Thread:
One of the big things too many people don't understand: It's possible to a) raise discount and b) generate more net revenue per student at the same time. In fact, if you keep raising tuition faster than inflation, its not as hard as you think.
One of the big things too many people don't understand: It's possible to a) raise discount and b) generate more net revenue per student at the same time. In fact, if you keep raising tuition faster than inflation, its not as hard as you think.
Discount rate used to be meaningful. It was a residue of a year done well (or not). It's an accounting term, and as most people know, accountants live in the past, mostly.
But as Campbell's Law (or Goodhart's Law, depending on your perspective) suggests, the more you use a statistical measure as a target, the more that measure is subject to manipulation via other variables in your equation.
Want to lower your discount for the sake of lowering discount? It's easy. Chop off the bottom 20% of net revenue producers. Oh, you also wanted total revenue to increase?
Discount more to get your total revenue up. Or, if you want to do both, admit more students at the bottom end, who are less price sensitive. You'll get more total revenue, and more average net revenue (lower discount.) Also more students, so expenses may go up.
Huh? Oh, you want more students paying more, to increase average net (via lower discount) and have more cash at the bottom line? And you want them to be better students? The ones who won't come at full price because they have offers up the food chain (at a better price?)
Well, you should have said so. You'll need to dramatically move yourself up in market position. Spend more on facilities, faculty, resources, etc. Oh, you don't have the money to do that?
Make it an EM problem. And if that person doesn't perform (you'll know by Wednesday or Thursday), just spend more to buy a better person who was fired for the same reason at another place.
Because we're not miracle workers. We work in markets, which seem to be fairly efficient. Wishing and hoping and praying might have some effect, but you can't sway large numbers of kids and parents with your sweet, sweet dreams.
Educating people about the difference between pipe dreams and reality is what we do. There is no greater feeling than seeing the light in the eyes of someone who understand what we understand, unless it's the commitment to work together on EM challenges.
Remember this when someone throws you the NACUBO study this week and asks you what you plan to do about discount next year, or when someone makes lowering your discount rate "our top priority."
Discount is not unimportant, of course. But it's a numerator and a denominator. This is fourth-grade fraction stuff, and we shouldn't have to explain it all the time, but we do.
Life is a series of tradeoffs, and EM is no exception. It's your job to make people on campus understand this. I think I invented the phrase "EM is making everyone on campus a little bit unhappy" in the 90s. It's still true.
Oh, and #EMChat
