Let’s begin with a common scenario. You’ve spent countless hours developing an impressive online course. It’s engaging; it’s comprehensive; it’s bound to enlighten everyone about the subject matter. But now, you’ve hit an obstacle – ‘How much do I charge for it?’ Price it too low, and you risk undervaluing your work. Price it too high and potentially scare off the customers. To say the least, online course pricing is a tightrope, and finding the right balance is critical.
Understanding your online course’s value proposition is a handy starting point in determining the course price. Your value proposition clarifies why a potential student should choose your course over a competitor’s, and consequently how much they might be willing to pay for this perceived advantage.
Speaking from our experience at Regpack, millions of course creators worldwide face this predicament. As a trusted online registration and payment management system provider, we work with a wide variety of organizations running online courses, and we have first-hand insights into the challenges they face. We’ve seen course prices ranging from paltry sums to premium prices and everything in between.
Throughout this blog post, we aim to share that knowledge and experience with you, helping to understand the complexities of setting the right price for your course.
Understanding Your Costs and Potential Profit Margin
source: Regpack
The first practical step in your pricing journey is to grasp a clear understanding of your cost and potential profit margin. This process is referred to as cost-based pricing.
Primarily, you’ll want to consider all the expenses associated with the creation of your course. This cost will likely encompass the time you spent developing the course material, any software or equipment you may have purchased, and the cost of hosting your course on an online course platform.
Of course, not every cost is explicit. Implicit costs such as the opportunity cost of time spent and the ‘lost’ potential income from alternative projects also must be considered. Accounting for these factors provides a truer sense of the course’s cost.
When it comes to the business of education, marketing is also a considerable part of the equation. You may have developed a top-notch course, but without putting it in front of your target audience through effective marketing efforts, it’s unlikely to gain traction. These marketing costs, which could consist of ads on social media, boosting SEO, affiliates, or even sponsored content, are a crucial part of your total cost.
Another factor often overlooked by course creators is the provision of financial aid. Offering scholarships or discounts can be a way to attract an audience that can’t afford to pay the full price. Remember that discounts also eat into your profits and need to be factored into your pricing strategy.
Content creation, another cornerstone of online education, also warrants financial consideration. High-quality videos, engaging worksheets, interactive quizzes, and other educational tools are necessary investments to ensure a holistic and engaging learning experience.
Once you have an understanding of all these expenses, it is vital to add a margin for profit to determine a preliminary course price. Creating a compelling price point requires a detailed understanding of your costs and the foresight to anticipate profit after meeting these expenses.
In comparison to a lower price strategy that could increase student volumes but risk potential revenue loss, strategizing for a higher price skews the model towards quality over quantity – striking this equilibrium between student volumes and anticipated revenues is critical in your pricing journey.
Remember – the price you set for your online course doesn’t just dictate your earnings; it also affects the perceived quality and value of your course. Pricing too low might have potential students questioning the quality of your course, while pricing too high may discourage students who might have benefitted significantly from your content.
Every course creator needs to realize that while profit is a fundamental aspect of any business, in education, the balance between making a profit and providing a meaningful educational experience is the real sweet spot one should be aiming for. Pricing strategies can have a significant impact on your course attendance and profitability.
Researching Your Competitors and Understanding the Market
Armed with a good knowledge of your costs and potential profit margin, the next step is to peek out from your cocoon and examine the landscape of your competition. Understanding how other businesses and individuals with similar course offerings have priced their online courses can give you a fair sense of the market’s general rule of pricing.
It’s important to keep tabs on your competition, not just to copy or undercut their pricing, but to match the perceived value against the actual value delivered.
To begin, make a shortlist of online course providers who offer similar course content. With the help of various online course platforms, you can research these courses actively. Check out how they package their offerings, what’s included, the levels of interaction, the required commitment, and more importantly, the course pricing. This information paints a vivid picture of the competition and market you’re entering.
Differentiating courses with a higher price versus those with a lower price will help identify the pricing patterns most equitable with your offerings. Recognize if the same course is being offered at vastly different price points – what is the higher-priced course doing differently to justify its price tag, and is the low-priced course severely undervaluing its potential?
Additionally, social platforms like Facebook group discussions and LinkedIn forums specific to your course subject can present valuable data about what potential students are willing to pay.
Understanding your competition’s pricing strategy and how the market perceives this pricing is the initiation to your journey of finding the sweet spot to price your online course. This research gives you the base level of where your pricing should start and helps you justify why you might price it differently.
