Undergraduate Students' Willingness to Pay for Online Courses

This paper uses student survey data from a regional university in the southeastern U.S. to gauge the impact of a variety of socio-demographic and personal preference variables to determine which factors are most significant on the demand side of the market, and specifically on the willingness to pay for online classes. While gender was not a significant factor in willingness to pay, students in the bachelor program were willing to pay more for online classes than the students in the associate program. We also found that willingness to pay for online classes increased with work hours, yet decreased with commuting time. Given the student responses on willingness to pay, we derived the demand curve and the marginal revenue curve for online classes to find that a revenue-maximizing price premium for an online course is approximately $150 per course, which is lower than the average amount ($226.3) that a student is willing to pay. We also find that a student expectation of a better grade is the most distinctive factor in the choice of an online course.