For most schools tuition is the primary source of income. Therefore, having it set appropriately is critical to survival and sustainability. Many schools set their tuition based upon what they think the families can afford. There is concern that if the tuition reflected the value of the education and experience no one could afford it.
Is keeping the cost of tuition low really the right decision? Yes, it is important to ensure the tuition is affordable. It is also important to ensure the tuition expresses the value. We seldom associate the lowest cost with the best quality. Parochial schools try hard to ensure that every student has a high quality, life-changing experience. Does being the lowest priced school in the area reinforce the perception of quality?
The strength of every Christian school lies in its ability to provide a high quality, life-changing experience. It is hard to build the necessary strength without a firm financial base. Appropriately priced tuition is an important component of the financial base.
Word of mouth is the best advertising and it is cheap. However, it depends on providing the family with a superior experience and catering to their preferences (needs). From the family’s point of view, that is high-value service. The parents will influence the referral sources and the students. Strong parental comments have a significant influence on referral sources. One of the best referral sources is your website.
What do the parental quotes on the website say? Do those quotes highlight the strengths of the school and justify the tuition? Here is a quote, “My son loves going to school at St. John.” Does that tell the prospective family that sending a student to the school is worth the tuition? There are public school parents who say the same thing without paying tuition. If parental comments are missing from the website, how strong is that referral?
Parents who feel that the school has provided a high quality, life-changing experience for their student tell their student. As a result, those students are often the more passionate and supportive alumni.
Let us assume that a realistic tuition for the school is $8,000 per year. The definition of realistic is based upon the value of the educational experience (quality, life changing, etc.). However, the local demographics suggest that an affordable tuition is only about $4,000. This implies that the donors must be willing to provide the other $4,000 in funds (scholarship assistance).
It is realistic to believe that the donors will provide the scholarship assistance but only if they understand the value. They must understand the value from two perspectives. One perspective is their experience. Do they believe that students need what the school intends to offer? The other perspective is, are the students receiving the value? Here the parental comments on the website, press releases, and stories in the newsletter highlighting the value are critical. Additional evidence (statistics verified by an outside source) is also important to the donors (Our students have a strong character and sense of self-worth. The teen pregnancy rate in our community is 30% but our graduates are below 8%.).
It is easy for families, referral sources, the community, and donors to understand the value of a lower pregnancy rate. It creates a compelling case for supporting the school and enrolling a student. It creates a clear distinction with the public schools without directly identifying them. It shows the strength of a faith-based education without drawing attention to the faith-based component. It is value rich.
It is impossible to sustain the success without having an appropriate tuition. There has to be more than just academic success (what the public schools offer) to achieve something more than the public schools are offering. That “something more” costs something. Setting the tuition appropriately ensures the mission is sustainable.
Next Step:
Set the tuition so that it reflects the value of the experience (education, spiritual growth, life skills, physical development, and emotional development)
Have several discussions each year with each family, ensuring that you are meeting their needs (preferences) and they continue to appreciate the value the school offers
Ensure the donors understand the value
Work with the donors to ensure they underwrite a significant portion of the tuition so that it remains affordable for all of the families the school serves
Traditionally, schools think about what parents can afford rather than what parents need and value. Tuition based upon what parents can afford is much lower than value and need. It is often well below the level necessary to sustain the school and mission. It also often implies that the quality is lower than the actual experience of the students.
It is extremely difficult to have value-based tuition without significant outside support. Catering to the financially gifted is one of the limited ways one can have value-based tuition without other sources of support. For all of the other schools it is critical to have highly satisfied families, enthusiastic referral sources, and generous donors. Providing a high level of quality and value is the best way to ensure the family, referral source, and donor support necessary to have a sustainable mission.
Is your tuition set appropriately for the value you want to provide? Do you need help balancing tuition and value to ensure a sustainable mission?
As always, contact Mission Enablers if you want help. We use a special process that offers a guarantee. For more information about our process and guarantee, you can click here.
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Could you tell me if any schools are doing this type of tuition charge. We have considered this method. Could you share their names or stories of success. Thank you.
Yes, there are schools using this tuition structure. The key element is having the donors and families agree with the structure. Since it is a needs based tuition structure you may have more families receiving tuition assistance. A quick example:
Let us assume the cost to educate a student is $8,000 per year.
If last year the tuition was $3,500 and the Smith family paid the $3,500, donors would need to provide $4,500. The donors are providing a gift rather than a scholarship.
If this year the tuition is $8,000 and the Smith family can only afford $5,000 they will need a $3,000 scholarship.
The challenge is to ensure that the Smith family understands why it is worth an additional $1,500 to attend the school.
The additional $1,500 from the Smith family is money the donors no longer need to provide to support that family.
One of the benefits is to use the extra $1,500 to help a new family enroll their child.