We’re not announcing any telling news by saying that college and university pricing is… less than simple.
But it can be instructive to examine how institutions make pricing decisions. As the online marketplace gets more crowded from week to week, admins must increasingly examine their competition and understand their target audiences if they hope to stay afloat.
Here’s a look at how a few institutions approach pricing – and a window into the endless complexities of the topic.
Although this public institution is not among the major national online players, it has a substantial online footprint, with over 15,000 students per year taking at least one online course and 2,400 enrolled exclusively online.
Initially, the institution charged significantly more for out-of-state students participating in online programs than it did for in-state online students. More recently, according to Keith Bailey, dean of West Virginia University Online, “we have started to level our tuition fees to have a single rate” for students regardless of their location.
Determining prices online is an iterative process, according to Bailey. The next planned step, he said, is a new “market-tested” program, which will be piloted this fall with four online undergraduate programs and one online undergraduate program.
The idea is to set prices with the competition in mind, rather than deriving a price from comparisons with a campus program. Several of the master’s programs involved in the pilot project currently cost students over $ 30,000. “The way all of our tuition worked was pushing them out of the market,” Bailey said.
The four online master’s programs in this pilot will all cost $ 820 per credit hour, and the online undergraduate program will cost $ 369 per credit hour. These prices could change again in the coming years depending on market trends, Bailey said.
Going forward, all online students will pay a standard distance learning fee of $ 75, instead of the more extensive fees for on-campus students.
The result of these changes will be that some online programs will have a lower sticker price than their face-to-face counterparts. Currently, a business degree on campus costs $ 1,000 per credit hour. After Market Approach takes effect, the program will cost $ 820 per credit hour.
Assuming the price changes lead to more inquiries, Bailey said he hopes to extend the approach to several of the university’s other online programs.
A handful of other models
- Out-of-State Online Students at Northwest Florida State College pay $ 1 more per credit hour in the tuition fees that state online students.
- Columbia College online last year eliminated all fees for online students.
- Thomas Edison State University, which largely offers online courses and programs, invoices a lump sum per quarter. Students can take as many classes as they can during this time.
- Colorado State University Global – the autonomous online institution of the state system – recently touted its tuition fee of $ 350 per credit hour for undergraduates and $ 500 for graduates. Both have been in place since 2011.
The cost of delivery is also discussed in pricing conversations, Bailey said. The university uses an entrepreneurial model in which revenues from online programs flow back to participating colleges. Online development, including instructional designers and multimedia specialists, tends to cost more than face-to-face development, Bailey said.
“We’re trying to budget that in there to make sure that over the next two or three years they will have enough enrollments to cover the expenses of these professors,” Bailey said. “A lot of programs might not have that detail, but it’s something we’re working on. “
Few institutions have less flexibility in pricing than the University of Florida, which is required by a 2013 state law to offer programs online with tuition fees 25% lower than the programs in the field. The law also prohibits the institution from charging distance education fees.
Providing high-quality programs doesn’t come cheap, according to Evie Cummings, president of the University of Florida Online since 2015 (and a opinion contributor to Inside higher education). As a result, the institution and the state have taken on a greater percentage of the cost burden for students of online programs.
The mandate provided valuable constraints and considerable challenges as well, Cummings said.
Each year, the state allocates $ 5 million to UF Online. This amount has not changed since the law came into force, although the number of students has increased and the programs have become more sophisticated. According to Cummings, the recurring recordings of UF Online’s advisory board, established by the Legislature in 2013, allow the institution to focus on spending only when appropriate.
“We don’t have the luxury, like others across the state, of having a huge online population paying very high tuition fees,” she said. “We are working to ensure access to much more affordable tuition fees. “
Administrators initially overestimated the number of international students who would be interested in enrolling, but they also underestimated the interest of Florida residents. Currently, 90 percent of UF’s online students are from the state.
Cummings doesn’t expect that to change anytime soon. In fact, she recently shifted some funds from the marketing budget to basic academic services.
“SUNY, SNHU, Missouri – they’re investing hundreds of millions of dollars in marketing,” she said. “We’re just not going to be able to compete with this.”
Alamo Community Colleges
Spurred on by a new chancellor urging a focus on “smart growth,” administrators investigated neighboring community college districts in Texas and found that Alamo’s online programs were offered. at prices well above average.
According to Luke Dowden, e-learning manager and associate vice chancellor, nearly 85 percent of the district’s 7,000 online-only students come from within the district boundaries. His team’s analysis of the potential market for online programs found that over 1.1 million adults living within 100 miles of colleges attended high school but not college, or attended college but did not. have no degree.
Until now, online and field students in the district have paid the same tuition price ($ 99 per credit hour), and the same is true for out-of-district students ($ 215). Starting this fall, tuition for out-of-district online-only students will be $ 170 ($ 45 cheaper than out-of-state field students), while in-state students will continue to pay the same price ($ 99) whether they are in the field or online.
The growth target is to enroll between 300 and 350 additional students this year – “nothing too extravagant,” said Dowden.
While an effort to target more students outside the district may seem like a pure revenue game, Dowden insists the motivation is to promote “social mobility” and the university district’s access mission.
Dowden arrived at Alamo last year after eight years at the University of Louisiana at Lafayette. There, his bosses expected his online programs to be self-sustaining, and costs and prices were aggressively monitored. At Alamo, he pushed for a financial model that will inform subsequent pricing decisions.
“It’s not a static thing,” Dowden said. “You are constantly feeding yourself because you have different inputs or you meet the needs of the students, whether it’s textbooks, virtual monitoring, the learning management system itself. “
