Low Tuition Prices or Discounts?

It is well known in the world of retail sales that customers prefer to buy a $200 item discounted to $125, rather than pay $125 for the same item with no discount (as JC Penney recently found out). This article, “Colleges Try Cutting Tuition – and Aid Packages,” (WSJ, 10 October 2013) indicates the same is true for tuition pricing.

If so, then it becomes even more imperative for colleges and universities to adopt lean management. Doing so will not only reduce costs and expand margins. The extra money earned can be saved for rainy days, used for increasing pay and benefits, or help fund discounting.

More importantly, Lean will greatly improve the value proposition of higher education. Students and payers will get better value for their money, whether tuition is discounted or not. Education with a better value proposition would result in greater and more relevant learning among students for the long-term.

The jam that colleges are in, caused by high tuition prices and payers’ discounting expectations, can be resolved through the correct application of Lean principles and practices in both academics and administration.

Hopefully, some colleges and university leaders will figure that Lean management is an effective solution for having to compete on the basis of price (discounted or not) as the higher education market transitions from sellers’ to buyers’.

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