Tag: pricing

  • Pricing strategy: the missing lever in university sustainability

    Pricing strategy: the missing lever in university sustainability

    This blog was kindly authored by Vincenzo Raimo, an international higher education consultant, with analysis from CIL Management Consultants.

    UK universities face an increasingly constrained financial landscape. Across all four nations, domestic undergraduate tuition fees are regulated and have failed to keep pace with rising costs. In England, the cap is currently £9,535 and, following the UK Government’s recent announcement, will rise annually in line with inflation from 2026, with eligibility linked to standards. This modest change does little to reverse years of real-terms decline, leaving much of the UK’s undergraduate teaching provision structurally loss-making. In Wales, fees remain capped at £9,535; in Northern Ireland they are £4,855; and for Scottish-domiciled students studying in Scotland, there are no tuition fees at all.

    In this environment, attention naturally turns to those parts of university income that are unregulated, most notably fees for international students and postgraduate programmes. Master’s fees for home students are unregulated in all four nations, and universities are free to set their own international tuition rates.

    Much of the public debate has focused on the fee levels charged by some higher-ranked universities and the narrative that international students subsidise domestic education and research. While this is certainly true for many institutions, it is far from universal.

    Once scholarships, discounts, agent commissions and other costs of acquisition are deducted, the margins on international student recruitment can be modest, and sometimes non-existent. For a growing number of institutions, particularly those struggling to fill domestic places, international recruitment at low net revenue levels has become a way of keeping the lights on. Better, in some cases, to have some income to cover fixed costs than none at all.

    But this is not a sustainable strategy. If international recruitment is to continue underpinning the financial viability of UK universities, much greater attention needs to be paid to pricing strategy.

    The price–profit relationship

    CIL Management Consultants recently analysed how UK universities can use pricing more strategically to support growth and profitability. Their work highlights just how powerful pricing can be as a financial lever compared with more commonly pursued strategies such as chasing volume or cutting costs.

    Their analysis included an illustrative calculation based on a scenario where a university charges tuition fees of £25,000 per international student, enrols 50 students on the course, and incurs a cost of acquisition of £4,000 per student (including scholarships, discounts and agent commissions).

    Under this model, a 5% increase in tuition fees would generate around a 6% uplift in profit, outpacing the gains from a 5% rise in enrolments (around 5%) or a 5% reduction in acquisition costs (around 1%). In other words, price is the strongest profit lever available to universities.

    Despite this, most institutions have historically set their international and postgraduate fees through incremental adjustments or by reference to competitors’ published fees, often without examining what those institutions actually charge in practice, and with little systematic consideration of how those fees influence volume, cost, and overall margin.

    Understanding the margin challenge

    CIL’s work also reinforces what many sector leaders already know: margins are being squeezed from all directions.

    • Capped domestic fees leave undergraduate teaching structurally loss-making for many institutions.
    • Rising operational costs, particularly staff, energy, and estates, continue to erode surpluses.
    • High fixed cost bases limit flexibility, with cuts risking reductions in quality or capacity.

    In this context, the international market has become the pressure valve. But unless pricing is managed strategically, even international markets will fail to deliver the surpluses universities depend upon.

    Three levers for strategic pricing

    CIL identify three main levers universities can use to improve pricing power and strengthen their financial position:

    1. Premium to domestic tuition fees: establishing deliberate price differentials that reflect a university’s strategic positioning, course value, and market dynamics. Currently, most universities operate with only a few broad fee bands, typically with humanities and much of the social sciences in the lowest band, lab-based subjects higher, and business or MBA programmes at the top.

      A true pricing strategy would be far more nuanced. It would use evidence on student demand, graduate outcomes, and perceived market value to differentiate pricing across and within disciplines, rather than relying on legacy bands. Some programmes could justifiably command greater premiums; others might need lower pricing to maintain competitiveness or support diversity.

    2. Cost of acquisition: developing clear internal pricing rules to manage scholarships, discounts, and agent commissions. For many institutions, these often-hidden costs now absorb a significant share of international tuition income. Transparent frameworks for managing these levers are essential to protect margins.
    3. Responsive pricing: using dynamic adjustments during the application and enrolment cycle to optimise both numbers and yield. This approach, widely used in other sectors, allows universities to flex pricing and incentives in response to market performance, course capacity, and demand signals.

