bp shinners wrote: imchuckbass58 wrote: Bildungsroman wrote:
imchuckbass58 wrote:Past that, anything like buying PTs, LSDAS, etc. are almost pure profit.
If you cover all of your costs using registration fees, then any additional fees that you make (i.e., from selling PTs) goes directly to your bottom line.
That's a big 'if', as you haven't factored in the cost of renting rooms, hiring proctors, having a system for signing people up, the actual cost of printing the exams, scoring the exams, etc...
While they make good money, the development cost isn't the end of their costs associated with each exam.
Yes, but there is no way this even approaches the fee. According to the above numbers, approximately $30 of each $140 fee goes to developing the test. That leaves $110. Let's ballpark everything else:
-Printing: Less than $5
-Scoring: Multiple choice scored by scantron, so negligible ($1-$2). For the writing sample, say you're paying someone $30/hour (generous) and they take 10 minutes to score a writing sample. That's $5. Let's be generous and call it $10 total for both scantron and hand-scoring, since maybe you have to have someone feeding/monitoring the scantron.
-Proctors and rooms: Let's say there are two proctors and 40 people in a room. Let's say the proctors have to work 8 hours (including check in, adminstration, and cleanup). Let's say they make $30/hour (again, generous). So personnel costs are $480. How much can it cost to rent a room for 40 people in a school on the weekend? I'd find it hard to believe it costs more than $500 or so since the space is basically unutilized otherwise. So $800 for proctors and rooms, spread over 40 people, is $25 per person.
All in that's another $40. So we're up to $70. There's still another $70 leftover (i.e., 2.8 million dollars from each administration) to cover things like computer systems, general overhead (accounting, legal, rent at the LSAC facility, etc).
I'm sure I'm missing stuff here. The point is that if you take a look at the magnitude of the numbers, there's no way the all-in costs of administration approach the fee. It's not LSAC, but organizations like the college board are massively profitable on an operational level ($55 million in 2007, and paying the CEO a $1 million salary). See here: --LinkRemoved--
The college board runs a 9.5% profit margin, and the SAT only costs $49. Granted the LSAT is slightly more complicated to come up with and score, and there's less volume to spread fixed costs, but at almost three times the fee, they must be making a killing.