Home » Uncategorized » JC Penney, college costs and real pricing: Are there lessons? #highered #admission #emchat

JC Penney, college costs and real pricing: Are there lessons? #highered #admission #emchat



I spend an inordinate amount of time thinking about the price and cost of higher education. In my 20+ year of working in enrollment I’ve listened to hundreds, if not thousands, of people sound the alarm about “spiraling costs” and politely (more appropriately, naively) recommend that in order to slow discount rates (a phrase I just hate), colleges must reduce their price to be more aligned with what the cost to attend really is after financial aid is applied.

If I’ve heard it once I’ve heard it one thousand times, “if you just charge what you actually net,” all of the college’s problem will be solved and families will be more inclined to enroll.”

I mean isn’t this exactly why the feds pushed for the Net Price Calculator? If families just know what the real cost is… And, with increased chatter about “affordability” and The College Scorecard the calls for real pricing are likely to stronger than ever before. And, the urges to study it further will be attractive.

I, myself, spent time recently contemplating what real pricing might look like in higher ed and at my institution and have some ideas about how it might work. (I will share that in a future post).

For now, though, for all of those who want real pricing in higher education, I hope you are paying attention to what has and is happening to JC Penney.

JC Penney’s multiyear turnaround, which heretofore has revolved around an ill-defined (and probably ill-conceived) plan to charge real prices for the goods they sell looks like it is a disaster. JC Penney’s “no sale” strategy, which was built around dropping prices does not appear to be working within a marketplace that values bargains and really likes sales.

Could JC Penney experience shed any light on why more colleges and universities have not followed a similar path to offer a real price?

I think it does.

I think the JC Penney’s mess forces important questions about a stakeholder’s interest in and understanding of real price.

JC Penney believed that real pricing would be welcomed by their customers. However, early evidence suggests otherwise and as of late-January of 2013 they’ve abandoned the “no sale” approach.

I recently read a wonderful piece in Forbes written by Jonathan Salem Baskin, which dissects the JC Penney debacle and offer some things for the real price advocate in higher education to consider. You can read the full article here.

Baskin identifies the following problems, which I believe would be similar problems for colleges that adopt a real price strategy:

  • The pricing plan was never explained or substantiated.
  • Nobody knows what the real price should be at any store, not just Penney’s, which means there’s always going to be a suspicion or expectation that they can (or should) go lower.
  • The no sale strategy was opaque on its fundamental issue when it could have established a new approach…

(The phrases above  are taken directly from Baskin’s piece)

Baskin nails it! He offers some excellent cautions for colleges that might be seriously considering some sort of real price strategy. I fear college would struggle mightily with explaining a new pricing plan. I am skeptical about the public’s understanding of true costs.  And, higher ed. and opaque are too comfortable with one another. Are there ways colleges could avoid the same mistakes and move beyond the gimmickry that defines most price adjustments or freezes?

Baskin does not get into why people want a bargain, but there are plenty of behavioral economists who can opine on this matter. And, nearly every enrollment manager I know can tell you that students and families really value a scholarship or grant—otherwise knows as a “discount.” For more on this, pick up Robert Reich’sThe future of success” in which he has an excellent chapter on “The age of the terrific deal.” It become pretty apparent, quickly, why we’ve been conditioned to value a deal, a discount and a door-busting sale…and, why when we don’t find one, we jump ship.

So-called real pricing in higher education, while on the surface sounds really good, is likely to go the way the “no sale” strategy that JC Penney just abandoned.

Please let me know if you have feedback or ideas about real pricing in higher education.

W. Kent Barnds a.k.a. @bowtieadmission


  1. Deborah Maue says:

    JP Penney’s biggest problem is that its brand doesn’t stand for anything. In that situation, it’s difficult to make any new pricing strategy work, unless the strategy is to give everything away for free. That said, I do think there are some parallels for higher ed; namely, that getting a deal makes people feel smart, and it makes them feel special.

  2. […] a recent blog post I discussed JC Penney and it’s effort to introduce “real pricing” by eliminating discounting […]

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