Why are MBA programs so expensive?

During my recent presentations to MBA hopefuls looking to apply to the UK B schools, one applicant asked me why the MBA programs were so expensive and whether there was a 'cost plus' reason for it. I was stumped - I had always assumed that the MBA programs were expensive because the applicants were willing to pay higher fees for this elite course. The question got me thinking - I went back to find out if business schools published their annual financial performance for public consumption and whether the financials provided any indication of why MBA programs charged such high course fees. Imagine my suprise when I could not find any financial data for any business school to assess if the higher fees for the programs are dictated by higher costs. I can only assume that MBA programs are expensive because they employ high caliber faculty (leading to higher costs), are required to provide significant non academic support to the students / alumni (careers / life long learning etc) resulting in higher program costs and not simply because the market is willing to pay a premium.

Think about this from a recruiter perspective - my dispstick research with some of the UK employers indicate that they are not happy with the quality of 'future leaders' these programs are producing - enough outside research is available to show that the recruiters feel MBAs lack the soft skills required to succeed in the business (team empathy / conflict resolution / ability to work under ambiguity etc).

Perhaps the answer is a standardized predictive test for MBA students that predicts on the job success of freshly minted MBAs for a period of 5 years after acquiring the degree. Recruiters could then ask the students to take these standardized tests to assess their future performance on the job. Schools could ask the students to take these tests before & after the program to judge the amount of 'value add' provided by the MBA -the quantum of 'value add' could be a good barometer to decide the amount of fee premium a school could charge for its program.

Any takers?