I mentioned in class a story I had heard on MPR about the pricing of online courses. I found it interesting that the main issue with the pricing of online courses higher their traditional counterparts seemed to be that nobody could adequately justify the pricing. The author of this pieces is looking through a cost-centric prism that misses a big factor in pricing.

Some colleges charge higher tuition for online classes | Minnesota Public Radio NewsQ.

Because they aren’t tracked, it’s hard to say how much the increased tuition is directly tied to higher expenses.

That bothers Travis Johnson, the vice president of the Minnesota State College Students Association. Johnson also takes classes online from Lake Superior Community College in Duluth.

“While the online piece creates more flexibility, the increased cost is an offsetting barrier. That’s just really a concerning to us,” Johnson said. “There’s campuses that don’t even charge a difference, and then there’s some that charge a lot more.”

How about supply & demand as an argument? Obviously people are willing pay more for an online course than they are for a classroom format. If this weren’t the case, the online courses wouldn’t have people enrolled in them. As long as the demand dictates it (the online section of Acct 320 is nearly always the first to fill) why shouldn’t colleges charge more?

Jan Doebbert, vice president of academic and student affairs at Alexandria Tech, has heard from students who’ve noticed the difference. But he said they’re getting more value — specifically extra technical support.

Mr. Doebbert accurately makes the case that students get more value. I find it debateable to think that the extra technical support creates the most value, though. I would guess that most online students choose that format for the flexibility it offers. They can work from home in their pajamas or from across the country on a business trip. If the roads are bad because of a blizzard they don’t need to risk their life to get to class. If they work inconsistent hours or have childcare concerns, the online format allows them to more easily take classes. Those should be the arguments to charging more for online courses.

As discussed in class, it doesn’t matter what the cost of something is to the company when it comes to setting the price. Cost is just one of many factors that enter into the pricing equation. If every company could just add up their costs and add 10% to top as a profit margin we would all be paying much more for goods/services than we do now.