Pricing your online course is never an easy task. Even for seasoned course creators it can be challenging. And if this is your first time pricing your online course, I am sure you have gone through a rollercoaster of ideas, thoughts and emotions. Most people leave it as an after thought and only think about it towards the end of the creation process.
But what if we told you that the price tag you put on your online course is as important as the content, the technology and the advertising strategy? Well it is, a price can either make or break your educational digital product.
You see, if your course it’s too expensive and people don’t see the perceived value they will probably pass on your offer. And if it‘s too cheap, people might think it‘s not a quality product, too generic and therefore not worth their money, and most importantly their time - Remember that money & time are currently the biggest currencies
The Actual numbers - What you really came for
Let‘s talk about the actual numbers because that‘s what you came for. According to a recent research by Podia that looked at approximately 130k courses the average price online course price is $137 and that the average price range is between $0 (free) and $304. That‘s a pretty wide range, and you might be thinking that charging $137 for a course might be too much, and you might be right.
Before you start punching number in a calculator and measuring your ROI for your next course there are some questions you have to ask yourself
Questions to ask yourself before putting a price tag on your eLearning program
Question #1: Why am I creating this course?
This is the purpose actual purpose of the course. Not all courses are created equally and for the same reasons. Some people build simple courses just to promote their brand and grow their audience - we will call this the Lead Magnet Online Course. While others create more comprehensive, specific and higher quality courses to share their knowledge and expertise with the world - We will call this the Real Online Course.
Question #2: Am I creating a generic course with limited content? Or is it a highly specialized and exclusive course?
Answer number two will determine how much it will cost YOU to create the course. Generic and simple courses shouldn’t cost much, and people usually don’t pay much for them, but they’re easy to make and they sell faster. On the other hand, people are willing to pay more for specialized and higher quality courses, but only if they know you and your work. Determine what type of course you’re creating and move on to the next step.
Question #3: Do I want to use a one time fee model? Or do I want a paid subscription model?
Here’s where it starts to get tricky if you’re a first time course creator. How will you know if people are willing to pay once or join you community for a subscription. As a rule of thumb, if you’re new go with the 1 time fee model. If you’ve been selling digital products for a while you probably already have a community and a subscriptions model might be a good options for you
The Pricing Strategy
Your answers to these 3 questions will begin to determine your whole price strategy. But the ground work doesn’t stop there, now you need to understand some vital aspects of pricing products and services. According to consultant Alan Weiss these are:
- The perceived value of your offering: Let’s start by clarifying that this is not a static number, it will change over time and depending on the customer. They way you can affect and “control” this value will depend on your marketing strategy, your actual digital product and your interactions with prospects and future clients.
- The Margin of Profit: This is the spread between what it costs you to create the online course (including your time) and what you charge for it. This will depend on you and how much you want to profit for your course, there is no specific percentage you should use. But as a general rule I recommend to always maximize your profits (at least at the beginning) and adjust as you go and as the market fluctuates.
- The Volume of sales: is the amount of people that will (potentially) buy your online course. Combines with the the Perceived Value of your online course, the volume of sales will determine if you can actually make a profit or stay in the red. If you want this “potential” number to be more certain, work on testing your audience’s interest and pre-selling as much before creating anything.
- The Price Point: We find that you can’t reach the Price Point, without really understanding the first 3 aspects mentioned above. Only after gaining this clarity will you be able to understand 1) What type of course should you create, how much should you invest in creating that course and how many sales you can expect to make with it. The price point is the result of this exercise, and it will allow you to maximize the value of your product and your profit.
The Method
Now that you’ve done all the pre-work that is required to understand the price of your digital product, you can start literary punching numbers on your calculator - or if you’re savvy enough off the top of your head.
Let‘s start with how much a course can cost and then jump into the method. According to rough estimations a course can cost you anything between $140 and $10.770 - and that‘s a conservative estimation, I‘ve witness course costs that can sum up to $100K, but that‘s another article.
METHOD 1: Cost Based Pricing: This is one of the simplest methods you can use when calculating the price. It’s basically based on your course creating course and the percentage of your desired profit margin. The result of these two numbers will give you the final selling price of your online course.
METHOD 2: Demand Based pricing: This method requires you to do the homework before you even start creating anything. It will depend on the number of prospective buyers, the interests shown by your audience or the number of pre-sales you secure. The more interest and volume of sales you make, the more you can boost the price of your product. You can use this method for the initial price or if you’re relaunching your online course
METHOD 3. Competition based pricing: Some people consider this method cheating, but I think it’s actually a smart move. That is if you find a similar digital product to yours that offers the same or comparable results. With this method you basically copy your competitors prices, or use them as reference point to price your own online course.
Conclusion
As promised at the beginning of this article, pricing your online course requires a process of research, learning and experimentation that (ideally) should be completed before you start creating or devising your eLearning proposal. Finding the optimal price for your online course involves understanding the different dimensions of your offering.
Always start with the purpose - is this course part of a marketing strategy or is your goal to make a real monetary gain? The purpose of your proposal will determine the amount of time, money and effort you should invest in the first place.
Once this first stage is clear, you can focus on the pricing strategy. Now you need to understand the fundamentals of your particular offering and combine them to find your ideal. This is a vital part of the process as it will determine the optimal price for your eLearning proposition, which is based on the expected number of sales, the profit margin and the perceived value of your digital educational product.
Finally, you will finally be ready to choose your preferred method for pricing your digital product. This step will depend mainly on your product, your particular situation and your marketing, outreach and sales strategy. Regardless of the method you use based on profit margin, demand for your product or your competitors' pricing, it all depends entirely on you, your preferences and your particular needs.
We can only recommend that you take the time to understand the dimensions and characteristics of your offer, before you put anything in place or even start thinking about the final optimal price.
Final note:
Remember that (usually) online courses are digital products that require an initial investment of time, effort and money. After that initial investment the amount of courses you sell may be zero or infinite. Take into account all the effort you are going to put into the production of your course to determine the final price. If this is your first time online course, or you are considering it, and you want to take a shortcut, you can always use the average price ($137) or even the mid-range ($0 - $304) and play it safe.
