Or “trying to explain several complex economic and sociological ideas and how they impact school districts technology decisions in less than 1000 words”.
So our brand new non-profit, Technology for Education Consortium has been at it for about two months. Our first effort, a study of what schools pay for iPads, has received a lot of attention. A quick search for will show you all the press coverage but here is a link to the first story that was published: http://hechingerreport.org/a-new-nonprofit-takes-aim-at-ed-tech-pricing-first-target-the-ipad/
If you read the article, you will notice the Apple responded to the reporter with iPad prices from 2014. Hey Apple, it’s 2016. Trying hard not to make some joke about Apple needing a new watch. Oops I just did it.
Anyway based on the press, lots of folks want to work with us. We are very excited for all the possibilities.
However, we have also heard the occasional, “so what?” Some people have asked why price transparency matters. They say, “school districts need to get better at selecting and using technology.” They say that talking about price may be a distraction from the real obstacles and goals of bringing technology into the classroom.
I say au contraire mon frere. Here’s why.
Let’s start with A for Apple and Asymmetry.
About a month ago, TEC finished up it’s first edtech buying decision study. We focused on iPads because we thought it would be easy to understand the pricing data we found. The iPads you can buy in the Apple store are the same iPads that schools buy. Apple doesn’t allow resellers to sell to school districts, so Apple sells direct to all public schools. Apple doesn’t make custom software or do custom configuration. Even Apple’s extended warranty coverage called AppleCare is offered to schools in exactly the same way you or I would buy it. Compared to chromebooks with dozens of makers and resellers, or compared to software with different license bundles and customization, we thought iPads would be as easy as pie.
So off we went excavating the iPad data. The results came back from 40 districts across the country. Very big, big, medium, little, city, suburban and rural districts were all represented. And as the prices came in we sort of freaked out. The prices were all over the map. There was no clear reason why some districts were paying more than retail while others pay $150 less. Some big districts paid more per iPad than some little districts even though those big districts bought thousands of more iPads.
So here is the number one reason why price matters. As we communicated with more and more districts, it became clear that everyone suspected they were getting ripped off. The lack of pricing transparency from Apple had already made them suspicious.
Now when we look at the edtech market as a whole, we see a lot of pricing transparency problems. We see a lot of backroom style deals. Some districts say to me, “Hey we are getting a great deal on those windows laptops.” I say, “How do you know?” That’s when the conversations get awkward. Other districts say, “I know I’m getting a bad price, but it’s the best we can do.”
All this confusion and wheelin’ and dealin’ makes the whole thing seem a little sinister and makes buyers very sheepish. Buyers don’t trust sellers because the sellers know the facts and buyers don’t. The seller knows what their product is really worth. The buyer has to guess. In ECON 101, this is called information asymmetry. There’s a Nobel Prize winning paper about information asymmetry called A Market for Lemons by economist George Akerlof.
Here is a one-sentence summary of Mr. Akerlof’s brilliance. Information asymmetry makes buyers very upset and eventually they will just stop buying. That’s it. If we look around, we see a lot of upset districts dragging their feet into the 21st century. If we ever want school districts to become better at choosing and using technology, the information asymmetry problem has to be resolved and price transparency is the first step.
B is for best. Districts want the best product at the best price.
It is generally agreed upon that tutoring is a very effective way for students to learn. That one-to-one attention and focus has amazing effects. If school districts could afford to have a tutor for every student, I don’t think any of us would be worried about public education. It would be pretty close to perfect. It certainly would be vastly different from the system we have now.
Many of us may not like it but public school districts do not have unlimited money to spend per pupil. The median annual spend is around $10,000 per student. Districts are forced to make tough choices. Cost is going to be the number one factor in those choices because money is the most scarce resource. Without money school districts can’t do anything. Money is the source of all the talent and tools district leaders have to improve schools.
If a district has to decide to buy software and hardware for each student this year, it also means they have to stop buying other stuff. How can they plan that if they don’t know what the technology will cost? Even if a district had thousand of studies proving that a certain technology product is effective, they can’t choose that tech if the cost if unknown. It may be the best tech, but is it the best price?
We want schools to adopt technology, but we don’t want to talk about cost? Considering the hard choices district leaders have to make, imagine how those leaders hear this message.
C is for Clever and Chromebooks.
If you are still not convinced that price matters, please take a quick look at Clever and Chromebooks. These are very different (but related) products that have a common strategy. They both offer radically different pricing models from competing products, and they are both going gangbusters.
Clever is a data integration product connecting district systems and app providers. Clever charges the app providers not the districts. The service is free to districts. I hear people say the cost will be passed on to districts by the app providers, but so will the cost of electricity or the beer in the app providers’ fridge. These are all costs of doing business and companies have well understood structures for absorbing those costs.
The results speak for themselves. Clever is everywhere. They claim 50,000 schools on their website. I know for sure that most of the largest school districts in the U.S are using Clever. Is Clever the most effective data integration product out there? For a district leader this is a stupid question. From a cost effectiveness perspective, Clever is the best.
Do I have to explain anything about Chromebooks? They have become ubiquitous. Why? Because the device is less than half the price of anything equivalent and the base software, Google Apps for Education or GAFE, is free. A basic Apple laptop is over $1000 and any useful software is extra. A basic windows laptop is at least $500 including the MS Office license. A Chromebook can be under $200 and, at the risk of repeating myself, GAFE is free.
Going back to the per pupil spending example above, it becomes very clear just how important price is. If a district was going to spend 10% of it’s per student budget on technology, Chromebooks allow them to drop that spend to 5%. This is the kind of math that every district leader will be forced to embrace. It’s not the quality or efficacy of the product that get’s the conversation going, it’s the price.
So the bottom line is the bottom line.
If we want districts to adopt technology, we need to talk about price. We need to provide district leaders with pricing information so they can plan their budgets. We need to support pricing transparency so district leaders can feel confident adopting change. Price is not the end of conversation with schools about using technology. It is the necessary beginning.