An MBA is just like any other product or service. You pay more for the top brands. But is price a true indication of quality? Is a £25,500 MBA from Cranfield School of Management three times better than an £8,420 MBA from the University of Leicester? Is London Business School's £43,490 MBA twice as good as Bath's £20,000 course? Many factors determine price, including the type of institution offering the MBA, the local economy, the make-up of the faculty and the mode of delivery. But with such variety in fees, prospective students need to be sure that their MBA is good value for money and a sound investment.
'The "top" business schools spend a lot of money on internationally renowned faculty members and that is reflected in the cost of the course,' says Jeanette Purcell, chief executive of the Association of MBAs (AMBA). 'You pay more to sit at the feet of management gurus. Some schools are able to charge higher fees because of their prestige, profile and reputation. But that doesn't necessarily mean that the schools with cheaper fees are offering courses of a lesser quality.'
Purcell advises prospective MBA students to consider only accredited schools. There are currently 117 business schools in the UK offering MBAs, 38 of which are 'kite-marked' with accredited status. This gives students an invaluable way of separating out the good apples from the bad. 'It narrows down your choice but it also gives you a guarantee of quality and return on investment. Providing you have chosen an accredited school, you can be sure your MBA will retain its value,' he says.
You might also wish to consult the rankings. The Financial Times, for instance, ranks schools according to value for money (see box, below. This is based on a calculation comparing the total costs of attending the MBA (fees, accommodation, lost earnings) with alumni earnings three years after graduating.
Unfortunately, a good MBA degree - one that provides a meaningful academic experience and is respected by employers - is rarely cheap. However, there are value-for-money business schools out there. Many of the institutions in Scotland and the north of England offer excellent courses but charge less than their southern counterparts.
Take Lancaster Business School, for example. It receives less publicity and has a lower status than the London Business Schools of this world, but Malcolm Kirkup, director of Lancaster's full-time MBA programme, claims that it is attracting an increasing number of students who appreciate its practical approach and reasonable fees. 'Price is often taken by the consumer as an indicator of quality,' he says. 'But we would argue that you can get a fantastic product from Lancaster at a much lower price.
'Our MBA course costs £17,000, which includes your core textbooks for the first two terms and a free laptop. We recognise that we're not based in the most convenient location and that our brand is not as well known internationally as, say, Warwick or Cranfield, so we have to keep our fees competitive.'
Tricia Anderton, a former global contracts manager for ICI, paid £10,000 for her MBA from Manchester Metropolitan University in 2003 and describes it as 'excellent value for money'. Now a project director within the decontamination department at Cheshire and Merseyside strategic health authority, Anderton says the MBA gave her the confidence she needed to leap from the private sector into the NHS.
However, she believes that those seeking highly paid jobs in blue-chip companies may benefit from shelling out more. 'The kudos gained from graduating from a top business school may just tip the balance in your favour in an interview.'
As a rule, the risk of getting an inferior qualification increases when you drop to the lower price ranges. 'I would be worried about someone paying £2,000-£3,000 for an MBA, expecting it to be a golden ticket into a job at McKinsey,' says John Glen, director of Cranfield's full-time MBA. 'An MBA loses its value when it can't deliver you to the place you want to be.'
John Purkiss, co-author of How To Be Headhunted and one of the founders of executive search firm Purkiss & Company, agrees: 'If you want to work in consultancy or financial services, the big-name business schools will carry more weight with employers. However, if you want to set up your own business, where you did your MBA will be less relevant. Bank managers and investors will be more concerned with whether you can figure out a sensible strategy and write a business plan.'
As discerning students increasingly demand better value for money, there will inevitably be changes in the way MBAs are priced. With the market reaching saturation point, business schools will have to be more creative to survive. The smartest schools have been revising programmes and rebranding products to find a niche market. Says AMBA's Purcell: 'Business schools will need to find ways of differentiating themselves from their competitors.
That won't mean all prices will be driven down, but it will mean more segmentation and choice.'
Prospective students should remember that an MBA is an investment, with the payback coming in the shape of an increased salary or brighter career prospects. However, although it's important to research the costs carefully and to make sure you're not paying over the odds for your qualification, the ultimate worth of an MBA cannot be defined by price alone.
'The value of an MBA is in what you learn during the course, the people you meet, the experiences you have and the expansion of your mind during the process,' comments 39-year-old Graham Bryce, who completed his two-year MBA at IMD in 2001 and is now the senior vice-president at Amsterdam's SBS Radio Group. 'Just because a school offers an MBA, it doesn't mean it has the same value as those offered by everyone else on the market.
The right course and school is everything.'
THE BEST MBA FOR YOUR BUCKS
1. Coppead, Rio de Janeiro, Brazil
2. Lancaster University Management School, UK
3. Trinity College Dublin, Ireland
4. McGill University, Montreal, Canada
5. IMD, Lausanne, Switzerland
6. University of Bradford/Universiteit Nimbas,
7. Birmingham Business School, UK
8. Schulich School of Business, York University, Toronto, Canada
9. Insead, France/Singapore
10. University of Florida, Gainesville, US
Source: Financial Times MBA rankings 2006.