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You want to fill them and are willing to use discounting to do so. But you'd much rather discount 10% than 50% because you'll earn more/lose less with the customer you can get for 10% than the customer you need to entice with a 50% discount.
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<p>Exactly. They are way ahead of the game giving four $10,000 scholarships to well-to-do high-stat kids than one $40,000 scholarship to some dirt farmer's kid. The four high-stat kids not only improve the schools median SATs on the top end, but they knock off the school's four lowest SAT customers from the bottom end. Double the benefit. And, as an added bonus, enrolling a lot of those students sends a message back to the wealthy high schools that Acme U. is a real up and comer. A place where well-heeled kids go. On the map.</p>
<p>I look at it this way. Let's say the sticker price is $40,000 per year at the top, top schools. But, by any objective measure, Acme is really selling a $30,000 product relative to the market leaders. But, instead of advertising a $30,000 product, they advertise a $40,000 product and offer a $10,000 "discount" to only their really special customers (say a third of the student body) to get back down to the market price. The customer who gets the discount feels better about the transaction because they got the special exclusive discount and the school gets the price they would have gotten anyway. Car dealers have been doing it for years. </p>
<p>On top of that Acme is able to attract some kids who will pay above the real market price (writing a check for $40,000), happy to get Acme's prestige even though they have somewhat average stats.</p>