Everybody’s looking for ways to save money today. Clipping coupons from the newspaper, downloading deals from the Internet, and scratching cards from a particular clothing store to see if one qualifies for 10, 20 or 30 percent off before going shopping there are common activities. Preferred shopper cards give preferred pricing to “members” on hundreds of items in grocery stores, and the dollars spent there can translate to some significant savings on gasoline purchases. Sale flyers still come to our mailboxes every week to show the deals of the week at stores like Best Buy, Lowes and the national pizza chains and fast food establishments. And, depending what type of credit cards you use, you can get 1% cash back on purchases, points which can be redeemed for airline tickets, or free lodging at various hotel chains.
So it’s no wonder that parents today want to know what your school’s tuition is, then want to know if they need to pay what you’re asking them to pay.
Sure, they can apply for financial aid, but there are a number of schools that don’t have financial aid funds, and choose to provide accommodation for financial need simply by “discounting” tuition. Parents also want an additional discount for the second or third child they’ll enroll in the school. Wait, did I say, “want?” I’m sorry, that should be, “expect.”
The difference between all these money-saving constructs and your school’s tuition is that your tuition is a once-per-year charge. Everything else that’s been described on this page represents a product or service that can have a varied discounted period of time, and you usually don’t get food from a particular restaurant only once per year. For instance, you’ve seen the fine print which says that a particular sale on a particular item ends on a particular day; a brand of peanut butter on sale this week may not be on sale next week; and you might find a great price on a side-by-side refrigerator, but next week at the same appliance store, microwave ovens are the items that provide substantial savings for the consumer. Your school’s tuition, however, is only charged at the start of the school year, and payments may be made against that total via a monthly payment plan.
To make matters worse, when a company is going out of business, they offer “huge discounts” on merchandise. Rather than simply giving it away or disposing of existing inventory, companies choose to recoup some of the cost of the merchandise, hoping a significant number of people are enticed by the significantly lower pricing, and then might purchase something else that they realized they need (or want).
Continuing to discount your product sends the message that what you’re offering isn’t really worth what you’re asking the consumer to pay. I’m sure you would vehemently disagree with me if I said your school’s educational program isn’t worth what you’re asking me to pay for it. If that makes sense to you, then it would also make sense to STOP DISCOUNTING.
Then you can start incentivizing.
“Discount” has a negative connotation, evidenced by the realization that a product really isn’t worth its retail price. If you’re looking for a new refrigerator, unless the one you have is completely broken and not fixable, you’re probably going to wait until the one that you’re looking for goes on sale. Incentive, however, has a positive connotation. Rather giving families a second or third child discount, you can offer them an “incentive” to enroll the additional students in their family.
Similarly, a need-based financial aid process can allow you to put together a financial aid award (which may be simply tuition reduction) as an “incentive” for the family to enroll their child in your school. With an incentive, the parent is made aware that they are receiving something, rather than simply subtracting charges from what the parent is obligated to pay for their child.
Sure, the net effect is the same, but the thought process is completely different, and perceived quite differently as well. People love incentives; discounts usually means something’s not quite right.