    When applied together, these levers can transform a reactive pricing approach into a proactive, strategic tool for sustainability.

    From volume to value

    The sector’s dominant mindset has too often been volume-driven: more international students, more income. Yet volume without margin is a dangerous illusion of success. CIL’s analysis reminds us that an overreliance on high-volume, low-margin recruitment can rapidly undermine financial resilience, particularly when acquisition costs are rising.

    Strategic pricing, by contrast, focuses on value, identifying where universities can sustain premiums, where scholarships genuinely drive conversion, and where cost reductions can be achieved without compromising quality or reputation.

    This is not simply a commercial exercise. It’s about ensuring that the financial model underpinning UK higher education remains viable enough to support teaching, research, and public value in the long term.

    Making pricing strategic

    For universities, developing a coherent pricing strategy means integrating finance, recruitment, marketing, and academic planning functions around shared objectives. It also means looking across all offerings to ensure fee levels reflect the real value, demand, and cost to deliver each programme.

    Above all, it requires cultural change. Pricing cannot be left to annual cycles of incremental uplifts or reactive discounts. It needs to become a core component of institutional strategy linked to brand, market position, and mission.

    Pricing for purpose and sustainability

    Price should not be treated as a purely commercial consideration or an uncomfortable topic best left to finance teams. It is a strategic tool that, when used intelligently, can help universities balance their academic mission with financial sustainability.

    A well-designed pricing strategy can sustain access by ensuring that scholarships and discounts are targeted where they make the greatest difference; it can maintain quality by protecting the resources needed to deliver excellent teaching and research; and it can enable innovation by generating the headroom for new programmes, partnerships and investment.

    Reframing price as part of a university’s purpose, rather than as an administrative exercise or a market reaction, allows institutions to align financial decisions with their educational and societal goals. It invites governing bodies and senior leaders to ask not just what can the market bear, but what price best reflects the value we deliver, the students we want to attract, and the impact we want to have?

    If the UK sector is to thrive amid constrained funding and rising costs, it must learn to price with both principle and precision. Getting price right is not about maximising income; it is about ensuring that universities remain able to deliver their mission sustainably for the long term.

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  • Bringing Real Transparency to College Pricing

    Bringing Real Transparency to College Pricing

    In today’s unpredictable higher education marketplace, TuitionFit, created by Mark Salisbury, offers something that colleges and universities have refused to provide—clear and honest information about what students actually pay. By gathering and anonymizing financial aid offers that students submit voluntarily, TuitionFit makes visible the hidden world of tuition discounting, where sticker prices are inflated but rarely reflect reality.

    The statistics show just how broken and confusing the system has become. For the 2024–25 academic year, private nonprofit colleges awarded institutional grants that equaled 56.3 percent of the published sticker price for first-time, full-time undergraduates and 51.4 percent for all undergraduates. In other words, more than half of published tuition is an illusion. Despite average published tuition of $11,610 at public four-year in-state colleges and $43,350 at private nonprofit institutions, the real net tuition and fees that students pay is far lower. At public four-year schools, inflation-adjusted net tuition has fallen from $4,340 in 2012–13 to $2,480 in 2024–25, while net tuition at private nonprofits has gradually declined from $19,330 in 2006–07 to $16,510 in 2024–25. Families who see terrifying sticker prices often don’t realize that the average all-in, post-aid cost of a four-year degree is closer to $30,000.

    These numbers also reveal deep inequities. At very selective private institutions in 2019–20, low-income students paid about $13,410 after aid, while wealthier peers often paid nearly $39,250. Such disparities are rarely explained by colleges themselves, who prefer to mask their discounting practices with vague averages and opaque award letters.

    This is why TuitionFit is so important. Instead of navigating by distorted averages or marketing spin, students and families can see what peers with similar academic and financial profiles are actually paying. That knowledge provides leverage in negotiating aid offers and choosing institutions that will not leave them with crushing debt. In an era when sticker prices continue to climb while net prices quietly decline, TuitionFit brings clarity at the individual level.

    The Higher Education Inquirer commends Salisbury and TuitionFit for providing a measure of transparency in a system that thrives on opacity. While it cannot by itself resolve the structural inequities of American higher education finance, it arms students and families with something they desperately need: the truth.

