First, I see where you're coming from, I've been there. One thing you don't want to do is undersell yourself. I realize that you're trying to get a small base of students quickly. But, once you do have a few, don't undercut yourself. Unfortunately the average joe looking for a Krotty school has no idea what's good and what's plain dumb. But, they will see that yours costs half as much as the McDojo on the corner. Bad thing is, alot of people tend to see that as, "well that one costs alot more, so they must be better." My advice, do some nice intro programs where they can get 6 weeks of classes and a uniform for a reasonable, but not rediculously small, price. Then keep your standard rates at least competetively close to the others near by. Which you don't seem too far off right now. That's if you need this to be financially viable as well as have good instruction. That's what I've learned as a relative truth in most markets.
Direct mailers for any product tend to net you around a 1% return. That's if you're mailing to a correctly targetted area and demographic. I've found it was just not worth it, for ME. Hours and hours of stuffing enveloped and sending out to a bought mailing list in a targeted area. Nearly zero response al around with the couple who did come in flaking out. I wouldn't bother. But that's me.
Newspapers? Not really. If you can find a way to get them to do a special interest piece on you then go for it. But, I wouldn't pay for newspaper ads.
We've had decent responses in the past to getting into the local coupon paks. Just don't spend a ton on it and don't give the store away with the deal you offer.
As for web pages... They're cool. If you have a student base it's nice for them to be able to go there and check the class schedule and events coming up, etc. But, nobody will show up at you doorstep becuase they stumbled accross your web page. The chances of having someone looking for your style, knowing the right keywords to find it, and the huge unlikelyhood of that 1 in a million being from your area are slim. Wasted money/time from a marketing standpoint. Email marketing gives the same issues.
For me, the one single thing that always netted the most signups was the yellow page ad. But, since you're subletting in someone elses place leaves you a bit handicapped.(and I'l come back to this) Can you paint a big window art on the front? Do you have your own phone ext? You see where I'm going. When I was doing this sort of scenario it was very hard and very slow going.
So, now that I've beat you to death with the bad ideas, here's some that can work. Since you're subletting, best probably to stick to the flyers on local makets parking lots, malls, laundry mat if they have a Bulletin Board, see if the local gyms will let you leave flyers there or post one on their bulletin board. Keep them with you and make sure have one to give to any and everyone you meet. Get yourself a t-shirt made with your logo and what have you, even phone number on it if you want. Where it everywhere. Main thing is YOU have to sell it. You need to always be excited, motivated, charismatic, and energetic...even if you have to fake it. You don't have to hard sell or anything, but always have that UP attitude and it will rub off. If you're down people will pick up on it.
I told you that for every successful school I've been a part of, the yellow page ad was always the best return for the money. When times were down even, we'd cut out everything but the yellow page ad. Even if you have to do a really small 1x1" ad or the standard listing. Why? Your average person looking for a martial arts school doesn't go the library and study up on Chinese/Japanese/Phillipino arts. They open their local yellow pages, turn to the martial arts' section and start making phone calls. Then if their bright they might go and try them out, but most go by their first impression on the phone combined with the proximity to their home/work and go there. But, save this one for when you get to the point you have at least a small base of constant income to afford this kind of thing. Don't go crazy. When you do, even if you're stil subletting, you can always use your cell phone number so they don't call and end up signing up with the other guy becuase you were'nt there to answer the phone.
Whew! Main thing is train hard, be honest, have fun, and be positive. Be the best you can and people will see it and want to have what you have. You're selling YOU far more than selling your particular art or mix of arts as the case may be.
There are no PERFECT techniques, only perfect execution for the situation at hand.