Why Some Schools Pay More Than Others When Buying From Apple
When administrators in Ohio’s Mentor Public Schools were buying MacBooks during the 2015-16 school year, the local Best Buy was offering a lower price than Apple, even after the company’s standard discount for school districts. Superintendent Matt Miller pushed for a better deal, but Apple said it would not budge from its price list. The company prohibits most third parties from selling new devices to school districts, so Miller couldn’t place a bulk order with Best Buy as a district official.
Frustrated at the thought of spending money he could use elsewhere in his budget, Miller devised an extreme workaround. He told Apple he would buy gift cards for each of his 2,700 high school students, bus them to Best Buy and let them purchase their own MacBooks. He threatened to invite local news outlets and create a media circus.
Apple backed down. While the company listed those MacBooks at $829 per device, it charged Mentor Public Schools $759 each, according to school officials. The 8 percent discount saved the district nearly $200,000.
Miller, now superintendent of the Lakota Local School District in Ohio, can be a bulldog at the negotiating table, but thinks he shouldn’t have to be. “I’m just tired of fighting that fight,” he said.
Miller is one of many vocal critics of the wide disparities in education technology pricing, which he and others contend is becoming an increasingly pressing problem as more devices and software enter U.S. classrooms. Almost 14 million devices were shipped to schools last year, up from 3 million in 2010, according to the market research firm Futuresource Consulting. Technology has become a vital component of teaching and learning, and it is considered a classroom requirement to adequately prepare students for life after graduation. The market research firm IDC estimates that $4.9 billion was spent on devices by K-12 schools in 2015, and the Software and Information Industry Association estimates that nearly $8.4 billion was spent on software.
Yet the same device or program can cost more from one state to another and even from district to district. Responsibility to negotiate with vendors falls on school districts that often do not have the time or resources to drive a hard bargain. Many also don’t have information about discounts that other school districts have received, and, when purchasing from a company like Apple, which has a reputation for being rigid with pricing, some district officials don’t even know they can ask for larger discounts.
The Benefits of Transparency
Although purchasing information is technically public, it is not widely disseminated and is rarely available online. School officials’ knowledge is often limited to the information they can get by calling colleagues in other districts — if they even have the time to do that. Some educators and advocates have begun to argue that more shared information and pricing transparency would help schools save money. The Technology for Education Consortium, a nonprofit formed to facilitate exactly that, estimates that school districts could collectively save at least $3 billion if they all got the best deals on hardware and software purchases. That’s nearly 23 percent of the total amount spent.
And there’s evidence that increased transparency works.
Efforts by the national nonprofit EducationSuperHighway to publicize how much districts pay for broadband have allowed many school systems to negotiate bandwidth deals to get greater capacity for a fraction of the cost. With school budgets stretched thin, even small deals on ed tech can make an impact.
“Every dollar saved for this necessary utility can and should be repurposed for the teaching practices that can improve education,” said Daniel Owens, a partner at The Learning Accelerator, a nonprofit focused on expanding blended learning in U.S. schools. “This is public money that should be used in the best possible way.”
Administrators at some schools buy their own tech; elsewhere, district officials handle the task. The negotiating process depends on the products that schools want. When buying specific software, administrators may have to purchase directly from one company. But they might be able to advocate for deals if they have a large order. Or, if they know a company has given discounts in the past, school officials can request a repeat bargain.
For some hardware, districts can comparison shop. To buy Chromebooks, the most-purchased device on the ed tech market, school districts can check prices from Google, Acer, Samsung, HP and others.
The Chromebook market is considered a buyer’s market; if school district purchasers don’t like a price from one vendor, they can try another. That’s all part of Google’s strategy to get into as many classrooms as possible. The company has held down the overall cost of Chromebooks, too, and schools have jumped at the opportunity to buy the devices at low prices.
