Tuition Discount Rates & PCE Pricing

The average tuition discount rate at private nonprofit universities is now 57% on average. This "list price" phenomenon, where different customers pay different amounts, isn't unique to higher ed. Furniture retail and airlines are weirdly similar, but unlike those two industries, private universities have convinced themselves that transparent pricing just looks bad. So instead of telling customers "what you see is what you pay," full-time residential undergraduate students (and their parents) are presented an insanely high anchor price and a bizarre system of "discounts" that nearly every student ends up getting. If you've spent anytime with senior leaders in enrollment management and institutional budget offices, you come away saddened and amazed by the circus-like hoops and smoke-and-mirror gymnastics they perform every year to manipulate the discount rate to fill seats. 

Schools, colleges and units of professional & continuing education operate under a different logic, setting tuition to what working adults and employers are actually willing to pay, without the layered administrative nonsense and negotiation. Private universities caught in the eye of the rapidly worsening discount rate spiral should be adopting their PCE units models of pricing programs based on direct market research, adjusting rates by region, format, and employer partnership, and then applying those models to specific full-time residential undergraduate majors where demand and willingness to pay vary widely. It would be quite easy for a mid-tier tuition dependent private university to pilot a transparent, non-negotiated pricing model in one or two academic programs to test whether clearer pricing will reduce the need for deep individual discounts.

Private universities don't need to invent new pricing models from thin air. Market-responsive models already exist within their own PCE divisions, and they're worth studying before assuming the only paths forward are deeper unsustainable tuition discounts and draconian budget cuts.