What next for differential pricing?

“News of different price arrangements based on country could very easily go viral with a negative impact on reputations and on business”

Language schools in many parts of the world will often charge a lower price to say, a student from Colombia than to a student from Saudi Arabia, a lower price for a Turk than for a Japanese. 

This practice is commonly referred to as “pricing to the market” and has evolved in large measure because course rates can be viewed as unaffordable – or at least as uncompetitive – by students in certain countries or regions.

Schools may refer to “special offers” or “country promotions” as a rationale for the discounting; those terms are, however, frequently used as a cover for what is, in fact, a permanent differential pricing policy.

Pricing to the market for exported goods and services is commonplace, and nobody is surprised to hear that a particular car or camera might cost more in one country than in another. The significant difference in the case of language schools is that students may be paying a different rate for the same service delivered in the same place at the same time.

That is close to uncomfortable. Imagine the outrage that would ensue if, when paying for car hire or theatre tickets or a restaurant, it was discovered that different rates were being charged based on the client’s nationality or country of residence, even if paid for in advance.

Within the EU, of which at the time of writing the UK is still a member, this would appear to be illegal1, and yet a little research reveals that language school organisations are demonstrably charging more for a given course delivered in the UK for students based in some EU countries (e.g. France, Germany, Belgium) than they charge for students based in others (e.g. Bulgaria, Hungary, Lithuania).

“Imagine the outrage that would ensue if, when paying for car hire or theatre tickets or a restaurant… different rates were being charged based on the client’s nationality or country of residence”

The schools would doubtless say, and indeed instinctively feel, that they were offering special prices to make their courses more widely affordable. The law1 would not appear to offer such leeway.

Quite apart from the law, there are other factors at play here. We all like transparency in the pricing of the goods and services we buy, and we don’t like it when we see that we have paid more than the going rate as a function of our ignorance, or of our failure to challenge the vendor.

Information relating to opportunism, exploitation or unfair practices in commerce is quickly spread through social media communities and virtual networks, where indignation is never far away.

“We all like transparency in the pricing of the goods and services we buy, and we don’t like it when we see that we have paid more than the going rate”

News of different price arrangements based on country (“I am paying more because I am Chinese?”) could very easily go viral with a negative impact on reputations and on business, even on the industry. Meanwhile globalisation and the emergence of virtual agencies and borderless business may mean students in a “premium” country will be more likely able to access course prices currently offered only to “discount” countries.

Schools’ pricing policies are in many cases significantly influenced by their agents, who may in (premium) country X require high top-line pricing from the schools in order to support a bigger margin, while in (discount) country Y they may require bigger discounts in order to be locally competitive. Schools, forever juggling multiple considerations to stay profitable, can, therefore, be caught in something of a cleft stick.

The question must be whether international language course pricing is likely to become more complex and opaque as schools find it ever harder to price their courses legally and ethically while keeping their students and agents in multiple markets happy, or whether simplicity, transparency and purer competition will win the day. Faites vos jeux.

About the author: David Blackie is the director of International Education Connect

Note 1: Regulation (EU) 2018/302 Article 4, 1 c. “A trader shall not apply different general conditions of access to goods or services, for reasons related to a customer’s nationality, place of residence or place of establishment, where the customer seeks to: [clause c] receive services from a trader, other than electronically supplied services, in a physical location within the territory of a Member State where the trader operates.”