Impact Pricing Podcast

Ep182: Grants, Scholarships, and Loans as Huge Factors of Pricing in Higher Education with Christine Carragee

Christine Carragee has been working as Carragee Consulting’s Business Consultant for more than six years now. She’s done two different stints at the Vendavo – first as their Senior Pricing Consultant then as a Principal Consultant – so she certainly understands pricing. Christine was a Senior Pricing Analyst at Capella University. She lived on three continents before she was four years old.

In this episode, Christine explains why it’s a must that you consider the segmentation of individuals when doing pricing in higher ed as she shares her pricing journey with Capella University.

Why you have to check out today’s podcast:

  • Find out how Capella University sets their price to students;
  • Discover how financial aids such as scholarships and loans help you create good quality for the university; and
  • Understand why it’s a must that think about the segmentation of individuals when doing pricing in higher ed

“A huge portion of higher ed pricing is through the grants and scholarships and loans. And so, what you’re initially paying at the time that you’re doing your coursework is very different from what the total cost of a program is for you.” 

Christine Carragee

           

Topics Covered:

01:47 – How Christine got into pricing

03:02 – Learning about airlines from her roommate and the book Hard Landing

05:01 – Trying to put economic value to a university; Segmentation of individuals in higher ed pricing

08:48 – Capella University’s two tuition structures; Grants, scholarships, and loans in higher ed pricing

12:54 – What Mark loves about the way they do pricing in higher ed

14:48 – Looking at how competitors do pricing + accepting high achievers and issuing financial aid

17:04 – Christine’s pricing advice for the listeners

18:15 – Table topics: “Pricing champions drive pricing change”

Key Takeaways: 

“There’s a huge portion of pricing in higher ed that you have to think about the segmentation of the individuals, where they are in their life and then what their personal and professional goals are. There’s a big pressure on colleges and universities to provide educations that have a financial ROI. But if you think about the history of university, especially in the U.S., many, many of the universities started as seminary schools or they started as state institutions with land grants, and they were more about having an educated population for a general purpose, involvement in society, and they were not the career track programs that we think of them as today.” – Christine Carragee

“You can admit people who couldn’t afford to come but have very high grades and have those personal statistics that make your institution look better on average by issuing financial aid.” – Christine Carragee

“That’s a self-reinforcing cycle, where once you become established or you have a reputation around having very good quality students, then it’s going to attract more people who want to go to school with high achievers.” – Christine Carragee

People / Resources Mentioned:

Connect with Christine Carragee:

Connect with Mark Stiving:   

Full Interview Transcript

(Note: This transcript was created with an AI transcription service. Please forgive any transcription or grammatical errors. We probably sounded better in real life.)

Christine Carragee

A huge portion of higher ed pricing is through the grants and scholarships and loans. And so, what you’re initially paying at the time that you’re doing your coursework is very different from what the total cost of a program is for you.

[Intro]

Mark Stiving

Today’s podcast is sponsored by Jennings Executive Search. I had a great conversation with John Jennings about the skills needed in different pricing roles. He and I think a lot alike.

If you’re looking for a new pricing role or if you’re trying to hire just the right pricing person, I strongly suggest you reach out to Jennings Executive Search. They specialize in placing pricing people. Say that three times fast.

Mark Stiving

Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the smart relationship between them. I’m Mark Stiving and our guest today is Christine Carragee. Here are three things you’d want to know about Christine before we start.

She has been part of Carragee Consulting for six years; I’m guessing a founder or owner or president or something like that. She’s done two different stints at the Vendavo, so she certainly understands pricing, and she was a Pricing Analyst at Capella University, which we’re going to try to talk about pricing in education again. Oh, and she’s lived on three continents before she was four years old.

Welcome, Christine.

Christine Carragee

Hey, Mark. Thanks for having me.

Mark Stiving

It’s going to be fun. How did you get into pricing?

Christine Carragee

Sort of by accident. I had majored in economics in college, and when I was applying for jobs, I got a referral from an alum who was working at Northwest Airlines. And when I started there, they somewhat arbitrarily assigned us departments based on when we were able to start and what their internal needs were. So, I was assigned as a pricing analyst within their marketing department. That’s my first job out of college. And then ever since that, you get the pricing moniker, and it’s easier to stay in your lane than to breakout elsewhere, I guess.

