7 Key Questions to Ask Before You Set Your Price in 2024

Jessica IckesVice President, Market and Research ServicesMarch 14, 2024

Co-written by Andrew Giachetti, Senior Market Research Consultant

Pricing strategy is more than deciding what to charge

Blog on 7 questions to ask on price setting: image of professional woman looking at a screen.
2024 is your opportunity to move to a more strategic approach to setting price.

Gone are the days of assumed standard percentage increases to tuition, fees, and (where applicable) room and board. It’s not only students and families who have become increasingly aware of the cost of higher education. The media, institutional boards, and state and federal governments lament price increases, which lead to growing questions on the value of higher education. Yet even in a time of increasingly sophisticated approaches to pricing, some institutions still set their price annually without a clear multiyear price strategy that aligns to the market, their mission, and strategic goals.

Including and accounting for market influence and perspective in determining price has become increasing important as viable price strategies have shifted from a cost-based approach—specifically incremental increases to address operational and strategic needs—to a market-aware, competitive-pricing approach. So how do you get there? Consider these seven important questions before you set your price in 2024.

1. What do our prospective students value? How well do we communicate to the perspective students the strength of what we provide?

Do you effectively show the value of your institution to students?

Price doesn’t exist in a vacuum. It’s highly related to many of the subsequent questions that we will discuss. But most importantly, it’s related to what students and often their families value. Do you offer what they value? This could include things like a specific academic program, strong academic quality, strong outcomes, experiential learning opportunities, and engaging campus community. We need to be confident that the market knows we offer what our students and families value…and at a price they expect to pay for it.

Are you a top choice among your competitors to provide the opportunities and experiences that they value? This can be a critical influence on a student’s willingness to pay to for education at your college or university regardless of your price point. How intentional is your college or university in understanding the priority values of your prospective students? How well are you communicating those quality attributes to your perspective students? How well does the student experience align with what you’ve communicated that experience will be? How well are you aligning your strength in those quality attributes with your price communications to the top of the funnel?

What does your college or university mean when it says “price”? Does your institution think in terms of a “sticker price” or a “net price” and does that align to market perception?

2. What is the goal of your current price strategy and how well is it working?

The goals of price strategy vary significantly and should be clearly articulated as part of your price discussions. Are you aligning price to support operating expenses? Are you utilizing your price to increase enrollment, recruit more academically prepared students, or to achieve a higher net tuition revenue per student? It may be difficult to achieve each of those goals. Have you articulated a prioritization? How effective is your current strategy in helping you to achieve those goals?

Starting with a clear understanding of what you are trying to achieve can help to set the stage for which strategies may be viable. For example, if your institution is a public institution committed to broad access for in-state students, it lends itself to consider approaches to prioritize increasing instate enrollment while maintaining or minimizing costs.

3. What is informing your current price strategy?

It is important to understand how price is currently set at your institution. First, understand, what does your college or university mean when it says “price”? Does your institution think in terms of a “sticker price” or a “net price” and does that align to market perception? Are there different processes for establishing changes in tuition rates compared to fee rates and compared to auxiliaries such as room and board? Do price changes come from a system or board as a directive, or is there a process by which those rates are reviewed, established, and recommendations made? Are there external market factors such as appropriations or state-backed tuition guarantees that dictate price?

Consider what informs those changes in your current process. This may include things like looking at historical rates of increase, examining external rates and indices like inflation, benchmarking against peer and/or competitor institutions, aligning rates to operational/strategic needs, and/or market research on price.

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4. Who are we competing for and who are we competing with?

In considering price strategy, it is critical to understand the demographic trends in the region you recruit from. Are those populations of potential new students increasing, stable, or declining? Is there variation in those trends between potential first-year students, transfers, and adults?

Equally important is understanding who you are competing with. Your price strategy should be aware of competition. Your price strategy may be influenced by the prevalence of a particular type of competitor such as a robust community college system or high preference among non-enrolling students for higher priced private institutions.

It is critical to approach your price strategy as an integrated part of your planning processes.

5. How sensitive are our prospective students to changes in price and aid?

Does your college or university have a current understanding of the price sensitivity of your prospective students and their families? An understanding of how even small changes in price and aid can impact the likelihood of a student to enroll is an invaluable asset in establishing your annual or multiyear price strategy. A keen knowledge of your market’s response to incremental increases or decreases to price and aid can allow your college or university to understand the potential impact of its price change strategy. For example, a lower cost for students may not necessitate drastic changes to your sticker price, or even decreased revenues for your institution.

6. How does our price strategy impact current students?

Student Satisfaction and Student Success
Pricing changes can impact whether current students will persist.

So far, we’ve focused on new and prospective students, but what about current students? Annual price change can often impact current students to the greatest extent. Incremental increases to price for current students are often not matched by corresponding increases to discount rates, ultimately resulting in a real financial impact on returning students. This financial impact may impact their willingness and ability to persist. Any price change strategy that is inclusive of returning students should be modeled carefully to assess any potential unintended impact to returning students. How effectively do we currently communicate price changes to returning students and families? How do we support students who suddenly may have not have the resources to return?

7. How do we align our price strategy to our mission and strategic goals?

It is critical to approach your price strategy as an integrated part of your planning processes. Through this integration, your leadership team can be mindful of the relationship between your mission, key strategic goals, key initiatives, and price strategies. This intentional integration can facilitate a mindfulness of the relationship between key areas of strategy development from recruiting to marketing and communication, to retention and persistence, and to pricing and finance.

2024 is your opportunity to move from pricing strategy as a rate-setting exercise to developing a multiyear price strategy that aligns to your mission and strategic goals and is informed by the market responsiveness to your price. While some use annual price setting to balance their budget, can you envision the opportunities and strategic advantage for your college or university to engage in developing an intentional and integrated price strategy?

Ready to explore how to develop a more intentional price strategy?

Our market research consultants work with institutions throughout the country to better understand price sensitivity leverage that to meet and exceed their strategic. Ask for a complimentary consultation and we will find a time to talk.

About the Author

Jessica Ickes

As vice president of Market and Research Services, Jessica Ickes assists RNL clients in taking a data-informed approach to their enrollment planning and new program development initiatives. Jessica has collaborated with colleges and universities on...

Read more about Jessica's experience and expertise

Reach Jessica by e-mail at Jessica.Ickes@RuffaloNL.com.

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