Do we question why Nike sneakers cost more than Dunlops? Do we boycott King Island cheese because it is sold with the same product name as plain label varieties? No, in the real world we relish excellence and we realise we have to pay for it.

While many university staff cling to the notion of free and heavily subsidised tertiary education of their youth, it is about time that universities stopped investing so much time apologising for their pricing policies and started investing more time in developing a clear understanding of market dynamics.

The University of Melbourne has released a very interesting paper on pricing, featured in The Australian’s Higher Education Supplement, which provides some interesting insights into pricing of education for Australian students.

This paper, available at www.fpg.unimelb.edu.au indicates that international students pay a premium for education over and above the cost of course delivery. As indicated in my last post, this neglects to reflect the significance of brand in both university choice and graduate outcomes. In short, there is a strong belief by many students that better jobs will be attainable if their resume cites a degree from a prestigious institution.

Brand equity needs to be considered as part of the equation in order to gain a deeper understanding of the real price of education. University brands can’t be built from a nervous lecturer plunged into a large lecture theatre; they are built on research, learning environment, alumni success and support services. These are neither evaluated nor priced in the University of Melbourne model.

Secondly, this same pricing model is evident in pricing for domestic postgraduate degrees. Compare the price of an MBA from the University of Melbourne with the same qualification from Victoria University; or a Masters in Science from the University of Western Sydney with the same qualification from the University of Western Sydney. Universities with better brands command higher prices. This pricing mechanism is not an international student issue – it is a constant for all unregulated course fees.

The University of Melbourne study served an excellent purpose in highlighting the significance of student revenue to the financial equilibrium of Australian institutions. The institutions themselves now need to work harder to identify the gamut of both supply and demand side factors that should influence their pricing models in future.