Fees Management

Give and take

As many parents struggle to meet their commitments in the current climate – and with uncertain times ahead – fees are the single most important area of marketing to get right. Stephen Martin-Scott reviews your options

In terms of your current parents, if it is not already happening, some will be making representations to you, having found themselves in financial difficulties. You may feel inclined to help them through this difficult financial time. But how long will the recession last? And how long can you extend terms to these parents?

It is good marketing practice to keep the customers you already have, never mind the disruptive alternative of their child or children having to move schools. It costs more to generate a new customer than it does to keep an existing one. But you must have a strategy, with financial support only being made available once clear criteria are met, just as with bursaries.

Alternative support
Do you choose to break even or subsidise earlier years? Have you rounded the fees for one morning or afternoon?
It is perfectly reasonable that one morning and one afternoon should cost more than one full day. When was this last reviewed? At what years are you most likely to lose pupils? Year 6? Year 11? Have you made sure that the fees that straddle the sides of the leaving points are the same, to make staying on easier?

Have you looked creatively at working with parents to fund fees? Or do you just send out a standard leaflet from a major provider? One school offers both a capital prepayment and a fees-smoothing option, both of which have been taken up by parents. In a recession, for many, whether or not with the cushion of a large redundancy cheque, certainty is paramount. Applying increases forecasting along with making a swift net present value calculation, and not only are you likely to guarantee that the child stays at your school for several years, but your capital account – and its opportunity value to you in reducing borrowings – is enhanced.

On paper
Have you reviewed your parent contract recently? Those to whom a recession is a novelty will probably not be able to recall the times of high inflation in the 1980s. Then, school fees were often not fixed for a full year, but sometimes for two terms, sometimes only termly. Ask your solicitor to ensure that your parent contract has flexibility.

Have you considered holding your fees at the same level, or using some reserves to hold increases below the minimum six to seven per cent increase probably indicated? Consider these ideas carefully. Parents know that there has been a lot of inflation over the last year, even if only from food and utility increases. They will be expecting a significant increase. If a parent can afford your fees now, a reasonable increase is not going to make that parent give notice. Those who will give notice will give notice anyway. Such decisions are not made on the margin.

Moreover, schools need to keep generating sufficient surpluses, not reducing or removing them. You are then in a position to consider increasing your bursary fund to help current parents – against strict criteria – as well as prospects. And all of this should increase the quantifiable element of the public benefit you deliver.

Whatever decision is taken over next year’s fees, it is critical to analyse it from a marketing as well as financial perspective.

Stephen Martin-Scott is managing partner of The School Marketing Partnership. Stephen can be contacted on 01823 334560 or by email through www.schoolsmarketing.com 

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