The price of an undergraduate degree - recap

Some time ago I posted on the issue of setting a price for an undergraduate degree programme - BA/BSc etc: The price of an undergraduate degree - Oxford and Cambridge will charge £9,000. The BBC has now produced a table of UK institutions and prices: Bath latest to charge £9,000 fees

As you can see, almost all of those institutions are charging the maximum possible - though a couple have set a range.

The one exception is Bishop Grosseteste, Lincoln: Welcome to Bishop Grosseteste University College
This isn't a well-known place to study. When you see their fees as being lower than elsewhere - what is your emotional/instinctive reaction to them and what they might offer you? If you try and think about it objectively - have you been fair?

Here is the statement from BG on why/how they set their prices: BG Announces Tuition Fees For 2012

The statement in full. Highlighting mine:

Bishop Grosseteste University College Lincoln (BG) has reached a provisional decision on the tuition fees it will charge students when the new Higher Education funding system comes in from 2012. For the majority of BG's courses the annual tuition fee will be £7500, subject to Government approval. Announcing this decision the University College stressed that it would continue its efforts to ensure students could attend regardless of family income.

Announcing the proposed charge Principal Muriel Robinson said "we have decided to play this straight with students and charge them the real cost to us of providing their courses. We are not trying to send messages about our quality or how we see ourselves relative to other providers. We are setting a fair fee. Our excellent track record in relation to quality, student satisfaction and employability means we don't need to play games with the fee we set. We recognise that this is a substantial increase in fees, but people considering coming here to study should remember that they won't have to pay the tuition fees while they study - they will receive a Government loan."

The University College stressed that the decision was not yet final - like all Higher Education Institutions BG will require the approval of the Office for Fair Access for the fee it intends to charge.

Professor Robinson added "we have an excellent record in encouraging students from all backgrounds to go on to Higher Education if they have the ability. We will continue to invest in reaching out to prospective students from lower income families and supporting them if they come here to study. Our strong financial position allows us to charge a fair fee despite changes in the Government funding system."

Now what do you think about them?

Radiohead - practicing disintermediation with their new album - King of Limbs

A few years ago Radiohead adopted a very interesting pricing and distribution strategy for their album In Rainbows. Consumers could choose their own price and download it directly from the website owned and controlled by the band.

Stories vary as to how much money was made - numbers of sales, average price paid etc, but what was undeniable was that per copy, Radiohead were receiving a much greater slice of the pie than for the traditional model of reproduction and distribution on physical media - like a CD.

How so? Costs not being incurred - burning and shipping discs - but also because Radiohead cut out many of the intermediaries in the supply chain. Record label, manufacturers of discs and jewel cases, distributors and of course retailers. The curse of the 'content producer' like a music band or the drudges that produce textbooks is that only a small percentage of each sale makes it to their bank account - all the other parties get paid, and often by a multiple factor when compared to the artist. Retailers would historically do much better from a book or album than the people who created them.

Radiohead have realised that these other parties are no longer useful or necessary - and that they can keep a much larger slice of the pie by disintermediating their supply chain. The prices are now fixed, but the same model is being used for their new album - King of Limbs.

Not everyone has gone - Radiohead still have financial intermediaries to move money about, and there is probably a technical and legal team supporting the website - but the vast majority of the cash is now going to the band and not the middlemen. Good for them.

Could a new band do the same - with no fame and reputation - we might say brand? Difficult.

The price of an undergraduate degree - Oxford and Cambridge will charge £9,000

How much should Universities in England and Wales be able to charge in respect of course fees for one year? The Government has set a new limit of £9,000 - up from just over £3,000.

Simultaneously, Government ministers have expressed 'concern' that institutions are planning on charging the maximum possible - internal documents have revealed this is certainly the case at Oxford and Cambridge: High-fee universities warned of sanctions

My initial comment is 'well duh!'. I would be amazed if those two institutions end up charging anything less, though there may be a sop of some kind of bursary scheme for students from disadvantaged backgrounds.

It won't just be those two ancient places though - very many others will want to charge as much as they can. Why? Other than the fact that it increases the amount of revenue received per head, charging less can create real problems in respect of how they are perceived. Would you choose a university because it had the cheapest programme in your intended area? I suggest not. Even if you hoped to reduce the cost of your education, you might be concerned how that might look to others - peers and employers for example.

'If you were any good, you'd charge full price'

So, some predictions:

1. Oxbridge will charge full whack as soon as they can
2. Redbrick institutions will follow suit, but have more developed bursary schemes
3. Those doing the teaching won't be seeing much of any increased revenue [drat!]
4. We're going to see a shift in the proportion of UK students in each general area. Humanities to be massacred, arts to shrivel, business schools to inflate. Note this is a prediction, not a desire.
5. Scottish students will be paying upfront in five years. It will start at a lower level, but catch up within the next ten years.

How would I set fees? Thanks for asking. I think that setting them by institution is a bad idea - it creates divisiveness/a class system and it encourages an upward spiral. Some have suggested that price should be a function of cost - that lab based programmes should cost a lot more than those that need only a lecture hall. I don't agree with that.

I suggest that rather than by institution, programme cost should be set by general area. A key problem with the spread of students in the UK HE sector is that we're dreadfully short of language students, engineers, scientists and mathematicians, and have very many students in other area -  case of under/over supply for society and the economy. I would use price to move students from one group to another, based primarily on how useful that person was then likely to be to society. Engineers, chemists etc go nearly free, other subjects pay more. I don't intend to denigrate subjects like history or sociology, but too many students of those subjects are at university as a lifestyle experience rather than because of ability or talent at those subjects - that is, a good proportion of students are flexible about what they study, and price could be a mechanism to change their behaviour. But what about students from a poor background that have considerable ability as a young historian, won't they be prevented from taking up their place by the higher price? With the increased revenue from high subject fees, it would be very easy to make sure that those of obvious talent get their places free.

So where would marketing and business education in general be on that continuum of free-to-expensive? It may surprise you to learn that whilst for obvious reasons I'm in favour of students studying marketing, I think it would be a good idea if the course fees were between the middle and the top of the scale. You study business to move into a well paid professional career, not to benefit society. You are being relatively selfish compared to the student nurse or the biologist and should therefore pay more.