Why Test Prep Companies Should NOT Attempt to Compete on Price

Price is right

One of the most important decisions you can make for any business is what to charge for your products and services. Typically, this judgement boils down to a strategic choice about the business itself: are you peddling a common commodity or offering a high-end product or service?

In the case of the latter, you have the ability to charge a premium to employ the best staff, and implement the most effective curriculum. With the former, you will spend your days trying to make ends meet in an unwinnable race to the bottom of local test prep pricing.

When it comes down to it, competing in your local market based upon the quality of your service will always lead to better outcomes than competing on price. In the world of ACT test prep, this difference is now more important than ever.

Quality comes at a cost

If you’ve taken the steps to ensure your test prep services are the best they can be, then you already know that high quality seldom allows for cutting corners. Everything from attracting and training great tutors to securing a comprehensive and custom-branded ACT curriculum requires an investment in excellence.

The competitors in the local market that can most easily afford to slash prices are those that aren’t tied to these types of costs. In most cases, to follow suit with comparable bargain-basement pricing models would be to sacrifice the quality of the service or ACT curriculum your company provides.

Set your tutoring prices based upon things you can control (like the quality of your service, your business’s overhead costs, and the added value you provide) will always be a better move than trying to simply undercut the competition.

Comparing apples and pomegranates

Often times when clients are comparing your prices to the competition, they don’t fully understand what they are equating. Giving in and cutting your prices to keep up with the competition is not the answer. It is up to you to differentiate your ACT test prep program from the alternatives! Doing so will allow you to charge prices that are reflective of your business's quality and the costs associated with providing said quality.

Make sure any conversation about price also includes references to the value of your test prep system, realistic growth expectations, and the totality of the service you are offering. Odds are, the cheaper competition is only able offer a drastically reduced price because of a drastically inferior product.

For more advice on navigating these types of conversations with prospective clients, download our 100% FREE eBook, A Tutor's Guide to Handling Price Objections.

Ebook Cover - A Tutor's Guide to Handling Price Objections
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You can’t get cheaper than free

The ACT Academy announcement has many test prep businesses scrambling to figure out if or how they need to adapt to remain competitive. Now that both the ACT and SAT are offering authentic, endorsed practice material for free, the prices commodity-style test prep can charge will likely drop.

This shouldn’t come as a surprise. When students and parents cannot differentiate between the content provided by a free, online test prep and a paid option, their choice is easy.

The good news for a boutique, service-focused program is that no amount of free digital content can compete with high quality test prep. Stay out of the commodified space and be sure to focus your business’s efforts on offering a complete ACT test prep experience rather than one that can be rattled easily by a new, free web tool.

How have you been able to resist the urge to compete on price in your local test prep market? Share your successes with our readers in the comments below! And don't forget to subscribe.

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Matt McCorkle