Learning, Teaching and Leadership

Figuring out how to price a program can be tricky. It can be even trickier to adjust the price of a program that has already been established. If your price is too high, prospects may balk. If your price is too low, they may think that it is poor quality. It doesn’t pay to offer bargain basement prices if you pride yourself on quality.

Before you price your program, you will want to determine your costs. Your cost for a program will include obvious things such as:

•    instructors’ salaries
•    learning materials (books, CDs, etc.)
•    excursions (including any lunches or entrance fees to museums, etc.)
•    accommodation (homestay, dorm or hotel)
•    insurance (medical and accident insurance for your students, for example)
•    photocopies
•    catering

And there are the not-so-obvious costs included in your overhead that you will want to factor in as well. These may include:

•    support staff salaries
•    office supplies (including stationery and business cards)
•    marketing materials (brochures, business cards, etc.)
•    any other printing
•    postage
•    rent (including any special events you may host, such as a graduation)
•    phone, fax, and Internet expenses
•    utilities and any other overhead costs
•    computing and technology expenses (including language lab maintenance and tech support)

Once you have determined your own costs, you divide the total cost by the lowest number of participants you expect to have. That way, you will know what your break-even point is.

Here’s a highly simplified example:

$5000 (your total costs, as determined by the list above) divided by 100 (the lowest number of students you expect to have) = $500

This means that you would charge each student at least $500 just to cover your costs.

But covering your costs isn’t enough. You need to ensure that your program is sustainable. So, you need think about how to price your program, using your break-even cost as a starting point.

Because hidden and unexpected costs inevitably occur during any program, one technique used by big institutions is to double your costs, at the very least. For specialized or custom-designed programs, you may be able to triple or quadruple your costs and use that as your price point.

Let’s re-do the math, tripling your base costs:

$5000 (your total costs, as determined by the list above) x 3 = $15,000

$15,000 divided by 100 (the lowest number of students you expect to have) = $1500

So, $1500 is what you would charge each student as tuition.

Sound too high? I have found that as educators, we tend to be reluctant to price ourselves out of the market. Remember that if your price is too low, prospects may not take you seriously. And you can always subsidize some programs if others are doing very well. It’s about finding a balance that will work for your school.

You also want to plan for unexpected increases in your costs. For example, in the past ten years in Canada insurance rates have skyrocketed, in some cases more than doubling. If a school hadn’t forecast such an increase, they might be left scrambling to make ends meet.

Another example is rising costs of natural gas, which can affect the heating and water bills for your school (or your rent). If you haven’t budgeted for such increases, it can seriously affect the sustainability of your program. These are examples from a Canadian context, but the principle applies to any school in any country. You need to plan for the unexpected. This isn’t about gouging your students; it’s about ensuring that you can continue to serve them into the future. It’s responsible.

Even if your program is non-profit, I encourage you to price your program responsibly. Should a miracle happen and you make “too much money”, you can give your staff a raise or hire more staff, re-vamp your website, buy better books or add another computer to your lab. You get the idea. You can re-invest in your own program to ensure it can continue in the future.

Speaking of being responsible, I strongly recommend that you tell your prospects exactly what they are getting for their money; they are more likely to understand what they are paying for, and they will be more likely to buy.

What do you include in your pricing? Books? Homestay? Excursions? Make sure that you list on your marketing materials what is included in the price. Some schools charge extra for students to take exams, so if your school doesn’t, be sure to list that.

Here’s an example of what you could write:

Our price includes:
•    25 hours of instruction per week
•    books and learning materials
•    CD ROM of practice activities
•    homestay (including 3 meals per day)
•    medical and accident insurance
•    all tests and exams
•    graduation ceremony
•    certificate of completion
•    final written evaluation of your performance

By pricing your program powerfully and letting students know exactly what they are getting for their money, you will gain both respect and increased enrolment.

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This post is an excerpt from 101 Ways to Market Your Language Program It is “Idea 7: Price your program powerfully.

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Sarah Elaine Eaton is a faculty member in the Werklund School of Education, University of Calgary, Canada.