Formation of pricing policy of the university
Price and pricing policy of the university
Price - the most important component of the marketing complex, as only it contributes to the accumulation of high school money. All other activities in marketing, including market research, advertising, etc., are costly. Price is also the main criterion for making consumer decisions and, therefore, an element of competitiveness and image of an educational institution.
The prices for educational services should ensure the financial stability of the institution and be maximally geared towards solving social problems of higher education.
The essence of the price is revealed through functions .
The functions of prices and the ways of their implementation differ depending on the nature of the economic environment in which they are used. However, a number of the so-called primary price functions are quite universal and applicable in various spheres, including in the education system. These include accounting, distribution, social and regulatory functions.Accounting function is predetermined by the very essence of the price and shows how much the society is satisfied with the satisfaction of a particular need for one or another educational service.
However, this function in market conditions can not be reduced only to the measurement of costs. To withstand competition, the institution must constantly monitor its costs, compare them with the costs of competitors and develop measures to improve the competitiveness of the educational services provided.
In the market conditions, the marketing policy of producers, including educational services, predetermines the pricing strategy. Simultaneously, the pricing policy is the main component of marketing activities, which is confirmed by the interchangeability of pricing and marketing functions. So, the function of self-regulation of commodity-money processes is based on the formation of prices, the level of which corresponds to the equalization of demand and supply. It is the competitive equilibrium of prices that stimulates the development of market relations. This function is acceptable in the field of education, because the demand for educational services can act as the main price controller.
A typical example is the current pricing strategy for the implementation of educational programs in law and finance. The costs of training specialists in the field of jurisprudence, economics, pedagogy, sociology are lower in comparison with the costs of training specialists in the fields of pharmacy, medicine, architecture, technological and technical profiles. Nevertheless, the existing demand for economic and legal professions led to the highest payment for the preparation of these specialists on a contractual basis.
The distribution function of prices allows you to redistribute the demand for one or another educational program and has an impact on the promotion of a particular specialty or a numerical reduction in the training of personnel in specialties not in demand on the market labor. However, the independence given to universities and the absence of a planned distribution of graduates restrain the effect of the distribution function.
In revealing the importance of the distribution function, it should be noted that its impact varies depending on the environment of use. As a result of the studies, some regularities were revealed. Thus, in public universities, contract prices for training specialists in comparison with non-state universities operating in the region are much higher. Simultaneously, newly opened specialties set tuition fees on a contractual basis lower compared to other higher education institutions. This pricing strategy is justified and understandable. The higher price is established for the guarantees provided by the state higher education institution, namely, the stable position of the university, the issuance of a state-recognized diploma, the provision of a postponement from military service, etc. And the lower cost of training is established for newly opened specialties in order to conquer the market and intercept the initiative .
Given that public universities have a training base and receive budget funding, their additional costs pay off even at a lower price, and this provides a higher competition and increases the attractiveness of the specialty for applicants. This explains the significant difference in tuition fees in state and non-state educational structures.
In 2008/2009 academic year, the cost of training in public universities exceeded the non-state fees by almost 30%.
In the 2009/2010 academic year, the cost of full-time studies in non-state higher education institutions has practically not risen since the beginning of the academic year. The cost of training in public universities in the general direction of preparation "Economics and Management" is presented in Appendix 5.
The cost of training differs sharply in the regions of the United States, which is explained by the level of income and solvency of entrants and their parents.
Social Function prices. The price level predetermines the structure and volumes of educational services, affects the standard of living and the consumer budget of the family studying in the sphere of basic and additional vocational education.
An example of the implementation of social pricing principles is the system of discounts applicable in a number of universities: for applicants from large families who have a low average income per family member; when teaching in a university two or more members of the same family; at loss of the supporter; presence of a high score upon admission; with the aim of stimulating excellent study. In these cases, non-state universities establish discounts ranging from 15 to 25%. Such a flexible pricing policy makes it possible to make education affordable for low-income families and attract able entrants.
Regulatory function prices are associated with the impact of the market on all areas of economic activity. Constant price fluctuations not only inform about the state of affairs, but also regulate economic activity. The price is growing - a signal to expand the supply; price falls - a signal to reduce it. Information provided by the market forces higher education institutions to reduce costs, improve the quality of educational services.
In the market economy, the significance of the price functions has changed, some have been lost, others' actions are limited. Basically, purely market regulators and stimulants are used, which does not contribute to the creation of an effective price mechanism. Prices for educational services, as a rule, are not justified, are set spontaneously with a demand orientation and competition in the corresponding region, the principles of formation are ignored.
The basic principles of price formation in education are:
• scientific justification of prices;
• target price setting;
• Continuity of improving the pricing process.
The principle of scientific justification of prices in a market economy is practically not applied, the main "engine" is the market. The principle of scientificity is to study and use the economic laws of the development of a market economy, such as the laws of value, supply and demand. The scientific justification is based on an analysis of the market situation and the identification of factors that affect the price. In addition, there is a need for a clear, uniform, justified system of cost formation and well-reasoned profit rates that ensure the development of a material and technical base and stimulate the improvement of the quality of educational services.
The methods of price development are determined depending on their purpose. The target priorities for different educational structures, differing in type, purpose, forms of training and other classification characteristics, have significant differences.
