At this year’s International Higher Education Forum (IHEF), much of the discussion focused on the pressures facing international student recruitment: slowing demand in key markets, rising competition from established and emerging destinations, and a more volatile and politicised policy environment in the UK.
But focussing too heavily on external pressures risks hiding solutions that remain within institutions’ control. The more immediate challenge lies closer to home: how universities understand cost, price their offer and define value.
The volume illusion
For many institutions, the default position has been to push for more volume – more students to meet higher income targets. That instinct increasingly rests on a simple assumption that more students automatically translate into more value.
But that assumption is now breaking down. The cost of recruiting international students has risen significantly in recent years: agent commission, marketing spend and in-market operations are all increasing, eroding the margin that additional student volume is supposed to deliver.
In some cases, universities are now paying a third or more of total tuition fee income just in commission, before accounting for other recruitment costs, and before the costs of teaching and supporting those students.
The result is predictable: net revenue per student is under pressure.
In some cases, once costs are fully accounted for, institutions are left with less per international student than they receive from domestic students, a level university leaders already argue is insufficient.
So we have reached a point where more volume does not necessarily mean more value. In fact in some cases, institutions are scaling activity that is only marginally profitable – or worse.
The problem isn’t recruiters – it’s the system
It is important to say that this is not a failure of recruitment teams. If anything, the opposite is true. Many teams are operating under a set of deeply conflicting signals:
- volume targets that continue to rise;
- pressure to discount through scholarships to remain competitive;
- competition on agent commission to secure pipeline;
- and expectations from senior leadership around margin, quality, diversification and ‘responsible recruitment’.
These objectives are not inherently incompatible, but they are rarely aligned in practice. The result is a familiar pattern: a race to the bottom on in-year discounts; a race to the top on commission; and no clear framework for managing the trade-offs between them.
The result is a familiar pattern: a race to the bottom on in-year discounts; a race to the top on commission; and no clear framework for managing the trade-offs between them
The cost of acquisition problem
At the heart of this issue is a more fundamental weakness: a lack of clarity about cost. Across the institutions I have worked with in recent years, three patterns are common:
- no single, integrated view of cost of acquisition;
- limited attribution of costs by market or recruitment channel;
- pricing decisions made without a clear understanding of the underlying cost base.
Even where data exists, it is often fragmented across functions:
- marketing spend that is difficult to link to specific outcomes;
- uncoordinated scholarship budgets spread across central and academic units;
- staffing deployed on fixed regional plans;
- commission structures locked into contracts and only visible after enrolment
In short, costs are rarely integrated, coordinated or actively managed. And this has a direct consequence: if you do not understand your cost of acquisition, you do not have a strategy but rather a series of activities.
The illusion of pricing complexity
If cost is poorly understood, it is unsurprising that pricing is underdeveloped.
Despite the apparent complexity of international portfolios, most universities operate with a relatively small number of fee points across hundreds of programs. Yet pricing is still typically set through an annual committee routine:
- benchmarking against last year’s competitors;
- applying an inflationary uplift;
- and rolling that forward across the portfolio.
This approach assumes: stable demand, stable competition and consistent perceptions of value. None of which now hold.
As a result, pricing is often:
- weakly linked to demand;
- disconnected from cost of acquisition;
- and insufficiently aligned to institutional strategy.
In other words, we behave as pricing complex but in practice use it as blunt instrument.
The levy as a forcing function
The introduction of a levy on international students in England adds a new dimension to this discussion but it does not fundamentally change it. Instead, it makes the issues harder to ignore.
By attaching an explicit additional cost to each international student, the levy forces institutions to think more carefully about net revenue after costs. And once institutions start thinking in those terms, the need to align pricing, cost of acquisition and recruitment strategy becomes much more immediate.
From volume to value
So where does this leave us? The challenges facing international recruitment are real. But responding to them through ever-increasing volume is unlikely to provide a sustainable solution.
Instead, institutions need to make a more fundamental shift: from volume-driven recruitment to value-driven strategy. This means:
- treating cost of acquisition as a core management metric, not a by-product;
- using pricing deliberately to achieve strategic priorities, not as an annual benchmarking exercise;
- making explicit trade-offs between volume, margin, diversity and quality;
- aligning financial, academic and recruitment objectives around a shared definition of value.
Without that shift, institutions risk continuing to chase volume in ways that do not deliver value or sustainability.
Universities cannot control demand, policy or competition, but they can control how they price, manage cost and define value.
