On MBA programme pricing

Kai Peters on MBA

A guest post by Kai Peters, CEO, Ashridge Business School.

Poets and Quants is a blog run by John Byrne, the man who originally brought business school rankings to the world in 1988 in Businessweek. Since everyone likes a list, he continues to compile them.

Wharton MBA cost

$172 000 for an MBA at Wharton is “good value” according to Anjani Jain, Wharton’s vice dean.

A recent list that caught my eye is a list of the most expensive programmes in the world. In first place with a bullet is the EMBA programme at Wharton – coming in at $172,200. In the accompanying article, Anjani Jain, Wharton’s vice dean, MBA Program for Executives, comments that the programme is good value. I wonder if he said that with a straight face or with tongue firmly in cheek?

Now I understand Thorstein Veblen’s concept of conspicuous consumption – how people spend money to show their status rather than consuming for any sort of utility – but still, $172,200 for an MBA programme is breath taking. Who would spend that much? Who would pay for one of their staff to attend the programme? How can a school justify that level of pricing without having some moral qualms about access and fairness?

I’ve been fascinated by MBA programme pricing for some time. Scraping together the equivalent of Euros 12,000 or so some twenty years ago was a challenge for me for my own MBA in Rotterdam. (At straight inflation, that would have to be multiplied by 2.2 for an equivalent price today). Since then, I’ve been watching prices for both full time and part time programmes with real concern. For a 2007 article in the Journal of Management Development, a colleague of mine at Ashridge, Martin Lockett, helped me calculate a line of best fit between the position on the Financial Times ranking and price. The top ten spots all commanded a significant premium over the rest of the list. I tried at the time to calculate compound rates of price increases – alas, finding reliable, historical prices was beyond me. Anecdotally, however, it was clear that prices have been ratcheted up significantly on an annual basis.

MBA value

Relative value for an MBA

I don’t know what a fair level of pricing is. I know what the cost base for my own school is. I also know that many services are involved in providing not only a good education but equally a solid careers department and other ancillary services, and that MBA students prefer more services to less. A large part of the financial equation also depends on the size of the class – it is obviously more “efficient” to have a class size of 70 then of 17.

The key factor in all of these calculations, however, is often overlooked. When business school finances, or as presently in the UK, overall university finances are discussed, teaching loads rarely come up. What is the right balance of research and teaching? How much should a faculty member teach?

Again, I do not know what the right answer is to these questions. Perhaps I am naïve in thinking that education should be accessible. I do think, however, when business schools have programmes in the market that cost more than houses do in many countries, we need to collectively reflect on what is fair.

Kai Peters
Chief Executive
Ashridge Business School


Kai PetersKai Peters is Chief Executive of Ashridge Business School, UK. Prior to joining Ashridge, he was Dean, and previously director of MBA programs, of the Rotterdam School of Management (RSM) of Erasmus University in the Netherlands.

Peters serves on supervisory and advisory boards for a number of organizations in the health care and social care sectors. He also serves in various capacities for educational associations including AACSB, AMBA, EFMD and GMAC. He is owner and was managing director (89-93) of a company in the German publishing sector and has worked with both IBM and Volkswagen managing educational activities.

Peters writes and lectures on cognitive sciences, leadership and strategy for government, business and academic audiences. He holds degrees from York University, Toronto and University of Quebec in Chicoutimi; (Canada) and Erasmus University (Netherlands).

On a personal note, I am a great admirer of Kai because he has the courage to take on difficult issues and to speak to give his honest and open opinion about them. This blog posting is just one example among many.

See also:

AACSB Associate Deans Conference: Executive Education: Developing Non-Degree Education for the Future (Brent Smith)

Brent Smith mainStandard 14 of the proposed new criteria for AASCB Accreditation deals with the provision of Executive Education. Given the importance of this activity in many business schools today, it is useful to look at some of the best practices in the industry.

At the AACSB Associate Deans Conference, Brent Smith, Associate Dean, Executive Education and Associate Professor, Management and Psychology, Jesse H. Jones Graduate School of Business, Rice University, set out some of the issues at his own university.

According to Mr. Smith the market is increasingly crowded and it is therefore vital that business schools fully understand their competitive positioning as well as the role of executive education as vehicle to advance the overall strategy of the school. Read more…

Interview with Bertrand Guillotin of the Fuqua School of Management, Duke University

 Fuqua School of Business Duke UniversityIt was a great pleasure to welcome Bertrand Guillotin, International Programs Director at the Fuqua School of Management, Duke University to Grenoble EM in November. During his time at the school we were able to make a short video in which Bertrand talked about life at Duke. Having studied and worked in both France and the USA, he was also able to share his insights into and the differences between French and American styles of teaching and learning. Read more…

 

 

The Halo Effect Good to Great The Ascent of Money
Excellent book that should be read by all managers and business students. One of the most important business  books of the 1990s and has been in the best seller list ever since. Fantastic read for anyone thinking about their leadership style. An excellent history of finance. Easy to read and lots of interesting examples.

Mark Thomas

Grenoble EM

ESC Grenoble

GGSB

Strategy

Blog

Global Ed

International Affairs in Higher Education

Business School

7 Comments

Filed under Business Schools, Fees, Guest Authors, Higher Education, MBA, Strategy

7 responses to “On MBA programme pricing

  1. Pavani Aysola

    Mr. Peters..i am in full agreement with your views and i do not believe it is “naive” to hope for accessible education.Though people try to justify the exorbitant fees by pointing at the high remuneration the MBA’s command, I am not altogether sure (being an MBA myself) if the degree adds so much value to justify the salaries paid and the fee commanded.

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