Mark Stiving

And there are so few people in pricing compared to the need or demand that this is like a no brainer. It’s easy to be in this field.

Christine Carragee

Yeah. So, I would say it happened by accident, but I stayed there on purpose. It has been really an engaging place to be in, and I feel like you’re in the control center of every business that you work in because it interfaces with finance and accounting and sales and marketing. You really get interesting visibility to the whole organization from your pricing vantage point.

Mark Stiving

Yeah. Absolutely. So, do you ever meet those people where you say, “Oh, I just wish I could know what they know”?

Christine Carragee

Yeah. Absolutely.

Mark Stiving

I wish I could know what it was like to work at an airline in pricing. I just think that would be fascinating.

Christine Carragee

Yeah. So, my particular job – you have to remember, I was just out of college. It was not as strategic as I imagined life after college would be, but there are a lot of smart people there and the work was very segmented.

There are folks that did pricing, which is like the fares that are stored from one origin to destination and there’s a whole repository of them, and then there’s people who did yield management or revenue management or fleet planning. And so all of those things are interrelated, but the job functions were each parsed out into discrete tasks that were, for the pricing group, very repetitive. I feel like I learned more from the lunch and learns, talking to my colleagues. I had read this book Hard Landing that my roommate at the time recommended. That had much more of the history of airlines and how they were consolidated and reorganized based on different regulatory shifts or big economic factors that had changed. And so I think I learned more about the airlines probably talking to my roommate and reading Hard Landing than I did in my pricing job. But I think that may be true of many first jobs – that they want to keep you on task for something very specific.

Mark Stiving

Well, it’s funny because we don’t know that much when we first get out into the real world, and so we just have to learn. One of my mentors early in my career used to call it “time on Earth.”

Christine Carragee

Yeah.

Mark Stiving

We just needed more time on Earth. TOE.

Hey, we’re going to talk today about the value and pricing at higher education, and I get so lost. First off, it’s a topic that I dearly love because I was a professor for several years. I worked at a university. I’ve taken way too many university courses in my life, so it’s just this thing that I dearly love. And then I have a couple of clients who actually sell to education. And I have a very, very hard time trying to put economic value to a university. So let me just leave it there and you can pontificate for a few minutes.

Christine Carragee

Yeah. So many thoughts that come to mind at once. It’s hard to kind of narrow your focus. But when I worked at Capella University, it was an online for profit, almost exclusively focused toward a graduate learner body, and so not undergraduate degrees. And that’s what I think comes to mind initially for most people regarding education, especially if they’re trying to afford helping their kids to go to college. That’s the vantage point I think we most look at or your own student loans potentially.

So my work there, I was trying to understand what the lifetime value of the different degree programs was and what somebody in a certain field might expect to earn, and trying to correlate the tuition prices back to what the lifetime value for them was going to be, and it’s different when you’re an adult learner and you’re funding it yourself or you’re going for student loans than it is if you’re kind of in the traditional path of starting at 18, going to college till you’re 22, and then launching a career from there. What’s different as a graduate student to figure out you want to make a career change or you never accomplish what you wanted to from an educational standpoint and you feel like you need it just to pay the bills, you’re going to need a certain qualification.

So, there’s a huge portion of pricing in higher ed that you have to think about the segmentation of the individuals, where they are in their life and then what their personal and professional goals are. There’s a big pressure on colleges and universities to provide educations that have a financial ROI. But if you think about the history of university, especially in the U.S., many, many of the universities started as seminary schools or they started as state institutions with land grants, and they were more about having an educated population for a general purpose, involvement in society, and they were not the career track programs that we think of them as today. If you wanted to go into a profession, you took on an apprenticeship, not a college degree. And so, there is a sense of elitism in the history of colleges and universities; that you’re not going there in order to fund your future. You’re going there as a general purpose education.

Mark Stiving

Yeah. So first off, I think this is fascinating, because what you’re describing isn’t what I thought we were going to be talking about, but that’s totally okay. We’re going to be talking about how do we price to people going to school. So how do universities set the price to students?

Christine Carragee

Yeah.

