Product or Service – Does viewpoint matter in VET

I had a quite interesting discussion with an L&D friend over the weekend about education in general and the question of whether or not education and in particular vocational education was a product or a service.  This got me thinking.  Now lets for the moment just all agree what education is a Good and that people should be able to access high quality education, what interested me more is what is it that consumers, that is students are buying when they buy a VET education and what is it that we think we are selling.  Now before any of you go off and say things about education not being for sale or not be a business, it is.  If you think for one minute it isn’t then why would universities advertise so heavily to attract the best students and why would there be such bun fights around funding for VET.  It is a business and that is not a good or a bad thing it is just a thing.

So now that I have got that little bit out of the way, here is the central question, What is it that students are buying when they buy an education?  I had someone a number of months ago now suggest to me that the reason that VFH needed to be paid on commencement rather than completion was that students were buying a product, namely all of the great material and content and knowledge that the provider had created and that if we thought about it was like buying a DVD or any other product.  You pay for it upfront, you don’t pay for it after you have listened to it or used it.  Now I think that this is a fundamentally flawed way of considering the interaction between students/funding bodies and providers as well as the kind of thinking that got us into this VFH mess in the first place.

Students and governments aren’t particularly interested in your content or how much time and money you spent on it.  They are not purchasing that, what students and funders are purchasing is an outcome.  The shininess of your content might influence some students in terms of their choice but in the long run what they are purchasing is an outcome, or more realistically they are purchasing a service which will give them the outcome that they desire.

So if we consider what we are selling as a service things become much clearer in terms of how we should think of  what we do and how it should be paid for, by whoever is doing the payer.  Take the example of a electrician; do you pay the electrician upfront?  Generally the answer would be no, you might pay a small percentage of the total fee up front where there were things that were required to be purchased by the electrician in order to do the job, but in general it is payment on completion.  We pay when we get the outcome that we want, we pay when the electrician has successfully installed our oven or whatever service he was delivering for us.

When we view the vocational education sector as providing a service rather than delivering a product, it must therefore alter the way in which we view how payments should be made in.  It produces the idea that there is simply no justification for commencement fees, or at very least no justification for full unit commencement fees, there may be a case as I have outline in other places a case to be made for partial upfront fees as long as those fees come with caveats around completions.

So here is just a little bit of an additional question to think about.  How did we get to the product viewpoint?  Some might suggest that it happened when we moved to a system that included non-public providers, but that would be wrong, simply because there have been non-public providers in the system for a long time and the service viewpoint was still there.  For me when it really shifted was not even at the start of VFH, but rather at the point where brokers became involved.  Why?  Well because brokers are paid on a sale basis which turns the process from one in which the provider is supplying a service to one in which the broker is selling a product.

Anyway that’s just my opinion.


About pauldrasmussen
Paul Rasmussen is one of Australia’s most widely read Vocational Education and Training Commentators. He provides deep, unbiased analysis and insights not only on topical issues, but also on the underlying structure and policy which supports the industry. His writing and analysis has been praised for its uncompromising and thought provoking style and its ability to focus on the issues of real importance to the sector. He has advised various government departments and ministers, training providers, public and private organisations, not for profits and small to medium enterprises on the VET sector and the issues and opportunities facing it. He is one of Australia’s most awarded learning professionals and a regular speaker at a range of conventions and forums. His extensive experience in vocational education, and learning and development coupled with formal qualifications in philosophy, ethics, business and education management allow Paul to provide a unique view of the road ahead and how to navigate it.

3 Responses to Product or Service – Does viewpoint matter in VET

  1. Timithy Rolls says:

    I agree that brokers have completed their role in selling to a prospective student. It would be crazy to think that they would be happy to wait several months before being paid by the RTO for the service they provided.

    For an RTO to pay them upfront, without the RTO themselves receiving any payment, would potentially cause cashflow problems, that could ultimately destroy a business.

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