Make hay while the sun shines is a rural English idiom, which means 'when the time is best, make the most of it'. In business this is standard practise. The Apple i-Phone was launched on a tidal wave of advertising and, despite a high initial cost, sold millions of units internationally. Then, when interest began to fade and the market saturated Apple put the price down, added on new applications and sold to the second wave of consumers - those who, like me, don't need to be the first to have the newest gadgets - with considerable success.

Top MBA programs, possessing the world's finest business academic minds, may have sensed a chance in the middle of the decade to 'make hay'. The sun was shining brightly for MBAs, with graduates leaping into high salaries and generous bonuses in banking, finance and consulting. MBA programs could have noted this and hiked their tuition fees sky-high.

Return on investment (ROI) is the key here. An MBA candidate earning the equivalent of US$25,000 who gets a place at a top business school can expect to pay off their initial investment in a short amount of time, perhaps three years. A candidate earning considerably more and then attending a school where the average salary on graduation is lower will find a poorer return on investment. It could take more than five years to see the initial outlay returned.

So when ROI calculations showed that MBA graduates could pay their investment off quickly, only a couple of short years ago, why didn't more business schools start charging top dollar for a top MBA course?

Effects of the downturn
Conversely, the economic downturn could have made business schools think about dropping their fees, considering that fewer graduates over the last 12-18 months were earning the salaries they were before. The signals would have been wrong: a school whose business model includes dropping prices rather than diversifying or adding value to their courses probably isn't going to teach the best business models either. 

The figures show that, with a few exceptions, most of the top business schools in Europe increased their fee structure only a little. Almost all top European schools kept their fees within a fraction of inflation rates from 2007 until the present day in late 2009. In some cases, such as IMD in Switzerland, the fees have remained the same. See Table One for details of the fee amendments since 2007 at Europe's leading business schools, including expected cost of living expenses.

Table One: all figures in Euros

School2007 fees* (€)2009 fees* (%increase)2009 including cost of living**Course durationAvg graduate salary*
INSEAD (PARIS)48,80051,000 (4.3%)85-100,00010 months80,000
IE Bus.Sch (Madrid)45,00048,000 (6.7%)70-80,00013 months68,500
IESE (Madrid)61,900 67,900 (9.7%) 90,10,000 19 months 69,200
 London Bus. School*** 46,000 50,000 (8.7%) 95-110,000 18 months 85,500
 IMD (Switzerland) 41,500 41,500 (0%) 65-75,000 11 months 88,500
 RSM (Holland) 51,000 51,000 (0%) 70-80,000 12 months 78,600
 ESADE (Barcelona) 53,300 (18 months) 52,000 (flexible duration) 75-85,000 12-18 months 60,200
 Vlerick (Belgium) 15,000 24,500 (6.3%) 35-50,000 12 months 80,000

* Information provided by the business schools to the TopMBA Career Guide 2007 - 2009

** Cost of living includes rent, books, transport and basic living expenses, not entertainment budget. Information available on business schools' websites. 

*** At EUR - GBP exchange rate 1 October 2009

Peter Rafferty, of Vlerick Leuven Gent Business School in Belgium, expects this trend to continue. Although fees for 2010 have increased just over 10% from 2009 figures - €27,500 including books and all materials - they will increase in line with the inflation index for the next few years.

Meanwhile, many schools have looked at the long-term future and not gone for big price hikes. Business schools are businesses themselves and, like other industries, they are expected to turn a profit like any other. Hiking prices just when times were good could have lowered goodwill for a school at a time when competition for the top talent, as in the business world itself, is raging.

At IE Business School in Madrid, fees have remained constant for these reasons, with schools taking a responsible lead in looking to the long-term as well as their own bottom line. Associate Director of Financial Aid Joel McConnell says that the school has held tuition fees steady for 2010. As an organization we decided it would not be helpful to increase fees at a time when many top candidates have either had to rethink their career plan or have found themselves without gainful employment. Market conditions are important for tuition (fee) setting.

Structural review

For other schools the downturn has promoted a structural review. ESADE, in Barcelona, for example, used this as an opportunity for a major restructure of the program format. The innovative flexible MBA launched in September 2009, replacing the 12- or 18-month programs previously offered. Katie Carr, ESADE Marketing Director, explains that the two courses have merged into one product, where a student can choose whether to complete in 12, 15 or 18 months.

The new course has one price tag regardless of how long the student decides to make their MBA. Carr says, This price - €52,000 - is the difference between the previous cost of the one-year MBA and that of the previous 18 month MBA. So for most students this represents a reduction in price. We don't yet know how many are getting the 18 month MBA with a smaller investment than before, and how many wish to complete it earlier to minimize on opportunity cost.

ESADE have also, in line with other top business schools, added a €2,500 additional fee for program-related fees - course materials, reference books, legal assistance and the like.

Like any business, business schools need to keep ahead, to diversify and to add value to their programs in order to justify charging higher fees. Add-ons and other improvements to the programs, which do not appear in the course fees section are an investment that the observant MBA candidate must take into account when making their decision. This isn't the schools trying to make a fast buck out of hidden charges but a sensible diversification and good business practice. After all, these schools could have made hay while the sun shone in the mid 2000s, but they didn't.