What are the emerging trends and challenges in tuition pricing and discounting in higher education?

1 Tuition pricing models

When setting tuition prices for higher education programs, institutions may consider different models depending on their goals, costs, and value proposition. Cost-based pricing aligns tuition with the actual costs of delivering education and is often used by public institutions that receive government subsidies. Market-based pricing adjusts tuition according to the demand and supply of education, as well as the perceived quality and reputation of the institution, and is often used by private institutions. Value-based pricing sets tuition based on expected outcomes and benefits such as career prospects and earnings potential, and is often used by innovative institutions. Each model has its advantages and disadvantages, so institutions may use a combination of them or adopt alternative models such as dynamic pricing, differential pricing, or performance-based pricing.

2 Tuition discounting strategies

Tuition discounting is a popular practice for increasing enrollment, diversity, and retention, as well as for signaling quality and prestige. However, it also has a direct impact on the revenue and expenses of institutions and can create unintended consequences such as tuition dependency, tuition inflation, and tuition cannibalization. To avoid these pitfalls, institutions need to adopt strategic and data-driven approaches to tuition discounting. This includes segmenting and targeting students based on their characteristics, preferences, and behaviors; balancing merit-based and need-based aid; and communicating the value proposition of education. This way institutions can offer personalized discounts that match students' needs and expectations while also highlighting the benefits of financial aid.

3 Challenges and opportunities

Tuition pricing and discounting are dynamic and interrelated processes that respond to and shape the higher education landscape. The COVID-19 pandemic has disrupted the sector in unprecedented ways, increasing financial pressure and requiring more flexibility and innovation in tuition pricing and discounting. Changing demographics also require institutions to adapt their strategies to appeal to new generations of students. Additionally, the sector is subject to various laws and regulations that affect tuition pricing and discounting, as well as expected to uphold high standards of quality, accountability, and transparency. It is important for institutions to comply with legal frameworks, balance financial and educational goals with social responsibilities, and communicate the rationale and results of tuition pricing and discounting.

4 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?