Pricing

Pricing strategies for HEIs

Pricing is an important issue for all Higher Education Institutions (HEIs) as they increase the diversity and range of their activities, responding to financial pressures and meeting the needs of an increasing number of stakeholders. HEIs are encouraged to move towards market-based pricing which can be defined as

• a pricing methodology that uses the demand for a product or service to determine its price. The price reflects the perceived value derived by the customer and is independent of the costs of providing the product or service.

Activities within HEIs must be sustainable in the long term and, as a result, HEIs need to

• be aware of the costs of activities undertaken; and
• consider the strategic development of pricing policies and procedures and related marketing practice.

The JCPSG produced Developing a pricing strategy in higher education institutions (July 2002). This guide assists higher education institutions to think strategically about the development of pricing strategies and policies. It provides both reference material and practical guidance on implementation, and builds on the JCPSG's publication "Pricing Toolkit for the Higher Education Sector" (October 2000). The toolkit emphasises that pricing decisions can often be complex, and that institutions my have to obtain additional information about markets, customers and competitors and to analyse the data thoroughly.

Work is ongoing to develop Good Practice in pricing throughout the sector. In taking account of the need for sustainability, institutions need to be able to calculate the full economic cost (fEC) marginal cost of projects to assist in determining the price to be charged.

There are many databases of statistics and other data, which may be used to provide useful market research and other detail to assist pricing decisions. To access the databases, please click here.

Policy

H M Treasury has formally set out Government policy with regard to non-competitive contracts awarded in its letter of 13 February 2004. Other Government departments are to pay 100 per cent of fEC on cost-based contracts. The report Responses to the Cross Cutting Review of Science and Research recommendations highlights progress made on how departments are responding to recommendations, including the recommendation: 'Departments to ensure that future costings fully take account of cost implications of Transparency Review, for any contracts they intend to place with HEIs.'

Principles to guide the pricing of research projects are shown in box 3.2 of the Science and Innovation: Investment framework 2004-2014.

The OST has issued guidance on the pricing of projects for non-Research Council funders.

This suggests guidelines for universities to use when considering whether or not to subsidise projects from those public funds which have been specifically been allocated for 'public scientific good' research. Further OST guidance for Government departments and HEIs on the pricing of competitive and non-competitive research contracts is available here .

Pricing conference materials

To access copies of the slides used at the JCPSG pricing conference on 8 November 2001, see the JCPSG conference materials page in the archive materials section.

For further pricing presentations, please see the Training materials section in Resources and Support or visit the Publications and presentations section under Archive material.