In this episode of CampusIDNews Chats, Rosty Chen, ID Administrator at Michigan State University, explains how his campus card office undertook its first comprehensive rate study to ensure it was charging appropriately for student, staff, and departmental ID cards.

Launching their first-ever rate study

The effort began with a simple realization. “We’ve never done a rate study before,” Chen says. Since the office was established in 2009, pricing had remained largely unchanged, with little documentation explaining how rates were originally set. A pending leadership transition added urgency. As Chen’s manager prepared to retire, the team saw an opportunity to revisit long-standing assumptions and “start exploring why we’re charging what we’re charging.”

Rising costs following the pandemic also played a role. With materials and supplies increasing year over year, the office needed to understand how those changes affected its budget. Because the ID office is subsidized by the university and not fully self-generating, it was especially important to clarify which services were covered and which required cost recovery.

Digging into the true cost of cards

Chen and his team partnered closely with IT Finance, meeting weekly for roughly two months to analyze data and calculate direct and indirect costs.

You want to tell executive leadership, hey, we want to charge this. With a rate study, you say, no, we need to charge this.

A key challenge was determining how much staff time was devoted specifically to card production, since the office also manages NetID credentials and provides a series of other services. They broke expenses down by card type – prox cards, non-prox cards, and badges – factoring in labor, card stock, printer supplies, and overhead.

The findings were eye-opening.

Departments were being charged just $3 for non-technology badges that actually cost about $11 to produce. Non-prox cards, also assumed to be inexpensive, cost $14 each to produce but only generated a $5 replacement fee.

The $20 student replacement card fee proved sufficient, until factoring in a $10 credit issued when old cards are returned.

Building a data-driven case for change

The study resulted in a detailed financial document and executive summary for leadership. Chen believes the process offers value to any institution operating on legacy pricing. “If you start asking the whys and getting into the details… it’s important to do this,” he says.

Armed with data, the team can now approach leadership with confidence, presenting clear math and justification for any recommended pricing changes.

To listen to the full interview, click the image at the top of this page.

TRANSCRIPT:

We originally decided to start because we've never done a rate study before.

The ID Office was started in 2009 and since then the rates were set, but we don't know where those prices came from and why we're charging what we're charging.

It coincided with our manager retiring and we wanted to tie some loose knots before she's leaving. That gave us the momentum to start exploring why we're charging what we're charging.

Of course with pandemic and the rising costs of everything we were noticing that the prices of everything keeps going up and up year over year. We wanted to re-evaluate how does that fit into our budget.

In terms of generating revenue, we are subsidized by the university so we're not a self-generating office.

Our assistant director was on board in her support for my manager and me starting this rate study. Also, because of my manager's retirement we had that great momentum to get done so we got our champions pretty fast.

We relied heavily on our IT finance team. They did most of the calculations for us, we're giving them the data, refining the data with them.

All said and done, it took us about two months of active weekly meetings to get everything in place and ready to go.

Obviously different offices operate differently.

At MSU, we do also IT like NetID credentials so we wanted to calculate how much of our full-time staff time actually goes to card production.

That was a big challenge for us figuring that piece out and of course figuring out the cost of the card stock, printer supplies, indirect and direct costs.

Because of our subsidy from the university, we don't charge for our first card for our faculty, staff or students.

We wanted to determine how many cards we actually charge for to begin with and then from there evaluate, what goes into production costs specifically for the cards that we charge.

We decided to kind of break it down by different types of cards that we provide.

We have prox cards, non-prox cards, and badges.

The biggest surprise for us was what we were charging for the badges.

We charged three dollars to departments for us to produce a badge for them. After we did the rate study, our calculations determined that actually it costs about eleven dollars to produce a badge.

So when we consider labor costs, all the printer supplies, indirect costs, everything tied into that, we're like, wait a minute, we're undercharging significantly there.

We were happy to find out that what we're charging the students for the replacement, which is twenty dollars, was actually sufficient within our production costs.

Where we fall short is we credit ten dollars back to our students when they turn in the old card. That process we want to reevaluate and potentially stop. Because the production cost is twenty dollars, if they turn it in and we give them ten dollars back, then we're undercharging for producing that replacement card.

Additionally, for non-prox cards, we were also surprised. We don't charge for the first non-prox card, but we charge five-dollar replacement. Well, first, second or third, it actually costs fourteen dollars to produce a non-prox card.

So this whole time we're thinking, oh, it's like plastic with less technology, therefore it's probably cheap. All of a sudden, that was our biggest surprises that we found out.

When you find your champions, it's definitely easier.

So we've had our champions with IT Finance and having that collaboration was very crucial to us to getting it done.

I think anybody can benefit from doing a rate study, especially if you're in a place like us, where we were charging how we always charge.

If you start asking the whys and getting into the details of the history and not finding the right documentation to support the charges, it's important to do this. What you'll end up with is a comprehensive financial document based on data.

It will serve as evidence for the points you want to make if you want to change your pricing.

If you want to go to executive leadership, you want to say, hey, we want to charge this. With a rate study, you can come in and say, no, we need to charge this. Here's our math for it and here's why we think we should charge that.

So our timeline I wanted to touch, it took us from about we started in December through January.

We had the rate study completed, and we had the executive summary ready for our leadership early February.