Dog in the Window: Exploring Private Higher Education Pricing Strategies
Summing up, I believe the current problems in pricing in Private Higher Education arise from a mistaken view of how value is created in Higher Education. One school of thought is that this can be created through a 'premium', by charging a higher price than others through the creation of an exclusive environment. The other school simply believes that this is about capacity utilisation - as if education is like a service as accommodation - better the rates of utilisation, better the profit.
In a way, both schools of thoughts are deeply flawed. Competitive Advantage, or Value, isn't created by simply pricing higher, but ensuring that the students' RELATIVE willingness to pay (relative to one's competitors) over and above one's RELATIVE cost (relative to competitors' costs) is higher. This 'RELATIVE' advantage can only be created through efficiency and track record: Ensuring that the relative costs of delivery are lower and yet the student performance, not in one's own examinations but using external benchmarks, is higher, which can only be achieved through better students and better teaching.
Equally, the capacity utilisation model is problematic, because this destroys the 'willingness to pay' side of the equation, whatever the cost. The formula for success in education is 'Brains and Communities, not Bums and Seats'.
In the end, it is quite obvious: A successful Higher Education offering can only be built through unwavering focus on merit, and, obviously, on good education. One of the most important lessons I have learnt at the time I spent working in NIIT, which built a very successful education franchise across Asia, is that education business is all about efficiencies, details and student satisfaction. This holds true for Private Higher Education, though how to marry this culture of efficiency with academic freedom and creativity will be a debate worth having.