Price, Perceived Value, and Satisfaction in Higher Education Services: Theory and Empirical Test

Abstract

This research analyzes the existing relationship between price and perceived value on graduate and undergraduate services in Mexico. It also provides a formula to determine the level of satisfaction among students as a result of service characteristics. This empirical study took place in the northeast of Mexico. Its intention is to identify the price- perceived value relationship, to know the impact that a change on one variable causes in the other. A second purpose is to identify the weight of the different factors determining satisfaction among students. Due to the increase on the

number of universities and the price variety on their services, infrastructure, and perceived value from the target market, it is important to know the existing relationship between price - perceived value and satisfaction within higher educational services in the area. The empirical study was divided in two stages. The first stage consisted on creating four different scenarios to find out the existing relationship between price and perceived value for each scenario; and determine if the relationship changes when the price or the perceived value gets modified. In the second stage the independent variables causing the different levels of satisfaction among students were measured. First stage results revealed that when the relationship between price and perceived value is opposite the correlation between them is higher. In all four scenarios there are constructs showing a strong correlation between high price and high perceived value on educational services, infrastructure and academic recognition; hence it is highly recommended to increment the value offered by the institution and with the use of communication campaigns achieve the desire position on the target market ́s mind. In the second stage a regression equation to measure the impact of the predictor variables on satisfaction was obtained.