Raise Or Lower Tuition Essay Example

Introduction

Different firms use different avenues to raise revenues in the institutions. However, before settling on a specific way, the firms’ management need to assess the implication the process would cause. For instance, an increase in the fees or product prices pushes the customers away because; they tend to turn to the competitors. On the other hand, the failure to raise the prices would result in the organization operating in debts. Nonetheless, an organization should follow the process that has more benefits than the drawbacks.
However, a rise in the tuition could result in either an upsurge or a decline in the Nobody State University revenues. Nonetheless, the university’s revenue would increase if the institution would cut down on its expenses, for instance, lying off some workers in order to reduce the salary expenses (Ehrenberg, 2002). Additionally, they could also increase the revenues through an increase in the school fees. Alternatively, they could engage in income generating activities, for instance, commercial farming. However, the university’s revenues could decline through a reduction in the students’ enrollment. Enrollment of more students to the institution warrants more fees thereby more revenues. On the other hand, stagnation of the revenues could occur if the school remained without either increasing the demand or the supply of the services offered in the school. As a result, the students’ population remains the same thereby stagnating the university’s revenues.
Nonetheless, an increase in the tuition could increase its demand in terms of the students who would wish to join the institution. In most cases, parents and students tend to think that an increase in tuition enhances education quality thereby attracting more admissions in the schools. For this reason, the increased tuition would result to the educators asking for more money from the students in order to deliver and meet the high demand levels. An increase in demand results to an increase in the prices of the services. As a result, the increase in the fees results in an increase in the revenues. However, before increasing the school’s tuition, it is essential for the management to consider the prices of the competitors and the income levels of the parents. Income levels determine the purchasing power of the parents thereby proving their ability to meet the new financial demands. Nonetheless, the increase in the tuition could become in line with the people’s tastes and preferences because some perceive that the expensive products and goods maintain high quality. Nonetheless, the management should bear in mind that revenues maximization does not necessarily lead to profit maximization.
However, an increase in the tuition could have negative impacts on the revenues. There are some of the students in the institutions with financial difficulties; therefore, an increase in the tuition would increase more pressure on the students because it would lead to financial constraints. Therefore, most of the students from the poor backgrounds would withdraw from the school thereby leading a decline in the amount of revenues collected as school fees. In addition, an increase in the tuition would lead to a reduction in the enrollment level in the university among the students who would not meet the financial requirements (Hoffman & Summers, 2000). As a result, the move would result in the students enrolling in other universities whose school fees are pocket-friendly. The management should first conduct a survey in the market, to establish the number of the competitors in the area. It is because the move would warrant some of the institutions taking a competitive advantage of charging reduced fees in order to attract more students.
Nevertheless, to increase the university’s revenues when the price elasticity is -1.2, the institution needs to set a specific amount of fees, which is higher than the current one. However, they should avoid over pricing the education services because it would result in recognition of super-normal profits. Nevertheless, the management should also search for on ways to increase the enrollment of more students to the institution. For instance, they could increase awareness of their existence to the people by embarking on massive advertisements to. In addition, they could advance credits and discounts to more people in order to attract more students (Martin, 2013). However, the school could also sell some of the assets not used in order to generate more income to support their daily activities.

Conclusion

In summation, the school should evaluate all the means to generate more revenues to avoid incurring more losses. On the other hand, the management should first determine the demand and the supply of the education services in the region. It helps them establish the move to take in terms of revenues generation. Increase in supply could result in a reduction in the prices by the competitors thereby forcing one to adjust accordingly in order to maintain the consumers. On the other hand, an increase in the demand levels leads to an increase in the prices of the goods and the services because high demand leads to scarcity. However, the income levels determine one's ability to meet the demands. Therefore, the institution could exercise discrimination pricing without knowing because they would end up hedging other students from joining the school.

References

Ehrenberg, R. G. (2002). Tuition rising: Why college costs so much. Cambridge, Mass: Harvard
Hoffman, A. M., & Summers, R. W. (2000). Managing colleges and universities: Issues for
leadership. Westport, Conn. [u.a.: Bergin & Garvey.
Martin, J. (2013). Turnaround: Leading stressed colleges and universities to excellence. Place of
publication not identified: Johns Hopkins Univ Press.