As course creators, you must understand that it’s a very delicate balance between being competitive with a higher price point while still offering value to your potential students and successfully justifying the premium to your potential clients. When done carefully and thoughtfully, this audit of your competition will be your primary guide to creating a pricing strategy that not only ensures profit but also resonates with your target audience.
Determining Your Value and Setting a Premium Price
source: Regpack
Having a clearer understanding of your costs and studying the competition sets the foundation for the next, crucial step – deciding your course’s value and setting a premium price if applicable. It’s about differentiating from a cost-based pricing strategy and leaning on the value-based pricing concept.
One of the key questions you should ask yourself upfront is this: what separates my course from the rest? What extra value am I offering that justifies a premium price point?
This could be the superior quality of your course content, offering real-time interaction through live Q&A sessions, creating a dedicated membership site for your students, unique case studies, or other course experience enhancements.
Let’s face it – a substantial part of an online course’s attractiveness lies in its content and the learning experience it provides. If you manage to offer a premium learning experience with valuable content, it certainly helps warrant a higher price point. It simultaneously allows more freedom with your pricing strategy, setting a higher price conveys the notion of quality, refinement, and exclusiveness.
However, the onus of convincing your potential students and potential clients about the value ingrained in the higher price point for your course lies with you. You might offer course content that is highly researched, well-structured, and surpasses what your competitors have to offer, but how well you communicate this difference to your potential customers can define your course’s perceived value and its pricing acceptance.
Moreover, it’s necessary to be mindful of potential online tuition increases that tend to be associated with higher-priced courses. Justifying a higher price not only involves communicating the value of your content but also calling attention to the auxiliary services like assistance, support, additional materials, etc., if they are included.
Here’s where your marketing efforts on social media, email campaigns, and other promotional activities come into play. They have a crucial role in disseminating your course’s value proposition and enhancing perceived value.
However, keep in mind engaging in premium pricing requires a fine balance to avoid alienating a segment of your learners who are not willing or able to afford the premium price. Offering varied options like a scaled-down ‘Basic’ version and a fully loaded ‘premium’ version or easy monthly payments could be a useful strategy to reach a broader audience.
Ultimately, the decision to opt for premium pricing comes down to your unique course offering, your target audience, and how effectively you can convey your course’s exceptional value.
Testing, Adjusting, and Optimizing Your Price
You’ve done the research, crunched the numbers, and even decided on the value you think your course offers. As much as we’d like this to be the end game, the reality of pricing is that it’s often an ongoing cycle of testing, adjusting, and optimizing until you hit the ‘sweet spot’. What is this sweet spot, you wonder? It’s the price point at which your course sales and your revenue are maximized.
Identifying the sweet spot isn’t as elusive as it might seem. Start by testing different prices. Maybe you begin with a low introductory price for early adopters or offer ‘presale’ prices. Gauge the response and note the conversion rate.
Simultaneously, actively seek feedback from your potential customers. Find out what they feel about your course’s price point. Are they seeing the value, or do they think it’s overpriced? Surveys and polls can be quite handy in accumulating this vital information.
Your conversion rate, or the ratio of visitors to your course site to the final course enrollees, is an honest indicator of your pricing strategy’s success. Besides, it also signals if your marketing and course promotion strategies are working or need tweaking.
This testing phase will bring to light several enlightening market insights. Perhaps your course is doing well at a higher price point than you anticipated, indicating your clients see the value you’re providing. Or maybe the low conversion rate is signaling a need to bring down the course price.
Remember to be flexible during this phase. While your course price shouldn’t drastically fluctuate, as it could dissipate client trust, strategic and calculated adjustments can help nail down the most effective price.
The most vital takeaway should be that the initial price point is just that, the starting point. Your task as a course creator is to remain vigilant, assess your course’s market response, and modify your pricing strategy as necessary to meet your audience’s changing needs and market dynamics.
Remember, no one knows your course as well as you do, and by applying a strategic pricing plan coupled with continuous monitoring, your course will resonate with its audience, ensuring its success in the market.
References:
“The Plain-English Guide to Cost-Based Pricing [+Examples]” Hubspot Blog, https://blog.hubspot.com/sales/cost-based-pricing. Accessed November 13, 2023.
“7 Pricing Strategies Small Businesses Should Know About” Regpacks.com,
https://www.regpacks.com/blog/pricing-strategies/. Accessed November 13, 2023.