Everything Apple produces, on the other hand, is proprietary. Many district officials say they are willing to pay more for what they call higher-quality devices that have greater functionality, last longer and have resale value even years later. But, with very limited exceptions, school districts must purchase Apple products directly from the company — the issue Ohio’s Miller ran up against. That policy, the rationale for which Apple officials would not discuss, ensures that Apple will not have to compete with others to make bulk sales to schools.
While purchasing scenarios differ from product to product, and exact comparisons can be difficult to make because of variations in things such as warranties and device memories, price disparities in product costs remain a constant.
Discounts Vary Widely
A Hechinger Report analysis of Apple purchasing documents from 75 school districts around the country found big disparities in prices on devices, warranties and professional development support. Five districts received double-digit percentage discounts, while dozens of others got no money off at all, even when making large purchases.
Many of the discounts uncovered by the Hechinger analysis came on iPad Airs in the year before Apple discontinued them. Some discounts came on accessories, AppleCare and teacher training. But even among those discounts, there was wide variation.
Apple officials declined to comment on discount practices and instead directed the Hechinger Report to the company’s published price lists.
In June 2017, Henry County School District in Georgia got $21,196 knocked off an Apple purchase of more than $3.2 million, a savings of just 0.66 percent. By comparison, in February 2016, Lawrence School District in Kansas got a discount of nearly 24 percent that dropped a $4.1 million bill to $3.15 million. Lawrence officials said that the person in charge of that purchase had left the district, and they were unable to explain the discount; many other districts said they had received discounts without knowing precisely why.
Northern Illinois’ Glencoe School District 35 got a 4 percent discount last winter when it spent almost $425,000 on hundreds of Apple products, including iPad Air 2s, MacBook Airs and iMacs. The district saved about $17,700 on its order, including $181 off each 10-pack of iPad Airs, which normally cost $4,530.
Superintendent Catherine Wang said that the 1,200-student K-8 district always asks Apple sales reps whether there is an education discount or a bulk discount available. But Apple’s sole-source policy limits the district’s bargaining power.
“We have zero flexibility with saying, ‘Oh gosh, we can get this from another vendor for $100 less, what can you do for me?’ ” Wang said. “There’s much less wiggle room with Apple.”
Others school districts don’t even ask.
Jeff Mao, who led the Maine Learning Technology Initiative for a decade, finds people working in schools tend to have a “defeatist attitude” when negotiating with vendors, often failing to ask for discounts in the first place. But, Mao said, schools can make particularly compelling cases for discounts. They are spending public dollars, for children, and they’re at the mercy of extremely tight budgets, after all. Even when he worked in a small district in Maine with just 3,000 students, Mao negotiated prices with Apple, securing a discount on his orders.
“No matter how big or small you are,” Mao said, “you have to push the idea that you are an educational buyer. You deserve a break, to some degree.”
Mao found that negotiating on the extras that came with the devices gave him the most room at the bargaining table as he brokered three successive statewide contracts.
To win the 2013 contract from the Maine Learning Technology Initiative, Apple had to meet a long list of needs relating to software as well as hardware. Mao said the company’s original bid didn’t include an app that would help students learn computational thinking, something he had asked for from the start. Mao argued that an additional app was necessary to meet the requirements of his request and pushed Apple to include it without increasing its per-device price. The company eventually agreed.
In another example from that same year, Mao and others from his team were on the phone with Apple representatives. Mao muted the phone so he could discuss an offer but then couldn’t unmute. He said his team’s silence prompted the Apple reps, who didn’t know about the phone problem, to lower their offer. Because of the fluke technological glitch, the final costs were even lower than Mao said he would have accepted.
Keith Madsen, director of technology at East Allen County Schools in Indiana, said he bargains on everything. Apple knocked 14 percent off a big order he placed in 2016, saving the district $425,000.
When it comes to software licenses, Madsen said he has seen prices drop 20 percent over the course of a couple weeks of negotiating.
“We’re always working on trying to get that license down as much as we can because obviously education has a very limited budget,” Madsen said.
