Financial - Issue Briefs - IB99-1 April 20, 1999
Peer and Market Comparisons of Sticker Price
The fees of competitor institutions are valuable benchmarks upon which to compare what one institution charges relative to other institutions providing a similar service. This Issue Brief discusses two types of comparator groups: peer institutions and market competitors. It is important to note that the fees being compared are sticker prices, or the published amounts charged by institutions. Sticker price can be and often is very different than the amount actually paid by students and their families.
The Association of American Universities (AAU) is the best peer group for the undergraduate and graduate programs at the Columbia and Rolla campuses. Because the Rolla campus is primarily an engineering school though, only those AAU institutions with engineering programs were selected for its peer group. The institutions of the Urban 13 were selected as the peer comparator group for undergraduate and graduate programs at UMKC and UMSL. These urban campuses face different opportunities and challenges than do other institutions due to their metropolitan settings. AAU public institutions were selected as the comparator groups for all first professional programs except optometry. Because of the low number of optometry schools nationwide, all public schools offering a Doctor of Optometry degree were included in the peer group for optometry.
Market competitors for each campus were chosen by proximity, based on the opinion that institutions located in a common area compete for the same students. As the largest campus of the University of Missouri System, UM-Columbia competes for students from across the state of Missouri. Therefore, its group of market competitors would include other four-year institutions in the state. The students who attend UMKC and UMSL are primarily from the counties of their surrounding areas. Therefore, the market competitors for these two campuses would include institutions located in these neighboring counties. Because of the lack of engineering programs at Missouri institutions, UM-Rolla has no market competitors other than perhaps UM-Columbia and thus no market comparison was made for UMR. Market comparator groups, unlike the above-mentioned peer groups, contain some 2-year as well as private institutions. Because a market comparison focuses on those institutions that are in direct competition for the same students, it is important to include in these groups any institutions which are realistic alternatives.
- In general, the undergraduate sticker prices for the UM campuses were in the top half of their respective comparator groups. The Kansas City and St. Louis campuses were in the top quarter of their peer group. Click the Table 1 (PDF 5 KB) icon to the right for details of the undergraduate level comparison.
- Graduate level sticker prices for the campuses of the University of Missouri are generally right around the median of their respective peer groups. However, non-resident graduate fees at UMKC and UMSL are in the upper quartile of their peer group. Further details of graduate level comparisons are shown in Table 2 (PDF 5 KB), and can be viewed by clicking the appropriate icon to the right.
- Most of the sticker prices for the first professional programs at UM rank in the top third of their respective peer groups. Exceptions to this statement include resident law at UMC and UMKC, which rank near the middle of their peer group; optometry at UMSL, which has the highest sticker price of any optometry program at any public institution in the country; and non-resident veterinary medicine at UMC, which ranks in the lower third of its peer group. First professional level comparisons are made in further detail in Table 3 (PDF 7 KB).
The inclusion of 2-year and private institutions in market comparisons requires a different approach than the above peer comparisons. Because there is a wide range of sticker prices between 2-year, 4-year, private, and public institutions, one's ranking within the group is not very relevant. A better illustration is the difference between the sticker prices of UM and the market comparators at two points in time to show how the differences have increased or narrowed over time. Differences are viewed in real-money terms, rather than in percentages because of the varying base sticker prices of institutions. An example of how percentages could be deceiving is the comparison of Truman State University and UM-Columbia. From 1989 to 1997, the resident undergraduate sticker prices of Truman State and UM-Columbia increased 134% and 136%, respectively, a seemingly similar increase. However, the base sticker price of Truman State was $1,398 in 1989 while at UMC it was $1,816. A 136% increase of $1,816 is much larger than a 134% increase of $1,398.
- As Table 4 (PDF 5 KB), Table 5 (PDF 5 KB), and Table 6 (PDF 5 KB) show constant dollar differences in sticker price between UM and each market comparator in 1989 and again in 1997 are more representative of changes in the market. Continuing with the above example, the difference in sticker prices of Truman State and UMC in 1989 was $418. Adjusted to 1997 dollars, this difference grows to $548. In 1997, the difference between the two institutions' sticker prices was $1,006, almost twice what it was in 1989.