Nobody State University Tuition Universities must constantly weigh tuition pricing in relation to the cost of providing quality educational services. Determining where to set tuition pricing is an increasingly critical decision which administrators and university presidents must analyze when considering the university’s goals. Not only does the cost of tuition play a factor in student enrollment, it also provides a major revenue source to an institution. The question which universities must answer is, “What effect will raising or lowering the university’s tuition have on the total earned revenue? This paper investigates this question and reviews under what conditions a change in tuition prices will cause the revenue to rise, fall, or remain constant. Finally, applying a hypothetical tuition elasticity coefficient of demand for education value of -1.2, provides a tuition increase recommendation to the Nobody State University’s president and administration board based upon the university’s potential revenue impact.
Historically, the demand for a university or college education has not reduced as prices have risen. In fact, even though prices have gone up, the number of college applicants has continued to rise. Meagan Pant writes in her article in the Tribune Business New, “The majority of Americans think college is too expensive for most people to afford -- although the widely held opinion has not hindered skyrocketing enrollment or stopped virtually all parents from expecting their child go to college.” (Pant, 2012) In these days of tighter budgets, college administrators must now consider if this trend will continue. Glenn Bryan and Thomas Whipple expand on this thought in their paper, Tuition elasticity of the demand for higher education among current students: A pricing model, published in The Journal of Higher Education. They state, “Establishing tuition