Price sensitivity to international school fees

When I think that I will spend £500,000 on school fees in a lifetime, it gave me the idea of finding out how much parents are really willing to spend on international schooling.

As parents, we want the best for our children, and investing in their future is as important as investing in our own retirement.  But clearly the limits to which we will invest in schooling will be determined by affordability, and also the perceived value that international schools deliver, sometimes referred to as “value for the price paid.”

Parents are pragmatic and will pay according to various trade-offs they make on schooling, and whether some of the benefits of international schooling can be obtained via other means, e.g. outside of school, or to pay for some of the facilities on an as-needed basis.

BVA BDRC Asia analysed the price sensitivity to school fees via our annual Brand Equity and Market Insights study for international schools, and to qualify the rationale behind how parents evaluate school fees.

In Singapore, with a high concentration of international schools serving different segments, there is a large disparity between primary and secondary schooling. 35% of parents state they are willing to pay at least S$35,000 a year for an ‘ideal’ primary school, but this is much higher at 58% for secondary years, with 20% willing to pay the most premium rates of S$45,000+ for secondary schooling.

Secondary years are the most crucial for academic results, but they are also a period when children can make the most of the sports and arts facilities at the school.
More generally, parents acknowledge that ‘I pay for teachers’ becomes more important as kids get older - the high price gives the ‘comfort factor’ to the parent that their children are attending the best school.

However, financial pressures on parents (that have increased during the pandemic) mean that some have no option but to trade down. Furthermore, the closure of schools and the limited access to facilities during the two year pandemic has eroded the perception of value for money, e.g. in not being able to access all the sports and arts facilities and more dependency on digital learning. Some schools are now specialising in digital learning as a low-cost option for international schooling.

We asked parents what would be the least they would be willing to pay for schools below which they would “doubt the quality of the school”. If push comes to shove, 59% of parents would be willing to trade down to S$20k or less a year for primary schooling and 50% for secondary schooling at these fees.

Based on our research, some parents state that low fees do not necessarily mean poor quality.  However, they would evaluate a low-priced school more carefully, e.g. to look for where compromises have been made, interview the teachers and heads more thoroughly, and generally undertake more research on the school by seeking references from other parents.  Part of the trade-off that parents can make are to compromise on campus facilities, have fewer ECAs, or to have these on a pay-for-use basis.

Those rejecting budget schools feel that this could be indicative of lower teacher quality, or low pay meaning teachers might switch out of the school in the future when continuity of teaching is so important to parents.

Our research demonstrates that the budgets for international schooling in Singapore vary considerably as shown by the wide distribution of our affordability data. The market has responded with more international schools catering for these different budgets, but also schools becoming far more innovative to demonstrate value and points of differentiation in an increasingly competitive market.

To find out more, please contact Piers.Lee@bdrc-asia.com.