Many districts seem to miss out on the best deals for ed tech because they simply don’t know how little they could be paying. The Technology for Education Consortium (TEC) is attempting to change that.
According to the nonprofit, about 150 school districts have joined the group and are sharing their ed tech purchasing data.
The consortium’s review of iPad Air purchases in 2015 found that some districts paid as much as $115 more per device than other districts for the same model and warranty package. On Chromebook purchases, some districts paid up to $90 more for the same product and services.
And while hardware can be the starting point for educational technology, the bulk of district spending is on software. TEC found that, collectively, 95 of its member school districts bought 360 different apps, and prices on the most-purchased apps varied by 20 percent. In one extreme example, prices ranged from $4.97 to $7.54 per student for licenses for Accelerated Reader, a product of Renaissance Learning. A Renaissance executive said pricing decisions are complex, and influenced by factors such as timing and volume, but that the company supports the TEC’s efforts to increase transparency.
Brent Maas, director of marketing and outreach for the Institute for Public Procurement, a nonprofit association for procurement officials, is among those who consider more transparency to be the solution. With enough transparency, districts can establish benchmarks for prices and identify seasonal trends that impact costs. But this doesn’t always mean they’ll refuse to buy products for anything more than rock-bottom prices, he said, just as consumers might decide they’re comfortable paying $100 more for a TV in January than they would have paid on Black Friday.
“It’s about an agency identifying what’s their tolerance,” he said. “It’s hard to do that now because it’s difficult to achieve broad data.
“On the whole, I would say most folks are running somewhat blind. They’re doing the best based on what they know.”
Without a centralized place to look up how much peer or neighboring districts pay for ed tech, school district purchasers are necessarily limited.
TrueCar and Kelley BlueBook enable potential buyers to see very clearly how much a car is worth with a simple online search. Healthcare Bluebook does the same thing for medical procedures. And EducationSuperHighway brought pricing transparency to school district broadband purchasing.
“Creating that transparency was really the starting point for us,” said Evan Marwell, CEO and founder of the nonprofit. Being able to show that some districts were paying the same monthly price as neighboring districts but getting just a fraction of the bandwidth uncovered a hidden problem.
Now, with the organization’s free Compare & Connect K-12 tool, school districts can see exactly how much other school districts pay for broadband and compare it with their own contracts.
In addition to the Technology for Education Consortium’s work, districts in some regions are banding together to share their own purchasing information and capitalize on deals that their peers have successfully negotiated.
But districts need to be careful when looking at others’ purchasing information, said Karen Cator, president and CEO of Digital Promise, a nonprofit that supports education innovation through technology. The same product might come with different amounts of technical support or professional development help, for instance.
“You can oversimplify the situation by just simply looking at the price of the product from one place to the next because there’s so much else involved,” said Cator, who worked at Apple for 12 years. “Many times companies have a good reason for variations in pricing and sometimes they don’t.”
Because of that, though, Cator thinks the answer is to seek detailed and complete transparency about what exactly other districts bought and how much they paid. “You can see very quickly if you’re comparing apples and oranges,” she said.
Mao questions whether transparency will actually lower costs for school districts. He said there’s a chance that more companies will refuse to negotiate with schools, leaving them to pay higher prices overall. But Marwell, from EducationSuperHighway, said he heard the same concerns when he started advocating for price transparency in bandwidth purchases, and the worst-case scenarios haven’t materialized. Vendors have not colluded to charge more, he said.
For Miller, the Ohio superintendent, price disparities in ed tech purchasing are an equity issue. He hopes lawmakers will consider passing regulations that require companies to offer districts good deals. The federal E-rate program already does this for telecommunications companies that provide goods and services to schools, and the Federal Communications Commission has issued fines and sued companies found to be overcharging districts.
The bottom line, for Miller, is that something has to change.
“Technology is a great equalizer for kids across the country,” Miller said, “and, I think, to maximize that, school districts need to be on an even playing field.”
This story was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education.