Market Pricing

It’s interesting to take a look back, since at times, we can only see clearly through the lens afforded to us by history.  Back in 2005, the media alerted us via news reports to “stress in the financial markets,” but in October 2007, the stock market reached its highest level in history (to that point).  Then the bear market began, and the collapse reached full throttle almost a year later.  The market didn’t break the 14,000 level until almost 5 years later.  Today, with the stock market over 2,000 points higher, we’re still talking about families having economic difficulties, which translates into our schools having financial difficulties.  The learning?  Even when we see that times are good, times can still be hard.

Similarly, when things seem to be incredibly bad, there were bright spots that offered hope – spectacular sales at retailers, the opportunity to get into the stock market (when stock prices were low), and car dealers that offered to make your payments for up to 9 months if you lost your job when you bought a new car.

That’s bold.

And boldness is something schools which 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 Sonic 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 $1,000 lower than any of those schools whose tuition may all hover around the $4,000 mark. Unfortunately, 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 market research pays 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’ve challenged yourself to keep cost low and quality high, the additional tuition charged could fund your financial aid budget line.

Every market is 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 “positioning” your school, too. Positioning not only determines the position your school holds in the market place, but also the position you hold in the minds of your constituencies – “the value leader,” “the first choice,” or, perhaps, “the only choice.” Only one entity can hold one position, too.  In other words, there can’t be two “market leaders.”  But that doesn’t mean you can’t position your school a little differently.  For instance, for elementary schools, if there’s already a school that holds “the first choice” position, you could become “the primary choice” in the minds of your prospective customers.

See what I did there?  The word “Primary” holds the dual meaning of the primary grades of your school as well as what parents may think of first when they’re looking at educational environments for their children, providing the foundation for their academic achievements.

Also note that when you consider positioning, the marketplace isn’t just the physical location of your school.  It’s the mentality of each constituent of your school.  Since your constituents include parents of students in your school and prospective students, as well as parents of alumni, alumni, businesses, community members, donors and everybody else, the market is more than a physical place where your school resides.  It’s a metaphysical place as well.  Therefore, when you hear the key to success is “location, location, location,” it’s not only the physical address of your school’s campus, but the mental space your school occupies in your constituents.  While this revelation isn’t necessarily apparent to the educational community in general, it helps to explain why cyberschools and distance learning resonate with today’s parents and students.  The school isn’t a place – it’s a state of mind.

As Catholic and Christian school educators, this shouldn’t be surprising to us.  John 4:22-24 details the words of Jesus speaking about worship, as the Jewish people worshipped in a place called The Temple.  However, He told of a time where God the Father would be worshipped in the Spirit and in truth.  The temple that he destroyed was that temple of the Holy Spirit we know as his body, and he rebuilt it three days later when he rose to new life.

As for our schools and the tuition we charge, each position can also dictate a different pricing strategy. In these economic times, you want to be sure you’re not pricing your school out of reach, but at the same time, remember that just because you can offer the lowest tuition possible does not guarantee that parents with school-age children will flock to your door.

© Michael V. Ziemski, SchoolAdvancement, 2009-2014 (Original Publication Date: 20090413)