Pricing for higher education institutions: a value-based approach

Abstract

Purpose

The purpose of this paper is to propose the concept of higher education institutions (HEIs) offering educational services based on value for money. The value is determined based on customers’ (i.e. students) expectations of the service and the costs in comparison to the competitors. Understanding the value and creating customer value are a means to attain competitive advantage and constitute the basis of price setting. Drawing upon this belief, as an initial step towards value-based pricing method, the possible value factors are suggested for calculating educational programme prices across HEIs.

Design/methodology/approach

This is a conceptual paper introducing the value-based pricing approach in setting HEI tuition fees. Extending prior discussion on the demand for quality education and current financial challenges faced by HEIs, it introduces the concept pricing based upon customer perceived value (student/industry). Value-based pricing is deemed appropriate in view of the value of short tangible and intangible investment by both parties (students and HEIs) to differentiate in terms of setting the right price for the right university for the right student.

Findings

The primary aim is to suggest the applicability of value-based pricing for HEIs, which is likely to be both relevant and fruitful for the sustainability of the sector. It represents a personal point of view; building upon a review of the literature, the paper extends the established knowledge one step further in terms of setting the right price for the right university, which is deemed worthy of further study and development.

Originality/value

The paper will be of use to the management and policymakers in the education sector in searching for a contemporary pricing mechanism for higher education.

Citation

Mohd Amir, A., Md Auzair, S., MAELAH, R. and Ahmad, A. (2016), "Pricing for higher education institutions: a value-based approach", International Journal of Educational Management, Vol. 30 No. 6, pp. 929-940. https://doi.org/10.1108/IJEM-08-2015-0110