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  • A call for more transparent college pricing (opinion)

    A call for more transparent college pricing (opinion)

    Despite frequent media reports about the high cost of college, many students pay much less than the eye-catching sticker price. Students enrolled at four-year institutions living away from their parents face the highest sticker prices. But only around a quarter or fewer of those enrolled at public institutions (for state residents) or private nonprofit four-year institutions pay that sticker price. The remainder receive financial aid. Even most high-income students receive merit-based aid. How are they supposed to know how much they will have to pay?

    Here is how colleges and universities could help. They can provide students with tools that lead them through a financial aid “information funnel.” Provide limited financial details (just family income?) and get an instant ballpark estimate at the top of the funnel. Provide a few more details, get a better, but still ballpark estimate. Keep going until you get an actual price. Extreme simplicity at the beginning of the process facilitates entry; the funnel should have a wide mouth. If the result is below sticker price, it can promote further investigation. Along the way, positive reinforcement through favorable results (if they occur) supports students continuing through the funnel.

    Courtesy of Phillip Levine

    This approach represents a significant advance over past practices, as I detail in a report newly released by the Aspen Economic Strategy Group (AESG). Historically, colleges provided no preliminary estimates. Students filed their financial aid forms (FAFSA and perhaps CSS Profile), applied to a college, and received their admissions decision and financial aid offer (if admitted) at the same time. Who knows how many students didn’t bother to apply because they believed they couldn’t afford it?

    This began to change in 2008. The Higher Education Act was amended at that time to require institutions to provide “net price calculators” by 2011 that were intended to provide early cost estimates. Unfortunately, the well-intended policy hasn’t been very effective because these tools often are not user-friendly. They may represent a useful step higher up the funnel relative to the ultimate financial aid offer, but they remain toward its bottom.

    Other steps have been taken along the way attempting to provide greater pricing information to prospective students. The government launched new webpages (the College Navigator and the College Scorecard), which provide college-specific details regarding the average “net price” (the amount students pay after factoring in financial aid). But the average net price mainly helps students with average finances determine their net price. Besides, using the median rather than the average would lessen the impact of outliers. It’s a much better statistic to capture the amount a typical student would pay in this context. Additional data on net prices within certain income bands are also available, but they still suffer from the biases introduced by using the average net price as well. What students really want and need is an accurate estimate of what college will cost them.

    The most recent advance in college price transparency is the creation of the College Cost Transparency Initiative. This effort represents the response of hundreds of participating institutions to a Government Accountability Office report detailing the inconsistency and lack of clarity in financial aid offer letters. To participate, institutions agreed to certain principles and standards in the offer letters they transmit. It is an improvement relative to past practice, but it also is a bottom-of-the-funnel improvement. It does not provide greater price transparency to prospective students prior to submitting an application.

    Institutions have also engaged in other marketing activities designed to facilitate communication of affordability messaging. Some institutions have begun to provide offers of free tuition to students with incomes below some threshold. The success of the Hail Scholarship (now repackaged as the Go Blue Guarantee) at the University of Michigan supports such an approach. Many of these offers, though, do not cover living expenses, which is a particular problem for students living away from their parents. In those instances, such offers may be more misleading than illuminating.

    In 2017, I founded MyinTuition Corp. as a nonprofit entity designed to provide pricing information higher up in the financial aid information funnel. Its original tool, now used by dozens of mainly highly endowed private institutions, requires users to provide basic financial inputs and receive a ballpark price estimate. More recently, MyinTuition introduced an instant net price estimator, which is currently operational at Washington University in St. Louis, based solely on family income. Given the limited financial details provided, those estimates include some imprecision; the tool also provides a range of estimates within which the actual price is likely to fall. These tools are an easy entry point into the process, which is what the top of the funnel is designed to accomplish. More such efforts are necessary.

    If we could do a better job communicating the availability of financial aid, it would also contribute to better-informed public discussions about college pricing and access. One recent survey found that only 19 percent of adults correctly recognized that lower-income students pay less to attend college than higher-income students. It is a legitimate question to ask whether the price those students pay is low enough. But we cannot even start the discussion with such limited public understanding of how much students across the income distribution pay now. Any step that colleges and universities can take to facilitate that understanding would be helpful. Improving the transparency in their own pricing certainly would be an important step they can take.

    Phillip Levine is the Katharine Coman and A. Barton Hepburn Professor of Economics at Wellesley College and the founder and CEO of MyinTuition Corp.

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