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An economist goes to Bett: 5 useful concepts from the world of economics

So, you've been to Bett, and now you're considering which products to buy. You've answered the strategic questions, and now you can't wait to open up your metaphorical chequebook. But first, consider these concepts given to us by economists.

What are the barriers to entry? In economics, this refers to how easy it is for a company to enter a particular market, but we can adapt it to mean: how easy will it be for staff and pupils to use? Is everyone going to need a day's training before they can do anything? Will you have to bring in extra technical support staff, or obtain parental permission?

If the answer to such questions is 'yes', then that may affect your implementation strategy. For example, maybe you just roll out the product to one year group at a time, instead of the whole school all at once.

What are the proportions of fixed costs and variable costs? The fixed cost is what you pay regardless of the number of users. The variable cost is the cost per user. If the product pricing consists of a huge initial outlay and a very low subscription rate, that might prove to be financially less onerous in the long term than a low fixed cost and a high subscription rate. 

Bear in mind diminishing marginal utility or returns. The more you have of something, the less benefit you derive from each extra one. For example, if you have no tablets in school, buying one set can make a massive impact. But by the time every single pupil has a tablet, buying an additional one won't have the same effect. It may still raise the overall benefits of having tablets in school, but the benefit of that last one won't be as high as the benefit enjoyed by acquiring the previous one. 

What this translates to after Bett is this: will the school get more benefit from buying X rather than Y, where X is something you currently have very few of, and Y is something you already have plenty of? On the face of it, the answer is 'yes', but there are other factors to consider, such as possible training costs associated with buying X.

What are the marginal costs and marginal benefits? By the 'margin' economists mean one extra unit, or user, or unit of time, or whatever happens to be the relevant consideration. The question is not, "is this beneficial?", but "are the benefits of using one more of this higher than the extra costs of doing so?" The ideal situation is where the result is neutral, because at that point if you add any more (users, units, etc) then the cost will outweigh the benefits; but if you cut down on usage (or users etc) then you could still benefit from increasing it, ie you have some unused potential. 

This is much easier to understand than you might think! Let's put it in simple money terms. If I ask a salesperson to work extra time, and he costs me £15 per hour or pro rata, I need to know that he will bring me in £15 in extra sales for every extra hour he works. If he brings in more than that, I can afford to ask him to work longer. If he brings in less than that, I need to cut down his time.

 Marginal costs and marginal benefits. The optimum quantity is where they are equal to each other.

Marginal costs and marginal benefits. The optimum quantity is where they are equal to each other.

 

What is the opportunity cost of this product? This is the cost of the product in terms of the next best thing you could have had instead. If buying this product means that there is less time to use another one, or less time for lesson preparation (because the new product takes up so much time), is the cost worth it?


You may find my book useful: Education Conferences: Teachers' Guide to Getting the Most out of Education Conferences. Amongst other things it looks at what to do after conferences such as Bett. That link takes you to your country's Amazon Kindle store.