Initial investigation aims to get the ball rolling on understanding course pricing at today’s institutions.

online-course-pricingAll institutions offer online courses at a lower price than on-campus courses, but the size and scope of the institution often affects how low the prices will go.

This finding comes as part of an initial investigation by Shouhong Wang, professor of Management Information Systems at the University of Massachusetts Dartmouth, into how online courses are priced at various institutions, as well as the reasoning behind pricing decisions.

“As higher education has become a global competitive business, pricing education products is a strategic tool for education institutions to compete with each other,” he explains in his research. However, “the literature of issues on online course pricing is scarce.”

Wang hopes that by taking a small introductory step in understanding how online courses versus on-campus courses are priced, the data-based findings might be helpful for administrators to understand how different types of educational institutions adopt different online course pricing strategies and practices.

Methodology for this small glimpse into online course pricing included looking at 103 U.S. institutions that offered both online programs and regular on-campus programs. These institutions also freely made available information on the prices for their online and on-campus courses per credit hour.

Attributes of those institutions in the data included: Academic class (Carnegie classification, such as Doctoral/Research, Master’s, etc.), Scale (total student enrollment), funding source (public or private), online course administration (registrar’s office or continuing education), and program level (undergraduate or graduate).

More information on methodology can be found in the report.

(Next page: What Wang discovered)

According to Wang’s sample of institutions, which he says included a diversified sample:

Overall, educational institutions set significantly lower prices of their online courses than that of on-campus courses. On average, the price of an online course could be about one-third less than the price of an on-campus course. Wang suggests that perhaps lower cost could be associated with cost savings from physical facilities, even though online education involves costs of various technological support.

Also, academic levels of educational institutions have no effect on setting the prices of the two forms of courses.

However, scale of educational institution has a significant effect on setting the prices of the two forms of courses. Specifically, small institutions or large institutions set significantly lower prices for their online courses than medium-sized institutions.

Private educational institutions also set significantly lower prices of online courses than public institutions.

Yet, online course administration body has no effect on setting the prices of the two forms of courses, and neither does program level.

Though Wang emphasizes that this initial study has many limitations in terms of scope and depth of data presented, it is perhaps the first step in a larger discussion as to what may currently affect online course pricing in comparison to on-campus pricing, as well as to the motivations of different types of universities in offering their online per-credit prices.

“Pricing online courses is an important issue for managing online education,” notes Wang. He hopes that this will spur other researchers to investigate and offer best practices to online program administrators.

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