Other Assignment Example | Topics and Well Written Essays - 1250 words

Other - Assignment Example This implies the university wants to obtain as much finances as it can (total revenue) from the fewer students who are expected to enroll for the services. By doing so, the university would have settled all the expenses it incurred to provide the services in the first place. As Beattie and LaFrance (2006) suggested, by choosing to increase the tuition fees, the university is likely to be engaging in price skimming in order to obtain maximum revenue. This is a pricing policy in which an organization sets a fairly high price for a good or service at its inception then reduces it over time (Bailey, Olson, & Wonnacott, 1980). It is a transient strategy of price discrimination quicker offsetting of potential losses. The strategy would allow Nobody University to reclaim its lost expenditure faster before competition from other similar institutions sets in and forces the market price downward for tuition services. Feess and Schumacher (2013) noted that price skimming may be used interchangeably with scaling down the demand curve. The institution’s main objective of implementing the strategy is to capitalize on the consumer surplus ahead of time so as to reap major benefits of the monopoly or the innovators’ poor price sensitivity. As such, Nobody University is likely to be a new institution that seeks to obtain the highest return on investment through its higher price strategy at its inception before normalizing the fee for a higher demand for learning. As Bailey, Olson and Wonnacott (1980) argued, meeting the demand of the first group of students will likely trigger the university to reduce the fee to entice another segment that is more concerned about fairer pricing. As Feess and Schumacher (2013) suggested, the university pricing strategy is theoretical in the sense that it is almost unlikely for the approach to turn the entire surplus of students into clients, despite its major potential impact on market