While "word of mouth" is the best advertisement, it should not be an excuse to sit back and wait for students to flow into your classrooms. Recruitment, aggressive recruitment, should always be the "modus operandi." Actually when enrollment is strong, marketing be even stronger. It helps to protect during the lean times. Recruitment, however, even aggressive recruitment won't assure fiscal strength unless tuition, spending, and salaries, essentially the entire budget is in balance.
A simple illustration almost always works to clarify a principle fundamental to institutional budgeting. Let's assume the total budget is $1,500,000 at a school of 100 students. To operate in the black, tuition must be set at $15,000. At this point the moaning, and outburst, "Be real," becomes so loud that I can't be heard. This actually happened as I spoke at a conference in Sturbridge, Massachusetts. "We couldn't charge that much, no one would attend." Well, what then are the options?
The "options" are tragic! You could pay the faculty the least possible and balance the budget on their backs. You could charge tuition which is below the actual cost. But who sells a product for less than it costs to produce? Three days ago I spoke with a school administrator who said he had to make up a 20% loss on every student because of low tuition. I was director of development at a school which required 35% to be recovered. Every year we operated in the "red." Then, of course you could charge extra for ports participation, music lessons, field trips, graduation, and …… All of these things are simply increasing tuition. You don't have to be a "brain surgeon" to figure that out. Consider that most Christian schools offer multiple child discounts and the differential grows more serious. This practice usually ends up providing discounts to families not needing them and the single parent child families unable to receive assistance. No discounts, no extra charges, just a "cost basis."
"Cost basis" is the way to go. Establish all financials using sound principles and with the advice of wise counsel, that of a very astute finance committee and you will be amazed at the result. Considering about 20% of the student body will require scholarship assistance, charging 10% above cost will cover the cost. Or if you prefer establish a scholarship fund or fully funded endowments to cover this expense.
There is no getting around the fact that quality is perceived through pricing. Higher priced cars are perceived to be better. Higher priced watches are considered more reliable. Higher priced clothing apparently wears longer. While this isn't always true the perception is. Can you remember hearing "perception is reality?" All things considered, you cannot operate a school at a loss for very long. You can operate a pricey institution successfully if the financials are in balance.
Success will be achieved if all institutional components are operating because of careful planning from the beginning or when bold action is taken when institutional problems are discovered. The school board must be the strongest you can put together. The administrators, directors, and officers must be the finest you can hire. The faculty must be of the highest quality available and paid competitively. The students must hold potential and be held to a golden standard. All of these must come together in a facility of which everyone is proud and others wish they could attend.
This task is a daunting task, hard work not for the weak or faint of heart. St. Paul in his letter to the Philippian Christians said, "…all that is true, all that is noble, all that is just and pure, all that is lovable and gracious, whatever is excellent and admirable – fill all your thoughts with these things." (Philippians 4:8 NEB)