The Shrinking Full-pay Market: What’s Next?

I don’t expect that finding enough full-pay families will be as difficult as finding a needle in a haystack, but it is clear that unless we get another economic boom akin to the one that we experienced in the late 90’s, we are going to have to hunt more strategically for these families. This includes the idea of developing a structured, targeted marketing initiative to address the full-pay market.

The illustration below shows a challenge that we will be up against in the next 10 years based on yearly tuition increases of 5% and yearly household salary increases of 2%. We will need to ask for more of a family’s pre-tax dollars; fewer families will be able to afford our tuition. Do you know what your prospective families will need to earn to pay the full tuition? How much will your tuition increase over the next 10 years? What percent of a family’s gross income will they need to commit? This does not factor in the potential shrinkage in the number of school-age children among the full-pay market in the years to come.

Schools won’t freeze their tuitions; therefore, strategic planning to acquire more full-pay families from within your market is going to be key. Some schools may choose to take a wait and see position. I chatted with an interim head at a K-12 school in Pennsylvania who said her school had an adequate number of students up until 3 years ago.  No one in the leadership position seemed to be paying attention until she started asking questions and presenting facts. Down in enrollment by 10% now, they are a bit concerned. I wish I knew what percentage of independent schools are not paying enough attention to their full-pay market penetration, or even thinking about taking action. I also spoke to a representative from an independent school in the D.C./VA area with a very strong enrollment. I was encouraged to hear that his school has already been putting forth efforts to better understand their full-pay admission funnel to ensure that they stay in their current position of strength.

Is it time to start planning? The MarketingtoFullPay.com blog could be a useful tool for all of us www.marketingtofullpay.com. It’s a free option and with some collaboration, it can provide schools with training and ideas to better prepare them to tap the full-pay market during a time when tuitions continue to rise and numbers continue to shrink. I welcome your engagement on this topic. Thoughtful discussions and sharing of ideas will help set the course ahead.  The Five Pillars workshop is another option.  Checkout this program at The Five Pillars: A Customizable Framework for Marketing to Full-pay Families’ link.