Towards Smarter Fees Policies

1. Towards Smarter Fees Policies Ensuring that providers maximise their income from non-Government sources

2. Overview of Key Issues

3. FE College Funding Changes

4. Key Findings from Providers Colleges have increased course fees as a direct response to Government Policy – little evidence of course fees supporting an overall marketing strategy Significant variation in charging practices across the country Little evidence that fee rises in themselves have led to a decline in adult FE numbers Concern about the impact of moving towards a 50% fee assumption Colleges have had little financial incentive in the past to increase fees due to the potential loss in LSC income. Fee income has remained static or fallen.

5. Findings from MORI survey of Individuals Most people felt that contributing towards the cost of learning was fair and appropriate There was widespread ignorance over the costs of learning and also the extent of public subsidy Individuals did not appear to have an expectation of saving or borrowing to meet the costs of FE learning Individuals were not always clear about the purpose and availability of fee remission Significant minority do not see learning as being for them.

7. Economic Returns on Qualifications (SSDA) Research studies consistently show that economic returns are highest for Level 3 and 4 qualifications. Relatively low return for NVQs particularly at lower levels Wide variation in returns by industrial sector Wider benefits of learning to health & well-being

8. England – Average Fee Yield by Level (19+) ILR field A13 (UK/EU learners, eligible to pay fees)

9. Key Factors Affecting Price Sensitivity Vocational courses were less price sensitive than leisure courses. This is probably due to the perceived economic value of vocational courses to the individual and employer. Repeat learners were more price sensitive than new learners. Large fee increases can be perceived as unfair by learners with knowledge of previous prices. It is more difficult to increase prices where there are high levels of competition (public sector, private sector and other lifestyle activities) Income level and ability to pay can affect price sensitivity, but it is not the most important factor.

10. Smarter Fees Policy Toolkit

11. Customer–Based. What will the Market Bear? Price Setting Government Directive Course Costing + Competitor Matching

13. Smarter Pricing Understanding the perceived value and price sensitivity of the product/service to your customers Increasing the perceived value of the product/service Promoting the value and benefitsrather than cost

14. Understanding the Perceived Value Use focus groups, questionnaires etc. to understand what your customers value in general and what they value about your products Is there scope for differential pricing? Understand your competitors. What is your added value? Asses the likely price sensitivity of your courses Model the possible impact of fee changes on income Monitor the actual impact of any fee changes

15. Perceived Price Premium Mid-Market Entry Model Perceived Value

19. Increasing the Perceived Value Develop the curriculum and introduce new courses Add value to existing courses e.g. trips and events, help line, web resources, account manager Change delivery or attendance patterns Develop curriculum specialisms Improve buildings and facilities Introduce value added services e.g. car parking, on-line enrolment, club membership Reduce the perceived costs by monthly instalments, direct debit etc.

20. Promoting Value Ensure the prospectus promotes the value and benefits of learning as well as the cost Determine and communicate the financial benefits of a training programme to an employer Articulate the benefits of premium priced products and services Where feasible develop brands that promote key messages to a target audience and enable differential pricing.

21. Questions What are the implications of Government funding being less secure in the future? What actions have already been taken on promoting value and smarter pricing? What actions might need to be taken in understanding, increasing and promoting value?