In the field of education, in determining tuition fees, the following objectives should be guided:
• make educational services accessible to the broad masses of the population, taking into account their solvency;
• Attract entrants from other regions;
• promote the specialties necessary for the development of this region;
• emphasize the prestige of the specialty and university;
• guarantee the stability of the price for the entire period of training;
• reduce prices for a one-time payment;
• Limit the recruitment if there is an excess of specialists in the labor market, etc.
The most important principle of pricing is continuous improvement of methods , calculations, reducing the complexity of determining prices, increasing the reliability of information support.
In modern economic theory, the principles of improving the formation of prices paid insufficient attention, which caused negative phenomena in the taxation system and the economy. These include significant errors in the calculations, instability of payment, inflation. Therefore, producers of educational services should be guided by the principles of improving the pricing process and controlling the legality of setting prices and observing the rights of consumers of educational services.
In the economic foreign theory, there are many price classifiers, which makes it possible to distinguish their various types. However, in the sphere of education, a limited number of prices are used: the price of the sale of educational services, the price is contractual or contractual.
Pricing in the field of education is the process of setting prices for educational services and products. To determine the price, a unified methodology is used, which is characterized by a combination of basic principles, principles and methods for determining the strategy, the pricing concept, reasoning, pricing and the pricing policy management system.
In Fig. 7.1 the scheme of the mechanism of pricing in the sphere of educational services is presented.
Fig. 7.1. The mechanism of pricing in the field of educational services
In the economic literature, the price system and its classification are widely represented, but for all the variety of existing prices, the issues of pricing for services in general and especially in the field of education are not fully covered.
The study of types of prices and methods for their calculation allows us to conclude that there are different definitions and characteristics of both types of prices and methods for their calculation. It should be noted that part of the conceptual apparatus is transferred from foreign translation literature, which is not always acceptable in the practice of the market economy, other definitions have inherited from the planned pre-perestroika economy.
Such conditions for the formation of prices in the market of educational services make it very difficult to theoretically justify the price policy in the sphere of education, which did not exist at all before.The essence of price policy is the selection and maintenance of an optimal price level in order to achieve the university's maximum success in the market of educational services.
The development of the pricing policy of any educational institution is carried out in the following stages:
• the capacity of the market of educational services in the region is determined, taking into account the demographic situation;
• the dynamics is studied and tendencies of the population's solvency are revealed;
• a forecast is made for the need for specialists (the labor market);
• Indicators of competing structures are studied (the number of students, the average annual intake, the list of educational programs being implemented, tuition fees, staffing, licenses and accreditations, material and technical facilities, etc.);
• the planned costs for the implementation of educational programs for costing items or for cost elements are calculated (if these calculations are available, analyze them, make adjustments taking into account changes in costs and the effect of inflationary processes);
• the costs covered by the profit (normative or target) are calculated;
• the contingent of students is determined by the forms of training and specialties, taking into account the fulfillment of licensing requirements;
• justify the methods of calculating prices;
• the price is adjusted for individual programs or for a certain contingent of students when using the system of discounts or surcharges to the price; determine the validity period of prices and the conditions for their adjustment;
• Prices are discussed at the academic council and approved by order.
In addition, when developing a pricing policy, it is necessary to take into account the pricing method, the goals of the university, external and internal factors affecting pricing.
External factors affecting pricing, - supply and demand in the education market, state regulation of education, market players, competitors, etc. Most factors have already been discussed in the previous sections, on one of the most important factors affecting the formation of prices - the demand for educational services.
Demand for educational services of the university is fixed by the number of applications submitted. The plan of admission of the university for a particular specialty is a proposal of the university to meet the demand. From the point of view of marketing, the demand for an educational service is defined as the solvent capacity of the population. In the sphere of education, the law of demand says: the higher the price, the less the quantity of services for which demand is demanded, and vice versa, the lower the price, the more services are purchased by consumers. Demand for educational services can be depicted graphically in the form of a curve showing how many services at changing prices and constant other equal conditions are bought in the market for a certain period of time.
Let's consider an example of construction of functions of demand depending on the income of consumers and the price in the sphere of paid educational services.
In the study of the dependence of demand for educational services (y) as a function of income (d), at constant prices (p) the curves En of the gel y = f (z) are constructed, the type of which depends on the type of goods and services (first necessity, second necessity, luxury). Educational services can be attributed to a group of goods and services of second necessity, for which the Engel curve has the form of a curve convex upwards.
When choosing the demand function, you can apply the so-called Tornquist function, which for this service group looks like:
where z ≥ b.
This function, the graph of which is shown in Fig. 7.2, has a demand limit. At the same time, demand for paid educational services appears only after the consumer's income exceeds the value b. The values of the parameters a, b and the constant c in this demand function are determined empirically on the basis of statistical data.
Fig. 7.2. Graph of demand function for paid educational services depending on consumer income and prices
When investigating the dependence of demand for paid educational services on the price of these services (p), with the consumer's unchanged income, the corresponding demand function is built on the basis of determining the profit P of the educational institution that is expressed as:
where is a cost function.
Among the internal factors influencing pricing, the costs of training prevail. In modern economic theory (largely borrowed from Western countries) the term costs gradually replaces the term cost price & quot ;. In business practice, these two concepts do not always act as synonyms, which is explained by the current accounting system, in which costs and cost are formed in different accounting accounts and are used in various fields of activity. Costs are formed in trade and public catering, and in industry and other spheres (including in education), the cost is determined.
Thus, the university's pricing policy should be aimed at the break-even operation of higher education institutions and the ability of buyers to purchase educational services at affordable prices.
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