When airlines want to know whether passengers will pay more for flexibility or choose a cheaper non-refundable fare, they don’t rely on surveys. They run experiments.
Presented with realistic choices, passengers reveal what they are actually willing to pay for, rather than what they say they value. Repeat that exercise thousands of times and a powerful picture emerges of genuine consumer preferences.
The approach, known as choice modelling, has been a staple of the airline industry for decades. Increasingly, Australia’s universities are beginning to recognise its value as they navigate a far more competitive international education landscape.
Moving beyond student surveys
Traditional market research asks prospective students what matters most when choosing a university. Rankings, graduate outcomes, campus life, teaching quality and location all feature prominently.
But when students are faced with multiple offers and only one enrolment decision, their choices are shaped by trade-offs that conventional surveys struggle to capture.
Would a Vietnamese student choose a lower-ranked university if offered a A$10,000 scholarship? Would a Chinese student pay higher tuition fees for a university with stronger brand recognition in their home market? How much is a guaranteed internship worth compared with studying in a more desirable city?
These are questions that stated preference surveys cannot reliably answer. Choice modelling is designed to do exactly that.
Simulating real-world decisions
Choice modelling, developed from microeconomics and consumer psychology, presents prospective students with a series of realistic enrolment scenarios. Each scenario varies factors such as tuition fees, scholarships, institutional rankings, campus location and employability outcomes. Participants must choose between competing options, with the combinations changing each time.
By analysing thousands of these decisions, researchers can quantify how students from different markets respond to price changes, determine the value attached to specific aspects of a university offering, and forecast how demand may shift if fees rise or scholarships change.
Importantly, the research focuses on prospective students rather than those already enrolled, providing insights into the drivers of enrolment decisions rather than reflections on the student experience.
Lessons from other industries
The methodology is well established across numerous sectors.
Airlines use choice modelling to optimise ticket pricing, determine viable routes and forecast demand under changing market conditions. Transport agencies use it to understand how commuters balance cost, travel time and comfort. Hotels apply it to pricing strategies, while consumer goods companies use it to identify optimal price points before launching new products.
In each case, organisations rely on observed decision-making rather than abstract opinions, allowing them to make more informed commercial decisions and reduce costly forecasting errors.
Universities, by comparison, have historically had less need for this level of analytical rigour during years of sustained international enrolment growth. However, with increasing competition, changing government policies and heightened cost pressures, understanding what truly influences student choice has become significantly more important.
From insight to strategy
Universities adopting choice modelling are uncovering insights that challenge long-held assumptions.
In one example, an Australian university found it could significantly reduce scholarship expenditure by moving away from broad-based discounts towards more targeted merit-based awards, without experiencing any measurable decline in student demand.
The example illustrates how evidence-based modelling can support strategic decisions around pricing, scholarships and recruitment, helping institutions better align their offerings with what prospective students genuinely value.
As international education becomes increasingly competitive, universities may find that the sophisticated demand forecasting techniques long used by airlines and other industries are becoming essential tools rather than optional extras.
The Edified white paper sets out the findings and implications for university pricing and recruitment strategy. It can be downloaded here.
Sharyn Martin is a Senior Partner at Edified – consultants dedicated exclusively to the business of education. Sharyn can be contacted via email.
