Market Pricing

     It's interesting - two years ago, we were talking about times of financial stress...yet, in October 2007, the stock market reached its highest level in history.  So, even when we see that times were good, we may have experienced personal difficulties.

     Similarly, when things seem to be incredibly bad, there are bright spots that offer hope - spectacular sales at retailers, the opportunity to get into the stock market (since stock prices are so low), and car dealers that offer to make your payments for up to 9 months if you lose your job when you buy a new car.

     That's bold.

     And that's something schools that charge tuition should consider.  If you've been an avid reader of these Marketing Matters, you've seen that it's important to consider your tuition in comparison to what other schools are charging, and what the perceived value of your school's education is in your market.  Let's use the car analogy a little more.  There's a big difference between a Chevrolet Aveo and a Chevrolet Impala - for a higher priced car, you expect higher quality.  Similarly, if a new Cadillac was selling for only $10,000, your first question would be, "What's wrong with it?" 

     So, if there are four tuition-charging schools in your local area, you may take comfort in the fact that your tuition is $1000 lower than any of those schools whose tuition all hover around the $3500 mark.  However, the perception could be that there must be something wrong with your school's quality since those other schools are all around the same amount and yours is not.  Similarly, if your school is the lowest priced as compared to those four schools (say your tuition is $2500 a year, and the other four schools are, respectively, $3500, $4000, $4775, and $5200), it would be very easy for a parent to dismiss your school based on price alone without even a tour...even though you work long and hard and your teachers sacrifice in order to keep that tuition as low as it can be.

     This is where some market research could pay off.  You may find that your tuition is lower than other schools in your area; you may even be able to raise it and still remain lower than your "competitors."  Doing so could provide the opportunity for a strong marketing message based on value...your tuition is now competitive with other area schools, but, because you're sensitive to economic circumstances, your school is still the best faith-based value in the community.

     Every market will be different, so it's important that you investigate the schools in your area in order to make the best decision for your school.  This exercise will help in what is called "positioning" your school.  In other words, what position do you want to hold in the minds of your constituencies - the value leader, the prime choice, or, perhaps, the only choice.  Each position can dictate a different pricing strategy.  However, in these economic times, you want to be sure you're not pricing your school out of reach, while at the same time, remember that just because you can offer the lowest tuition possible does not guarantee that children will flock to your door.

© Michael V. Ziemski, SchoolAdvancement, 2009 (Original Publication Date: 20090413)

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