Fall Courses – Marked Down and Priced to Sell

December 28, 2013
Posted by Jay Livingston

Every semester when I make out the schedule (we do this several months in advance – I just finished Fall 2014) I have the same worry – making sure that each course attracts enough students so that we don’t have to cancel. Since the university pays teachers per course not per student, it wants high student-teacher ratios. Low-enrolled courses are economically inefficient; they get the axe.

For students here, the timing of a course is crucial. Montclair is predominantly a commuter school, and even the students who live in the dorms like to go home on the weekend, which begins Thursday in the early afternoon.  Most students also have jobs; afternoon and evening hours are for work, not school. If only I could schedule all our courses Monday to Thursday between the hours of ten and two, the enrollment problem would be solved. 

But every department would like to offer all its courses in prime time, and there are only so many classrooms. So the university forces each department to schedule some of its courses in unpopular days and times. Departments, unfortunately, cannot force students to take those courses. 

The solution is obvious once you frame the problem as an imbalance of supply (classrooms/courses) and student demand. In prime time, demand outruns the supply; for other times, demand falls short.  What’s missing is the variable that links supply and demand: price.  Regardless of a course’s desirability, the price is the same.  What we need is flexible pricing.  Let the price of a course reflect the demand. If students want a great course at 11:30, let them pay for it.

Of course, you can’t say that you’re charging more for some courses. Instead, you raise tuition across the board, say $300 a course. Then you give a $300 discount for those early morning courses and late afternoon courses or for courses that have a meeting on Friday. With the hefty discount, those times would suddenly become much more attractive.

We might extend the policy to teachers. Some teachers are very popular. Their courses always fill.  But less popular teachers run the risk of not drawing the minimum enrollment.  Here too, differential pricing can help equalize student demand.  Oh, a few egos might be bruised (“You mean I’m being marked down?”*), but  enrollments would improve.  And for the really popular teachers, we could charge a premium. Like l’Oreal, they’re worth it. 

The trouble with variable pricing – aside from the basic unfairness of extending yet another advantage to those who have more money –  is that it exposes a reality we would rather not notice.  We like to think that what students are buying with their tuition is education, and it is – especially at elite schools.  But farther from the upper tiers of higher education, students also think of the academic enterprise as the buying and selling of credits, credits that ultimately add up to a diploma.**  In deciding to take a course, students consider the educational quotient, but they also calculate the costs. Right now those costs consist mostly of the opportunity costs (would it mean giving up hours at work, would it reduce the weekend from three days to two?) and perhaps the cost of the amount of work the course requires. For these students, price would merely be one more non-educational variable in the calculation.

But for those who pretend that the university is engaged solely in some ideal of education, variable pricing threatens to give the game away. As Goffman says, for staff in institutions, a large part of life is dealing with the gap between “what we do” and “what we say we do.” But university administrators are already adept at portraying administrative conveniences in terms of educational ideals. No doubt they could come up with a similar idealistic rationale for market pricing.

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* That line is spoken by wealthy but insufferable character played by Bette Middler in “Ruthless People.” She is being held for ransom. The kidnappers tell her that her husband (Danny DeVito, who is glad to be rid of her) refused their original demand of $500,000, though he could afford it. He also refused their second demand of $50,000.
“So we’re lowering our price to $10,000.”
“Do I understand this correctly? I'm being marked down?” she asks angrily. Then she starts crying.  “I've been kidnapped by K-Mart!”

** This orientation becomes especially visible in the summer, when students comparison shop for their courses based on cost, convenience, and utility (does the course meet a requirement) rather than content and quality.  See my earlier post here.