Pricing Strategy

Some Thoughts on Pricing

Last month, Moody’s Investors Service reported that nearly one-fifth of private colleges have discounted their first-year tuition by at least 60 percent. 

Some, according to the report, are discounting 70 percent. 

This got me thinking about pricing strategies and the opportunities available to colleges and universities to uniquely position their offerings via price. So here are a few thoughts for your consideration. 


In your Introduction to Marketing course, there will be a chapter addressing pricing and perhaps an entire chapter dedicated to consumer behavior. In those chapters, a key concept to remember is that when you publish and promote a price that some or all your target audience feels is “high”, they will remove your institution and programs from their consideration set. 

In today’s digital world, with so much research being performed by Millennials and Gen Z before they even make themselves known to you, this means they decide not to speak with you – and that means you don’t get the chance to discuss your discounted offer. 

My suggestion is for you to make it clear that discounting is part of your strategy, so you motivate them to speak with you to learn more. Remember, you want qualified prospective students to contact you – not suffer sticker shock and cross you off the list before you have had the chance to explain. 


For many institutions, the mission is about providing students quality learning experiences – innovative programs and pedagogies, faculty creativity, critical and analytic thinking, and study that instills values and knowledge.

Turning around and dropping your price by 70% undermines that in the mind of your audience – and this, in turn, can damage your brand reputation with your audience which can negatively impact inquiries, referrals, enrollments, and even fundraising.

Typically, price promotions such as discounting are used to driv short-term sales/enrollments.  The way discounting is used in higher education today can make the prospective student question the honesty of communications from your institution and the quality of the educational experience. 


At the end of the day, going through the discounting process can, as I alluded to above, negatively impact trust – and it can cause the student to question their decision which can negatively impact enrollments and retention.

They wonder if they got the best deal or left money on the table. And that doubt can lead to remorse which can lead to prospective students changing their mind and enrolling elsewhere.


What is your institution’s pricing objective? How does it bring the institution closer to achieving its mission? 

Do you want to increase gross revenue? Increase net revenue? Increase market share? Support your positioning as a ‘quality leader in education’? Or do you want to simply survive by covering your costs? 

Answering these questions and establishing a clear objective is important – especially when you are relying on pricing promotions such as discounting because sometimes the focus shifts, resulting in failure.

Let me explain. You will have goals projected for revenue and profit and enrollments and even a discount rate – but the closer you come to the start of the term, it’s common to focus on enrollments and push revenue and profits to the background. And when that happens, discounting can get aggressive, which results in more students, less revenue and little to no profits. 

Enrollments are important – but you need profitable revenue to keep the doors open, lights on, and make the investments into the quality you need to achieve your mission. 

Pricing isn’t easy. And competing on price can be extremely dangerous – which is why focusing on unique value for your audience is important.  It’s the difference between a “red ocean” and “blue ocean” strategy. When you have something your audience wants and/or needs, and can’t get anywhere else, they become less price sensitive and willing to pay more. And that’s a much better world to live in.

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Strategic turnaround consultant and writer.

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