Often a business model is used solely as a plan for assessing the revenue that it is possible to generate within the market, whilst identifying the costs involved.
When it comes to universities entering the area of lifelong learning provision generating income – earning money – is certainly an important issue, but it is not the only reason for entering the business. Political demands and societal obligations often play a bigger role for a public university.
The mission of a university is not to earn money, but to provide society with research and education. At the same time, this should be done in a responsible way whilst getting value for money and avoiding unnecessary costs. Especially, when moving into the area of lifelong learning it is important, that the revenues and costs are in balance within a few years.
A Financial Analysis
In relation to financing the following questions should be answered as part of the overall business model for providing lifelong learning at a university:
How do we finance the development of lifelong learning courses/programmes – both manpower, material and infrastructure? From which sources do we receive our income (revenue streams)?
How are our costs distributed (cost structure)? What are the fixed costs – e.g. investment in the production of the course/programme - and what are the variable costs – e.g. expenses for delivery to each student?
How many students do we have to recruit in order to reach a break-even point for revenue and cost – and how many years will it take to reach this point?
A financial analysis should answer:
Differing Finance Models
In Europe, the conditions for financing lifelong learning courses/programmes are very different. In some countries, attending university education is free of charge or entails only a very small tuition fee (e.g. Sweden and Germany). This goes for full-time students as well as for students in further education – lifelong learning. The university receives government funding to cover its costs.
In other countries all the costs for developing and delivering lifelong learning courses and programmes have to be covered by the students signing up for the education (e.g. the UK). In between, we find a huge variety of models. Students pay fees, which in combination with grants from governments cover the costs of development and delivery (e.g. Denmark). But there is a considerable difference in operational freedom for the institution whether the grant is regulated per student signing up for the course or as a yearly paid sum.
Therefore the following issues should be taken into consideration:
From which sources does the university receive the funds necessary for providing lifelong learning?
To what extent is the revenue dependent upon student fees – e.g. due to government regulations? Will it be easier to reach a break-even point with more students supported by government grants and paying low fees than the other way around?
How many times and with how many students does the course/programme have to be offered before the development costs have been paid – assuming that the delivery costs are calculated per student?
Does the programme aim at an audience for whom the fee is irrelevant or of minor importance or even prestigious – e.g. programmes for executive levels in companies?
Is it possible to develop and deliver a course with a high and competitive content that fulfils the quality standards of the institution for a price that students/compa-nies are willing to pay?
Does the delivery format place considerable additional costs on the students - e.g. travelling and accommodation for face-to-face seminars, lab-work, exams or study materials?
The following questions should be asked:
The financing decision should be seen within the broader information context of market relations and options for production and delivery.
Critical to the the financial decision, are the key issues primarily oriented toward the sources from which money is available (revenue streams), and how the cost is distributed between fixed costs and variable costs (cost structure).
When all 3 dimensions of Market Relations, Production and Delivery and Finances are considered and assessed, the university should be in a position to determine whether it would be viable to provide lifelong learning or not.
THE FINANCING ASPECT OF A BUSINESS MODEL
Context and Inspiration
In an effort to provide context and inspiration to the users of this site, selected examples of university programmes exhibiting excellence or innovation or indeed delivery of strong performance within specific or diversified markets, can be found in examples of implementation, in the popups on the right side of this page.
The popups are based on information provided by the partners and furthermore elaborated upon in the context of business models, particularly with regard to the financing aspect.
They provide examples of how lifelong learning programmes have been financed.
From these popups you are also able to access a synthesis of the individual case studies, that are also accessible via Examples of Implementation.