Owners tend to treat this as a billing decision. It is closer to a positioning decision, because the two models attract different families and produce completely different months.
Packages
Sell a block — 24 sessions, a term, a level.
Cash arrives early, which is the honest reason most schools like it. It also means the money is spent before the teaching is delivered, so a quiet enrolment month lands as a cash crisis two months later rather than immediately.
Commitment is higher. A parent who paid for 24 sessions turns up for session 19 on a wet evening. This is a real retention effect and it is the strongest argument for packages.
The barrier is higher too. You are asking a family to make a large decision about a school they have seen once. In a price-sensitive market this is what loses you the trial student who was almost sure.
Refunds are where it goes wrong. Write the policy before you need it, put it in the enrolment terms, and apply it the same way to everybody. Package refunds handled case by case will make you look either rigid or arbitrary, and word travels.
Monthly
Charge for the month ahead.
Lower barrier, more enrolments, particularly from families trying you out.
Cash is predictable and smooth, which makes payroll far less stressful — and payroll is the bill that cannot be late.
Retention is weaker and more visible. Every month is a small renewal decision. That is uncomfortable, but it surfaces problems while you can still fix them, rather than at the end of a package when the family simply does not come back.
Collection work is constant. Twelve invoices a year per student instead of two or three. This is only manageable if reminders are automatic — see collecting tuition.
What usually works
Monthly as the default, with a discounted term or year option for families who want it.
You get the low barrier for new families and the commitment effect from the ones who are already convinced. The discount for paying up front is not generosity — it is what you are paying for the cash and the retention.
Keep that discount modest. At 20% you are giving away real margin to families who would have stayed anyway.
The rule that matters more than the model
Whichever you choose, the price must be unambiguous before the first lesson. Sibling discounts, registration fees, materials, make-up class policy — all decided and written down, not negotiated per family at the front desk.
A price list that bends for whoever asks is a price list that teaches parents to ask.
That single piece of discipline does more for collection rates than any change of model.