3 Tips for Pricing Your Online Course
Pricing your online course isn’t an exact science. There’s so much advice about how to avoid the pitfalls of this aspect of your business. Your decision will come down to the value you place on what you’ve created. In the end, how you price your online course will make a huge difference to whether you will dominate your year, which is something we all want to do.
Choosing the right price for your online course is one of the long list of decisions you need to make, including:
- Your course topic.
- Content creation techniques.
- Content delivery platform.
Even so, pricing online content truly can be one of the most difficult areas to grapple with. Price too low and you won’t make a profit; price too high and you might scare off your potential customers. We all know there isn’t a bullet-proof formula to choosing a price for your online course, right? While that’s the truth, there are some tips that can help you to get the balance right.
Here are three tips to pricing your online course to up the odds of making a profit and delivering the best product.
1. Steer Clear of Race-to-the-Bottom Pricing
Pretty much everywhere you turn, there seems to be a new online course being offered, making entering the online course market as a newbie that much more intimidating. The temptation will be to offer your course at a low price to gain an advantage over the competition, but that can potentially do more harm than good.
Why is that? Let’s take a look at some low-pricing pitfalls.
It takes the same amount of work – You’ll have to put in nearly as much effort to sell a course priced at the lower end as a higher priced course. Getting and nurturing leads have to be done, no matter the price of your course. The sales funnel for a higher priced course may involve a few more steps; however, the extra effort will be worth it, especially as you think about the additional income you could make.
You may subconsciously take your foot off the gas – If you price your product at the lower end of the scale, it might be hard to motivate yourself to go full throttle, in terms of getting your course out there. Your marketing still has to be on point because a low price doesn’t automatically mean people will be rushing to buy your course.
Advertising swallows up your profit – Selling a low-price online course might make it hard for you to advertise on the scale you want (or need). Making a profit becomes hard because the numbers won’t add up to justify the spend on promotion and marketing. Take Facebook for example. Around 1.4 billion people use Facebook every day, making Facebook advertising an attractive option for online course creators. Given that the average cost per click for Facebook ads for the education industry is $1.06 — your costs of promoting your online course will soon rack up.
It’s easy to list reasons to price your first course at the lower end, for example:
- Free or low-cost versions of your course already exist.
- Unsure about how much your target audience will pay.
- Small email list.
While the reasons to justify a low price for your online course are probably valid, changing your focus from the reasons you can’t charge premium rates to reasons why you can will make a world of difference to pricing your online course.
The first mindset shift to avoid the race-to-the-bottom pricing is to be clear that your target audience is hungry for what you’re teaching and YOU are the right person to deliver what they want. Make it a point to resolve the fact your course will transform lives for the better, and people will be willing to pay for this opportunity.
2. Focus on Value
“All our knowledge has its origin in our perceptions.”
–Leonardo da Vinci
The old saying, “You get what you pay for” hasn’t lost its significance in today’s technology-driven world. An article in the Harvard Business Review makes the argument that the way customers perceive a price is just as important as the price itself. This means that customers need to attach a value to your online course and price is one way to do this.
You may have put blood, sweat and tears into your online course but if you price it cheaply, it is likely that your customers will form the perception that the information offered will be of little value. Your sales will be affected by how your customers perceive your brand and your course.
As well as providing the best content and positioning yourself as an expert in your topic, you could also do the following to boost the value of your online course:
Choose benefits over features - Answering the question, “What’s in it for me?” with your customer in mind is crucial to communicating the value of your online course. The vast majority of customers aren’t interested in the bells and whistles of your course. But they do want to know how it will solve a problem they have or make their lives better.
- Make it an investment – Take your audience on a journey of where they are to their destination after they have completed your course. Let them know that investing in your course is an investment in a better quality of life by saving them time, money etc.
- Build an exclusive community – Boost the value of your online course by creating a members’ only community for your customers. This community should encourage your customers to build relationships with each other. You can also give members hints and tips to build on what they’ve learned in the course. (Pro tip: Use a platform already in place by creating a Facebook group.)
- Provide coaching – You can provide extra support or reassurance by offering coaching on a one-on-one or group basis. This coaching will help you to deal with specific issues that your customers are facing. It will also keep them accountable, so they are more likely to complete your course and gain the most benefit.
- Create resources to download – Add value by allowing your lessons to be downloadable. This gives your customers an extra level of convenience, so they can learn at anytime and anyplace. Downloadable resources like checklists, roadmaps and templates to help your customers reach their goals are also a great and simple way to add value.
- Offer live calls – The promise of ongoing communication and engagement with your customers will go a long way in adding value to your online course. Including a weekly or monthly ‘consulting hour’ where you deal with specific issues is a solid way of reminding your students that you’re available to provide support. If you have a Facebook group, you can offer your live calls using this platform. Or you can use software like Google Hangouts, Skype orZoom.
Pricing your online course to create value involves over-delivering on expectations and including a support system to help your customers to succeed.
3. Offer payment plans
If you decide to price your online course at a premium, it could be a good idea to consider offering payment plans. Payment plans increase sales of your course, because it provides options for those who can’t make a financial commitment in one lump sum. If your online course is priced at $300 or higher, you might want to think about giving options to spread the payments.
The benefits of a payment plan include:
A higher sign-up rate - More customers can afford your course. Steve Chou at mywifequitherjob.com/ experienced a 27% increase in sales when he offered payment plans.
You can charge more – Raising the price of your course is another perk of offering a payment plan. Now that you believe in the inherent value of what you have to offer, being able to increase the top of your funnel by lowering the barrier of entry should inspire you to implement payment plans without fear of taking a hit on the overall value.
Payment Plans: Best Practices
Here are some questions to ask before offering a payment plan:
- Is your course long enough to be divided into at least three-month payment instalments?
- Is your course exceptional? If your course doesn’t deliver on what’s been promised, your customers will feel less bothered about making the remainder of their payments. It’s a case of sticking to your promise and increasing the chances that your customers will stick to theirs and continue to make payments.
- Do you know your numbers? – You should know the profit you will make by offering the payment plan, how many payment options will be offered? and the typical delinquency rate for your industry.
Expect the Unexpected: Failed Payments
Unfortunately, the downside to offering payment plans is that you will get failed credit card payments. This could be as a result of more than a hundred different reasons, including a cancellation by the customer or card expiry.
If you opt to offer payment plans to your customers, you must be prepared to take action immediately if a credit card payment fails. Sending automated emails will only go so far as nearly 85% of these automated requests are ignored.
Sending automated emails to customers with failed credit card payments is just the beginning. If you fail to get a handle on this part of your online business, you will end up with headaches and lost revenue. You need to have a full-time focus on retrieving the revenue from failed payments. As important as this aspect is, it could be difficult to allocate someone on your team to make sure that customers are hearing from you in a meaningful way when their card payments fail.
This is where Gravy comes in. We work with you to manage failed credit card payments for your subscription-based or membership business, to get your customers back on track. We’ve done away with collection agency tactics, which normally take a few months to kick-in. Instead, we contact your customer within one working day of their payment failing. Our full-time focus is on getting your payments for the course that you’ve worked so hard to build.
In fact our proven system has resulted in online marketing experts like Pat Flynn and Amy Porterfield who recovering more than 70% and 79% (respectively) of their recurring income from their online courses.
We will help you to go over the critical numbers that tell you your churn rate and what that actually means for your business.
Click the button below to book a conversation with us today, and let’s have a chat about how to protect your bottom line against failed payments.