Why are 1 year programs so costly?

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Hello, I have been researching a lot of international and national 1 year programs in management.One thing I am not able to digest is the cost of program.When the same institute runs the same program for freshers for 2 years the cost is 4-5 time...
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Though I am not completely sure of the reasons why 1 yr MBA are more costly, calculations do show that they offer better returns in the short term (3 year period)

Examples for illustration: IIMA PGP (2 yr) + ISB PGP (1 yr)


IIMA PGP

Case 1: You are an engineering fresher who would have gotten an IT job.

Your expenditure will be...

Year 0: Graduate from college
Year 1: 1st year Rs 7 lakh IIMA fee + Rs 4 lakh potential salary of IT job
Year 2: 2nd year Rs 7 lakh IIMA fee + Rs 5 lakh potential salary of IT job
Year 3: Graduate with Rs 16 lakhs MBA salary (avg salary)

Total earning = - 7 - 4 - 7 - 5 + 16 = - 7 lakhs. Total loss of 8 lakhs.

Case 2: You have 2 years experience in IT

Your expenditure will be...

Year 0: Quit IT job after 2 years
Year 1: 1st year Rs 7 lakh IIMA fee + Rs 6 lakh potential salary of IT job
Year 2: 2nd year Rs 7 lakh IIMA fee + Rs 7 lakh potential salary of IT job
Year 3: Graduate with Rs 18 lakhs salary (avg laterals salary)

Total earning = - 7 - 6 - 7 - 7 + 18 = - 9 lakhs. Total loss of 9 lakhs.


ISB PGP

Year 0: Quit IT job after 2 years
Year 1: 1 year Rs 22 lakh ISB fee + Rs 6 lakh potential salary of IT job
Year 2: Graduate with Rs 16 lakhs salary (avg salary)
Year 3: 20% increment in salary = Rs 19 lakhs

Total earning = - 22 - 6 +16 + 19 = 7 lakhs. Total gain of 7 lakhs.


Hence at the end of 3 years

IIMA without work exp: Loss of Rs 7 lakhs
IIMA with 2 yrs work ex: Loss of 9 lakhs
ISB with 2 yrs work ex: Gain of Rs 7 lakhs


An interesting insight here is... even if the ISB graduate gets a salary of Rs 12 lakhs (which increments to 14.5 lakhs in second year of job), he still has a net gain of Rs 1.5 lakhs which is higher than IIMA PGP.


Factors not taken into account in calculations

1. CTC flab of salaries, personal expenses... though they will be equal for IIMA and ISB and IT jobs.
2. This is only short term. Nobody knows ISB degree's value in the long term as the school is new so the jury is out on that one.

Of course, this does not explain why 1 yr programs cost more. But it's interesting to see that despite the higher fees, the short term RoI is better for someone earning at the average salary mark.

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Average 15,17 whopping lakhs .. Apart from money minting any other reasons?

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Hello,
I have been researching a lot of international and national 1 year programs in management.One thing I am not able to digest is the cost of program.When the same institute runs the same program for freshers for 2 years the cost is 4-5 times less costly.I am not able to digest this more for Indian schools.
I don't want to name the institutes but would like to know if there is a valid reason for higher costs or its just that the schools know that prospective students are experienced working professionals(some even with international exp) and are ready to spend their hard earned money for a certificate.

If there are any experienced students who are done with 1 year program can shed some light as to why these are so costly it will be helpful? Like good infrastructure,better visiting professors,better hostels(than our 2 years school mates)?

Thanks,
Ryan

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