How to Raise Prices Without Losing Students
Costs are rising everywhere. That means buying materials for your classes, paying instructors, and just keeping the lights on is more expensive than it used to be. Unless you have an endowment or other major funding source, and in many cases even if you do, it might be time to increase class fees to help bridge the gap.
Knowing you need to raise your prices is one thing. Actually making the change is another. You might be worried about upsetting students, or fear that raising your prices will make classes less accessible.
Those are reasonable concerns. But, in the long run, raising prices really can be in everyone’s best interest. We’ll show you why and how to raise your prices while keeping students happy.
Adjust Your Mindset Around Rising Prices
It’s easy to assume that any price increase is a bad thing. You want to make classes affordable for students, offer valuable educational opportunities, and keep your program accessible. Doesn’t raising prices go against that mission?
Probably not. There are several good reasons to thoughtfully increase prices.
- Quality. When the cost of materials, facilities and labor goes up, something has to give. A price increase can help you keep quality high.
- Accessibility. The worst case scenario is that your program can’t sustain itself and is forced to close. That means students in your community will no longer have the opportunity to take the kinds of classes you offer. A loss for everyone.
- Value. Which do you think would taste better: A $1 sandwich, or the $5 version? Cost impacts the perception of value for many people. Charge too little, and students may see your courses as less valuable regardless of how awesome your class is!
So making a calculated decision to raise prices can actually be a good thing for you and your students. It can allow you to offer better classes to a wider range of students who perceive those classes as valuable. Here’s how to do it.
How To Price Your Classes
Before you can announce a price increase, you need to figure out how to price your program. There are several strategies you can use including: competitor-based, cost-based, and value-based pricing models. We recommend the value-based model, but let’s explore all three.
Competitor-based pricing: You can look around at what competitors are charging, but you have no way of knowing if their classes are priced appropriately. There’s a danger that you could end up unable to cover your costs because you’re trying to match a program that has different needs than yours. Plus, factors like location, demographics, and class content can impact price, but it can be hard to find competitors who match you on all of those factors.
Cost-based pricing: You could base pricing on what it costs you to run a specific class, but that can lead to confusingly inconsistent pricing for students. This type of pricing can be difficult to maintain as costs fluctuate. Will you need to raise prices every time you hire a new person or purchase a piece of equipment?
Value-based pricing: We recommend using a value-based pricing model. Value-based pricing allows you to price your classes based on how much students believe these experiences are worth. You can use competitor-based strategies to get a rough idea of what other programs are offering, but then adjust that baseline depending on what makes your programs unique. Of course, make sure you’re covering your costs and overhead for each class too!
Factors for value-based pricing
When assessing the value of your programs, consider the many different kinds of value your classes may bring to students. These might include:
- Skills for work and personal development
- Fun and entertainment
- Confidence and self-esteem
- Community building
- Improved mental and physical health
- Access to tools, equipment and materials
- Interaction with knowledgeable instructors
Once you identify the factors that bring value to your students, you can build marketing messages around each one. The more clearly you highlight these factors, the more comfortable students are likely to be with price increases.
For example, if your classes are mostly for fun and entertainment you might compare the price of your class to the price of a night at the movies: “Why spend $30 to go to the movies when the same amount could get you two hours of fun and a painting to take home at the end.”
If your class provides access to tools, equipment and materials, mention those perks by name: “Most people don’t have room for a furnace and annealer at home, but we have everything you need to make the glass art you’ve been dreaming of.”
Targeted Pricing Strategies
So far, we’ve been talking about how and why you might raise prices across your program. But sometimes you might need to make more targeted adjustments. You might want to raise prices around a particular class or category of classes.
Here are a few indicators that it might be time to revisit pricing for a particular class:
- Cost of materials has increased
- You need to upgrade the space or equipment
- Popularity has skyrocketed
The first two are pretty straightforward, but that third point might take some explaining. If a class is really popular, you may need to bring on additional instructors or support staff to help meet demand. On the other hand, increasing the price can help you reduce demand, since fewer people may be willing to invest in the class at a higher price point.
The following advice on how to raise prices for informal ed classes works whether you’re making a targeted change or raising prices across the board.
How To Raise Prices For Informal Ed Classes
Once you decide you need to raise your prices, these best practices will help you communicate the increase to students.
1. Tell Them In Advance
A sudden price increase can leave students feeling blindsided. Don’t just silently raise your prices without warning. Give students a heads up that a price increase is coming. This allows some students the chance to register now before prices increase. Others will appreciate the extra time to adjust their budgets.
2. Explain The Reasoning Behind The Raised Price
Transparency is the best policy when you’re communicating a price increase. Whether you’re buying new course supplies or bringing in new instructors, tell students where their money is going. This kind of transparency reassures students that they will reap the benefits of the raised price.
You can say things like:
- “In order to maintain our low instructor-to-student ratio…”
- “To ensure each student has their own CPR dummy…”
- “…to upgrade our technology so we can better support our students.”
If the reason for the price change is inflation and rising materials costs, it’s okay to tell them that too. Just remember to keep the focus on quality. Try phrasing like:
- “In order to keep delivering high-quality courses…”
- “To help our instructors meet the rising costs of living…”
- “This x% increase in class fees will help us stay in the convenient location you know and love.”
Phrasing like this reminds students of the value you bring and shows them how they are helping to improve or maintain the quality of their learning experience.
3. Be Prepared To Answer Questions
When you announce the price adjustment, give students a way to contact you if they have questions. Ideally, this would be an email address, but a phone number could also work depending on your audience.
If students do contact you with questions, make sure whoever is responding has answers to where, when, how, and why the price increase is happening. Discuss the increase with your staff to make sure they fully understand why you’ve increased prices and how you want them to talk about the change. You might want to create a FAQ document they can refer to when speaking with students.
4. Regularly Evaluate And Adjust Prices
Incremental increases in course fees are much easier for students than sudden, large price hikes. Plan to reevaluate and adjust pricing every six months, or at minimum, every year.
Email Template to Announce An Upcoming Price Increase
Since you’re one of our valued students, we want to keep you in the loop about changes to our programs and classes. Effective Sept. 10, you will notice a 3% price increase on all of our classes. This small adjustment will help us continue to deliver high quality courses from experienced instructors.
We’re telling you now so you can take advantage of the current pricing while it’s available. If you register for any class before [date], you’ll get it at our current rate.
Here are a few classes you might like:
[list 2-3 classes related to the student’s history].
If you have any questions about this, please feel free to contact us. You can respond to this email or call xxx-xxx-xxxx during regular business hours.
[Director, admin or coordinator]
Plan Your Pricing Strategy Over The Long-Term
A long-term plan for gradually raising costs helps you keep students happy over the long term. It allows for the ebbs and flows of the economy without blindsiding students. Plan for incremental increases over months and years, so you can continue to offer high-value programs and classes.
Streamlining class registration adds value to your programs and encourages students to register. Contact us to learn about CourseStorm’s course registration software, or start your free trial to experience it yourself.
Brian is a scientist-turned-education technology executive. He has founded and led technology companies for more than 20 years and uses his analytical mind and experimental approach to spur growth in small and medium businesses and start-ups. He is passionate about using technology to enhance access to lifelong learning.