Mark Stiving

Which sounds fascinating to me. And what I love that you said – and I’m going to verify that this is true – that you are figuring out lifetime value different, and I’m going to say the word majors, and then did you charge different prices for, say, a PhD in Finance is possibly the single most valuable Ph.D. you could ever get versus a PhD in Science where it’s really hard to get a job in a lab or teaching, so although it sounds great, it doesn’t pay well.

Christine Carragee

There’s a lot of layers to unpack here. So yes, these different institutions are looking at things like the Bureau of Labor Statistics and what the lifetime earnings are for people in the career fields that they believe they’re enabling people to enter. So, they’re assuming that you’re putting your education to use in a number of different fields, and they’re trying to understand a social worker gets paid differently than a teacher that gets paid differently. All these different professions have different ranges of expected earnings, and an older learner has fewer productive working years left to recoup that expense, right? So, for example, my brother went from accounting into medicine not as a 20-year-old, and so he has fewer years left to recoup the medical training costs and the opportunity cost of all the time.

So, there is some aspect of that, but there’s a very important factor to the pricing, which is not the MSRP or the ticket price, the advertised tuition. A huge portion of higher ed pricing is through the grants and scholarships and loans. And so, what you’re initially paying at the time that you’re doing your coursework is very different from what the total cost of a program is for you.

And so, one of the things that I did was not just to look at the Bureau of Labor Statistics data, but also to look at how long the enrolled students were staying in their program. And while they were in the programs, almost everybody is taking financial aid, and so there’s an interest rate on those loans and there’s a payback calculus related to that. But they’re very often subsidizing their living expenses with that financial aid; they’re not using it exclusively to pay tuition and books.

And so, one of the things that the Capella University in particular was looking at was can we help people to move through the programs more quickly by incentivizing that they take on a right sized work load or course load? And so, they had two different tuition structures – one, which was a pay per credit or pay per course, and then another, which was for the quarter or the semester that you’re enrolled, a flat rate, and you could take as many courses as you wanted to try and take on. And they wanted the educational outcomes to still be good. So they didn’t want to incentivize people to take on so much that they were just going to fail because they had pushed so hard from a financial perspective, but they didn’t want learners to go one course at a time at the flat quarterly or semester rate, and then use up all of the available financial aid before they had completed the curriculum, because then they would not have an ability to pay, they would leave the program without the credential, and they may have gained some valuable knowledge in the meantime but they’re no closer to being qualified to enter the career that they want when they started and they have a heap of student debt. So, it was a completely different situation; that way in education.

Mark Stiving

So, what I loved about what you just said, many, many things, but there were lots of lessons that you guys used or lots of pricing strategies in the things that you were talking about. The first one I thought you were going to talk about was when you said financial aid, you then went on to say that it was about loans, and I was thinking it was about price discounting. So, we’re going to give you a lower price because for whatever reason it happens to be, right? And so that is a great example of price segmentation that you guys use.

Christine Carragee

That happens, too. That’s a whole other line of thinking. Yep.

Mark Stiving

Good. And then the other one that I loved was the pricing metric. Now, you guys put together two different pricing metrics. At most schools, we charge by the credit hour. And so, you said, “well, that’s a fine pricing metric, but let’s also put together pricing metrics that we’ll charge by the semester.” And now you can essentially do all-you-want, all-you-can-eat type of school. And it was pretty fascinating that you created a new pricing metric. I don’t think a lot of schools do that.

Christine Carragee

Yeah. It’s not like other places like they’ll have up to 12 credits or something and then over 18 credits then you start paying again. But anywhere, what they would consider a full course load is the price for the semester, so that they usually have fencing around it, so it’s not exactly price per credit. And then there are Western governors and a couple of other institutions that had the incentive to go as quickly as possible a price for the semester, the quarter. So, there’s a range of different ways that they can price, but you’re right, it’s much more common for a per credit rate.

Mark Stiving

And then we started this off with you saying, “Hey, I was figuring out the lifetime value of a degree to different majors or different businesses.” Did you ever look at the price of other universities and what your competition looked like?

Christine Carragee

Yeah, and this goes back to how opaque price is, and to your question about do you offer grants or aid incentives to attract certain people? And so, they’re essentially issuing grants and scholarships to the folks that they would most like to matriculate, and those are the people that they think are going to succeed in their programs and then go on to succeed in the working world. They’re going to become donors. They’re going to have high incomes. They are the people who make the statistics associated with the school look good as they enroll and then over time.

