An unfortunate reality in higher ed is that…
The more expensive your program is the more you can afford to spend on marketing
And when the majority of paid inquiries come from bidding platforms (e.g. paid search, paid social), it means more expensive institutions are often at an advantage, not disadvantage, when it comes to recruiting new students.
This means that institutions committed to keeping prices low are often getting priced out of the very marketing platforms they need to drive interest in their programs.
Because when there are 4,000 colleges and universities in the U.S., it’s quite literally impossible to properly price compare.
So the advantage regrettably doesn’t go to the students, it goes to the house
Now there is certainly shifts in market afoot, taking shape both in increased price sensitivity and decreased consumer confidence, but neither has mounted enough of a movement to meaningfully shift the market away from high-cost providers to low.
This is likely due in part to the dichotomy that while students say they would certainly prefer to pay less, when surveyed, many acknowledge they tend to equate higher price with higher quality.
Again, meaning that institutions committed to keeping prices low - either through tuition freezes or reductions - are often at a disadvantage when it comes to marketing.
So What Is A Low Cost Provider To Do?
The only solution to combating this reality is for low-cost providers to increase the percentage of annual tuition revenue they reinvest back into marketing.
By being both a low-cost provider and running a highly efficient operating model, institutions can spend like a high-cost incumbent without burdening their students with exorbitant cost.
It’s a critical page out of the playbook of every mega university and it’s a reality your institution will need to embrace if you intend to scale without increasing price in the process.
Ending The House Advantage
So to all of you rightfully and righteously striving to keep tuition costs low, please know I’m rooting for you. But low costs and faith alone aren’t enough to win when the marketing game is rigged against you.
So refine your operations, increase your marketing allocation, and do your best to disrupt over-priced incumbents and beat the house.
About the Author
Seth is the founder and CEO of Kanahoma, a San Diego-based performance marketing agency on a mission to build a better agency for organizations building a better world.
You can learn more about who we are and what we do at www.Kanahoma.com.