Is your pricing right?

The setting of school fees is critical to how your school is perceived by parents. But the fee must be backed up with identifiable and valued benefits. Russell Speirs explains why pricing is a key marketing issue

Those of you with experience of marketing can usually recall the 3Ps, 4Ps or 5Ps of marketing, covering any combination of product, place, people, positioning, promotion and, of course, price. Pricing is at the heart of marketing. Why?

It’s because of the marketplace itself: a space which exists to facilitate the exchange of money in return for desired goods or services. Marketing is about managing your brand’s position within that market and matching it with people who desire your particular good or service more than the competition’s.

The setting of fee levels in schools is therefore a marketing decision, based on an understanding of parents’ views, expectations and characteristics. How happily parents pay fees is a measure of how satisfied they are with what they are getting.

Getting value
Value for money is not the same as price. Value for money is a measure of three things:

• parents’ satisfaction;
• the price parents need to pay; and
• affordability.

There is an important relationship between these, as shown below.

Value = Benefits / Costs

The way to increase the amount of value parents ascribe to your school is to reduce your fees or increase the number of benefits for parents. If you find additional benefits that mean a lot to parents but cost you little or nothing, then you have achieved an outcome that benefits everyone.

Supermarkets have been masters of providing benefits that fit these criteria, costing little but meaning much: free telephone calls to taxi firms, special holders for flowers on the trolley, trolleys for children and so on. Schools can do the same.

At Kingston Grammar School, for example, the parents help run parents’ evenings. Up the road at Latymer Upper School, they invite experts to lead discussions with parents about parenting and childhood development. Or across the river at St Paul’s, the boys’ tutors are expected to meet the family of their tutees outside school once a year.

“The way in which schools communicate fee increases is a great concern to parents.”

Value for money, then, is a more slippery measure of parental satisfaction. Indeed, every school that has taken part in our benchmarked parent survey has seen good scores for value for money only where parents are happy with their child’s education.

Setting fees
Until recently, the setting of fee levels was considered off limits for marketing staff. Our own study, RSBenchmarking, showed that in 113 out of 152 schools from HMC and GSA, fees were set without any consultation with their marketing manager, a job now increasingly based in the development office.

Now, the setting of fees is increasingly recognised as a key marketing issue, as territory in which the school’s marketing manager has a rightful voice. In part, this is because prices are no longer based on accurate estimates of other schools’ price rises.

The other reason is the growing concern among governors that schools might be pricing themselves out of the market. With additional demographic pressures in some areas, the tendency is to keep prices low.

However, pricing is an indication of the quality of what you provide, relative to parents’ expectations and their perceptions of the competition – including state schools, of course. Keep your prices as high as you can while maintaining, even increasing, perceived satisfaction. The two go hand-in-hand.

Getting on top
Think of pricing as a tool for managing your customers’ behaviour. Or, more precisely, as a tool for making them behave profitably. My favourite example of this principle is from a Chinese restaurant in London that offers guests as much as they can eat for £15. What happens? People pile their plates to the ceiling and subsequently leave three king prawns, some noodles and flakes of cold, crispy duck, uneaten. So the restaurant manager decided to continue with the £15 offer but, this time, charged guests £5 for every 250g of food left on their plate.

What are the time-consuming or costly practices within your school that arise from parents behaving badly? Is it not picking up their children at the expected time? Or is it that you cannot get them to all use email and your website for obtaining information? Is it the handling of cheques rather than direct debit? In each case, you have the option of changing your systems and communications to reduce the number of these costly incidents or of changing your pricing to encourage people to behave as you would wish them to. Remember the restaurant.

Parents’ views
Parent Profiles, a survey of 5,500 independent school parents, established that as many as 90 per cent of respondents considered it extremely important that their child’s school should be “managed in a professional and up-to-date manner”.

“How happily parents pay fees is a measure of how satisfied they are with what they are getting.”

Parents expressed similar views when more than three-quarters agreed with the statements “I should be treated as a valued customer by my child’s independent school” and “Even good schools need marketing”.

In this context, prices and value for money need to be considered. A context in which parents expect up-todate management and marketing practices and, most important of all, to have a relationship with your school, which is that of a customer.

Customer always right?
Customer power, or consumerism, is now as alive in independent schools as anywhere else. I heard a story recently of a family that had duped three schools into believing their daughter was joining. They subsequently sent their child to each school, for one week, and then excused her absence with a letter. It later emerged that the parents wanted to try out the three schools to decide which was best.

That’s consumerism at its worst, of course, but lesser examples of high service expectations abound. For one group of parents we interviewed, a big gripe was that their bill invariably included some very small items, which were compulsory: swimming proficiency badges at 85p or a trip to Lyme Regis for £18. Among the parents of boarders, what really annoyed them was being charged £8.99 for a birthday cake. The one day in the year, perhaps, which they would most like to spend with their child and, instead, they get a bill for a cake from Tesco.

Set the right tone
The way in which schools communicate fee increases is a great concern to parents. The news often comes too late for parents’ financial planning. The tone is frequently described as aloof or, at worst, patronising in its simplicity of the explanations. Too often, the chair of governors, who signs the letter, is regarded as distant or anonymous. Be honest, be open, be clear and be grateful.

Let parents know how you spend their money. Let them know how expensive it is to run an excellent school and how their child is benefiting. Next time you have the school photograph taken, include all your staff: secretaries, maintenance staff, cooks and cleaners, music teachers, the lot. It’s one way of showing parents just what it takes to run a school as good as yours. And it’s great for morale, too.

Russell Speirs is the founder of RSAcademics, a company that specialises in marketing and management consultancy for independent schools. Russell can be contacted on 01572 821306. The website address is www.rsacademics.co.uk

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