And so, it truly is a yield management game of how many acceptances should we offer, what’s the take rate and role, and then what is going to happen with those folks as they move through the program and they move on as alums. You can buy your way into the highest SAT scores and the highest GPAs, and all of those things are say, the quality of your institution. So, you can admit people who couldn’t afford to come but have very high grades and have those personal statistics that make your institution look better on average by issuing financial aid.

Mark Stiving

Yeah. So, it’s some strategic decisions on where we get good, I don’t know, I guess it’s PR, or good stats based on who we can get.

Christine Carragee

And then that’s a self-reinforcing cycle, where once you become established or you have a reputation around having very good quality students, then it’s going to attract more people who want to go to school with high achievers, right?

Mark Stiving

Yeah. Perfect.

Christine, this has been fun, but let’s start to wrap this up so we’ll have time for the new thing we’re going to do today.

Christine Carragee

Okay.

Mark Stiving

But first, I have to ask you the final question. What’s one piece of pricing advice you’d give our listeners that you think could have a big impact on their business?

Christine Carragee

Generally, outside of education? I think there’s one graphic that I saw years ago where you look at the customer and you look at value and then costs and then your business and then the same graphic in reverse. And so, to be able to trace through in both directions, how does your customer view your product or service and what does it cost you to deliver it? And from a cost base perspective, what are you producing? And then trace that back to the customer. You have to be able to go both directions, and it can’t really have any missing pieces in that landscape.

Mark Stiving

So, I love that piece of advice. The one thing I’ll say is I think every company goes from cost to customer and very few companies go the other way, which is sad. Alright.

So, to our listeners, I already talked to Christine about this, but to our listeners, I want to tell you what are going to do for the very first time on our podcast today. If you’ve ever been a toastmaster, they have this thing called table topics where someone asked you a question, you stand up, you talk for one to two minutes on whatever the topic is. And I’m actually going to time Christine. She gets one to two minutes to do this. And many of you may know I created a deck of playing cards out of the memes that you often see you post on LinkedIn. I don’t know if you can hear me shuffle them right now, but I’m about to pull a card. I’m going to read the meme to Christine and she is going to spend one to two minutes saying whatever the heck she wants to say about this saying.

Are you ready, Miss Christine?

Christine Carragee

Yeah.

Mark Stiving

Okay. Pricing champions drive pricing change. By the way, that was the four parts.

Christine Carragee

Okay, so pricing champions. Interesting. So, I’m assuming that is an internal thought leader or hopefully it’s somebody in a pricing department, but I suppose that could be a sales leader or that could be a finance leader. That could really be anybody who has good strategic thinking around pricing and then the organizational capital to carry out those good strategic visions. And I think that’s very true in my experience, that there are some visionaries within organizations and they are able to see a progression for how to improve the function and see pricing as an area for continuous improvement, that they’re able to understand strategic and tactical actions that need to happen and then figure out how to line up everybody in the organization to get behind that and just keep moving forward. So, I think that is a true statement.

Mark Stiving

That was awesome, Christine. You went a full minute. So how was it? Just tell us how that felt.

Christine Carragee

I think it’s great. I think one thing that would help me a little bit would just to see the quote while I’m responding to it. But I can write it down.

Mark Stiving

I could type it in the chat next time.

Christine Carragee

Yeah, no worries.

Mark Stiving

Awesome.

Christine Carragee

Not an imperative.

Mark Stiving

Christine, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Christine Carragee

Look me up, I guess, on LinkedIn. It’s probably the easiest way, and hopefully, that’s connecting with people that can use it.

Mark Stiving

Yeah, we’ll put the link in the show notes so everybody has it.

Episode 182 is all done. Thank you for listening. If you enjoyed this, would you please leave us a rating and a review? And if you like the podcast, your pricing colleagues might, too. Please shout it from the rooftops.

Finally, if you have any questions or comments about the podcast or pricing in general, feel free to email me: mark@impactpricing.com.

Now, go make an impact.

Mark Stiving

Thanks again to Jennings Executive Search for sponsoring our podcast.

If you’re looking to hire someone in pricing, I suggest you contact someone who knows pricing people. Contact Jennings Executive Search.

Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

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