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Revenue and Investment Optimisation

Taking the guesswork out of tuition fee pricing decisions

Adjusting tuition fees can have an impact that's immediate and far-reaching. 

But setting fees isn't easy and, more often than not, there's an element of guesswork. 

Edified’s Revenue and investment optimisation (RIO) helps education institutions optimise revenue and make more informed investment decisions by designing programs and setting course fees that are based on student preferences and demand.

Using choice modelling and micro-economics, inspired by Nobel Prize winning economist Daniel McFadden, we obtain insights into student (and parent) decision-making to determine revenue-optimising tuition fees. 

This reduces risk, improves pricing accuracy, and helps institutions achieve financial sustainability and make wise investment decisions.

What this can deliver for you

Increased revenue

Improved
margins

Increased demand for targeted programs

A tool for decision-making around pricing, which incorporates accurate demand forecasts

More targeted marketing messages

Identification of most valuable attributes to students

Scholarship optimisation by market

Price-setting policy consensus

How do we do it?

Put simply, we simulate the marketplace to accurately forecast demand.

Education institutions commonly make pricing decisions on an ad hoc basis. These are often based on adjustment to historical prices, costs (e.g. cost-plus pricing) or competitors’ prices (e.g. market-based pricing).  

All these approaches fail to consider the single most important factor in setting prices: student demand. As such, they're less likely to achieve their revenue potential.

By using these compromised approaches to pricing, universities can unknowingly be 'leaving money on the table'. Sometimes, a lot of money.  This can result in unnecessary stress on university budgets and lead to suboptimal decision-making.

By generating reliable forecasts of demand, Edified’s approach enables decision makers to see the revenue potential by market and study level, across their suite of campus, delivery mode and course offerings.

The problems we help to solve

What tuition fees and prices should we set?

Establish revenue-optimising tuition fees for a set of courses or fields of study

Avoid ‘leaving money on the table’

What types of scholarships should we offer?

Identify the scholarship programs most valuable to students in different markets

Avoid giving away money with poorly targeted discounts

What product and brand features should we build into our offering?

Design courses and services that students value most

Know how much incremental revenue would be generated by an increase in course and university rankings

What combination of promotional messages should we use?

Target marketing messaging for different markets according to what students value most

What investment projects should we prioritise?

Rank major facilities and infrastructure investment decisions by their value to students

Know how much revenue could be generated by investing in specific infrastructure or services

Key steps in the process

1

Choice experiments are used to generate the microdata required for producing the data i.e. demand and revenue functions, price elasticities, and willingness-to-pay estimates.

2

Specialised econometric models are fitted to the data. The models are then used as input into the creation of a pricing wizard. The wizard is used to explore new policy settings for pricing and related decisions, and to forecast the impact of policy changes before they are implemented.

3

The wizard is data-driven, evidence-based, and is a powerful tool that’s used to greatly enhance policy and pricing decisions.

4

More accurate forecasting leads to increases in revenue and more informed investment decisions.

Example of willingness-to pay-estimates that can be established from choice modelling

The willingness-to-pay estimates offer strategic insight into the design of programs and help shape the future investment decisions.

Example of the pricing wizard 

The pricing wizard is a decision support system and a visualisation of the data and econometric model. It can be used university and school teams to run ‘what if’ analyses and help to determine the optimal program configuration, before expensive investments are made.

Case studies

Strategic transformation for a Group of Eight university in Australia

Project sponsors

Deputy Vice-Chancellor Academic, Chief Financial Officer, Chief Marketing Officer

Objectives

Optimise revenue for price, redesign scholarship programs, reposition university in the market

Scope

Broad fields of study of the university, existing and prospective students in key markets

Recommendations

Systematically reprice the programs, significantly alter the scholarship programs of the university, substantially refine the marketing and communication messages to reposition the university

Results

Identified pathways to increasing revenue from international student fee income by 30 percent (from $250m to $325m) and to reconfigure scholarship program.

Product design for a top tier university in Aotearoa New Zealand

Project sponsors

Director International, Director Online Programs

Objectives

Forecast demand for online, on-campus, and hybrid course offerings, establish priority fields of study for new program development, establish revenue-optimising prices for online offerings (relative to on-campus and hybrid offerings)

Scope

Broad fields of study of the university, prospective students in key markets.

Recommendations

Systematically reprice online offerings based on revenue optimising prices, specify priority fields of study for new program development, set directions for market development strategy

Results

Credible pathways to generating significant sources of growth in student load and revenue were identified and are being implemented as part of a new internationalisation strategy.

Tuition fee optimisation and brand positioning for a regional university in Australia

Project sponsors

Deputy Vice-Chancellor, Chief Finance Officer, Chief Operating Officer

Objectives

Understand the value to current and prospective students of key features of the university offer and test assumptions on the willingness to pay for paid internships, on-campus accommodations and other university investments and services.

Scope

All broad fields of study (plus Nursing) of the university, current students, and prospective students in key markets.

Recommendations

Reconfigure program offering and campus location to drive demand and optimise revenue. Highlight unique features of the university co-op model.

Results

Pricing wizard being used to test differentiated tuition fees across three campus locations; an established fee-setting governance process now in place; research formed the basis for investments in student services and infrastructure.

Our Revenue and Investment Optimisation team

If you have questions or you would like to explore the potential for our pricing and revenue optimisation to aid your organisation, please get in touch.

Sharyn Martin
Senior Partner 

+61 402 993 466
[email protected]

Sharyn Martin
Senior Partner

Sharyn has more than 25 years of experience at a senior level in international and domestic university strategy, marketing and recruitment in government, in the private sector, and as a consultant and a Senior Partner at Edified.

Dr Len Coote
Pricing Expert

Len advises in the areas of demand and revenue management using the concepts and methods of micro-economics and micro-econometrics. He has advised a wide range of organisations, ranging across global corporates, private equity firms, professional service firms and universities.

Dr Edward Wei
Pricing Expert

Edward is an experienced marketing and management insights specialist and market research professional with advanced quantitative analytics and choice modelling skills. He has over 25 years of experience in various consultancy and research roles.

Ben Martin
Associate

Ben has a finance background and is an education industry specialist. He is an accomplished strategic planner and has a proven history of developing and implementing marketing and customer experience initiatives to build brands and drive customer acquisition.