The Biggest Tuition-Setting Mistake Schools Make

The Biggest Tuition-Setting Mistake Schools Make
The Biggest Tuition-Setting Mistake Schools Make

School Heads//

February 5, 2019

When it comes to setting your tuition, many schools make assumptions about what their families are willing to pay. This can compromise a school's ability to offer quality programs.

Some schools think they must keep their prices low to match their local competitors. Others feel parents will simply refuse to pay tuition over a certain amount.

Our research has found that these assumptions are not the case. ISM, Measuring Success, and the National Business Officers Association (NBOA) collaborated on the third iteration of a study initiated in 2006 to gauge the impact of tuition increases on private-independent school enrollment.

Data from 259 schools of all types, grade levels, sizes, locations, and affiliations in North America was examined. The findings from this study echo those found in 2006 and 2011: There is no measurable relationship between increases in tuition and subsequent changes in enrollment. In fact, the study found quite the opposite. If a school can demonstrate value to students and their families through better delivery of the school’s mission, tuition is seen as a worthwhile investment.

We have worked with thriving schools in many different locations with various backgrounds and wide-ranging pedagogies. We have found that parents will pay tuition that matches the value they feel a school brings to their child’s life.

On the other hand, parents will stop paying when they no longer see the value in the school's program for their children’s well-being and success. Therefore, tuition shouldn’t be a question of “What are parents willing to pay?” Instead, it should be “What value do we provide? And what is associated with that value?”

Your school’s strategic plan should hinge on the value proposition you offer. Your Board should know the value proposition and it should be part of the decisions they make.

This includes forecasting how much it will cost to adequately fund quality programs, including salaries, benefits, facilities, and more. This will ensure your school’s offerings are in line with your value proposition, giving parents what they expect. This helps you deliver your mission with excellence and ensure all parties on the same page when it comes to setting your tuition.

Click here to read the full research report for our complete findings—Effects of Tuition Increases on Enrollment Demand.

Additional ISM Resources:
The Source for School Heads Vol. 16 No. 6 Should You Re-enroll Students Who Owe Tuition?

Additional Resources for ISM Members:
I&P Vol. 42 No. 6 Tuition Change and Enrollment Demand: A Replication Study
I&P Vol. 43 No. 12 Announcing Tuition: Focus on the Benefits

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