying full-time or part-time doesn't necessarily mean or dictate what kind of result you get from that person. Now, I'm not saying paying full-time people is bad, right? It was a specific example where the revenue of this business can't support the full-time hire yet, but the owner is wanting a full-time hire to have the relief of someone else holding the business with them. And you can get that relief. Someone else can hold the business with you without having to pay full-time or having to stretch your studio in a way that's gonna tear apart your profit or tear apart just your peace of mind when it comes to getting all of your expenses covered. Full time is not the same thing as committed. And paying for full-time, just so you can maybe think that they're gonna be just as invested, is paying for reinsurance and you can create someone who's committed and empowered and invested in the business on a part-time pay.

Avoiding Authority And Negotiation

Speaker 11:19

The fifth client brought to me this quiet thing underneath all of them. And this sounded more like, who am I to really be the leader? Who am I to expect more? If I'm setting a rate and I'm holding an expectation, I'm saying this is the job and this is what it pays, all of that asked you to stand in your authority as the owner. And when that feels uncomfortable, overpaying can become the way out. You'd rather pay extra than have the conversation about what you can actually afford, what work has to be done with that pay, and what you truly expect from that role. Here's how it may show up. Like someone says, I want to teach from you, they tell you what they want to be paid, and you know, oh, I'm not, I can't pay that right now. That's not the rate that we pay for X, Y, and Z, whatever it may be. And instead of saying, hey, this is what our, this is what we are hiring for, this is the role, this is the expectation, you start to overpay the person just from that sense of like, who am I to dictate this? Here's the thing: fear, wanting someone to come in and rescue you, guilt, wanting to feel safety, wanting to avoid standing near your authority, those are five things that will make you overpay. And the thought that can drive all of that is I would just rather pay someone what they want than get into the uncomfortable pieces of leadership that include negotiation, following a budget for high profit in my business, having high clear expectations from the get-go, standing firm and what I know the return on this investment needs to be. And leadership is a hard thing to step into, but add money on top of it, that can be a breaking point for so many of us. So if this is you, I just want you to know I'm not calling you out. Like this is normal, there's no judgment. I'm more just calling you in to understand this next level of leadership is available where you feel confident, clear, secure in what you're paying, and you know you're getting a good return on every single investment in my business. Because without that, you can end up overpaying and underdelegating. You can end up being the bottleneck of your own business. You can give away 80% of the thing that's meant to bring your company revenue. You can hire for a salary that the business can't support quite yet. You can tiptoe around a contractor in your own company. And the deepest result,

CEO Brain And Clear Pay Decisions

Speaker 14:08

the one that actually matters is this your business can't grow because you're spending real money to stay exactly where you are. You can start to fund your own avoidance. And I really want you to hear that. Misspaying isn't just draining your bank account, though it can, it's keeping you in the employee mindset. And a business run from the employee mindset has a cap, has a ceiling. So, what do you actually want to do instead? You want the right size team, again, that 20 to 35% of your overall revenue monthly being payroll. You want to pay someone a salary or wage that matches the outcome that you expect. And you want to create a business that runs without you stressing about every single dollar and every single decision so that you can live in the CEO seat and work on the business instead of always being in it. Here's what I need you to hear: the CEO brain feels every single one of these feelings we just mentioned fear, guilt, the urge to overpay, the flinch when you have to negotiate a rate. The CEO brain is not immune and it's not fearless. The CEO brain just sits in this upper seat one beat longer and strategizes and thinks and plans instead of just paying to react to something happening in the business. So the new thing I want you to think about is leading through every single pay rate conversation that you may have. That means you get clear on the role, you write down the actual deliverables, you set expectations out loud, you match the pay to the potential outcome. And when the answer honestly is I don't know what rate this should be or how to pay for this, or if this should be full-time or part-time, that is when you get support. So often I'm telling my clients, hey, you're paying them X when that task is actually worth Y. So that they can understand that maybe without even knowing it, they've overpaid for what they're getting. You can learn how to stand strong in leadership when it comes to pay. And this can change your entire business because at the end of the day, we do care about you having a profitable, sustainable business. And one of the main things that will rip that from you in this industry is overpaying on your payroll, is not being clear on how to negotiate your rates, is not having clear expectations for your team.

Audit Your Payroll And Get Support

Speaker 17:08

So here's what I actually want you to do. I want you to think about how much is my payroll right now? Is there any place where I think I'm overpaying a potential person? You could also, we could do a whole podcast on underpaying. Maybe we'll do that too. Is there any fear driving what I'm paying people? Is there any guilt driving what I'm paying people? Is there any place where I'm trying to seek feeling more safe or have someone come in and save me and just name it and be really honest with yourself? This is exactly the kind of work that we do inside of the studio CEO program and in the Grow Mastermind is making sure that you're matching what you pay to what actually needs, building a business that is profitable and working on becoming the leader that you have to be to fully run a business. So if you have been waiting to join the studio CEO and you know overpaying is one of your problems and payroll hits every month and it hurts every month, or you know you need to hire someone, but you're not quite sure what to pay and how to do it, then I would love to chat with you more. I'll see you guys in the next episode.