Value judgements

Independent schools’ greatest challenge over the coming years won’t be selling an annual increase in fees, but finding new ways to offer greater value to keep and attract future parents. Simon Shneerson reports

Heads and bursars have traditionally viewed annual increases in fees with trepidation. Yet, until now, each year they reported that only one or two parents had complained and none had left the school as a result.

Beneath the surface, a product-led market has been cost-led both in its budgeting and in its pricing. That has
led to excellence in teaching, in facilities and in pastoral care, but affordability and market volume have been
sacrificed. While it was certainly true that parents rarely left a school when fees went up too high, the real loss was from the new families that never even came to look around the following year. Schools played down the underlying
trends that indicated over-pricing: trading down from full-boarding to weekly and flexi; more day pupils at boarding
schools; and increased emigration to grammar schools and sixth form colleges.

But now the economic bubble has burst. At the time of writing, many schools are nervously awaiting signs of short-term pupil losses, with Easter representing a moment of truth when families can give a term’s notice of withdrawal, or a term’s notice of not joining in September. By the time you read this, you will know what has happened at your school.

The outlook
Whether the news is good or bad, there is plenty of evidence to suggest that the real impact of the downturn will hit schools in 2010, 2011 or 2012. So that should be the main focus of your planning. Why? To start with, parents are extremely reluctant to remove their children from a school once they have started. Heads have been reporting that banking and finance sector parents have lost their jobs but that their children are still in class. That may change now we are approaching the end of the academic year, but the immediate reaction is to cancel the holiday rather than the
children’s education.

The real issue to prepare for is that families will not join in the first place. This is a much easier decision to take if one’s finances or confidence are weak and, whatever the fall-out from next term, it is certain that more families will
drop out of entry lists for 2010 and 2011.

In addition, we can expect to see professional families being really squeezed in 2010-2012, as their earned income reduces, their savings are depleted and their taxes start to increase. As and when their children approach tidy exit points, an appreciable number of families may decide to move out of the independent sector. This will combine with the fall-out among new parents to produce a dangerous double-whammy effect on pupil numbers.

Soldiering on
But life goes on and those who are able to adapt will fare well at the expense of the ostriches and the turkeys.
The recession will evolve into a new world where money will be harder to earn, but still very possible to earn. A
good education will continue to give the foundations for personal confidence and success in adult life. The need for
independent education will strengthen, but expectations of quality and value will be greater. In the post-recession
market, pricing will have a higher profile and affordability will really matter.

The good news is that schools have been far more traditional in their pricing than any other suppliers of consumer goods and services. There is plenty of scope to look much more imaginatively at pricing as a marketing
tool, both defensively and offensively.

What next?
The main options include repositioning your price points, introducing new types of discounts, creating entirely new pricing structures, or simply expanding the range of payment and financing options. These can be used
individually or together to achieve multiple marketing and business goals, and there are opportunities for true
innovation as well as simple evolution of current pricing models. Smarter pricing can gain you real competitive
advantage in the changing market, so make more use of this underrated tool.

Simon Shneerson provides strategic business consultancy for independent schools. Simon can be contacted on 01923 283574 or via www.simonshneerson.com 

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