Over the past few episodes, we’ve been getting into the nitty gritty of online courses – from if this is the right online product for you, to administration and supporting your students… but what we haven’t talked about yet and what I’ve been saving up for in this episode is pricing and value.
These are two separate topics for sure, the price of your online course and the value one receives from the course can be completely disconnected (like you could give away a course for free and it be life changing or you could charge a fortune for your course and it not help your student at all) — but what we really want is for the price to reflect the value and the value to be seen within the price.
There are multiple ways to price a course, I’m going to go through the most common ways here.
- Flat rate. Your students pay 100% of the course price up front before gaining access.
- Installments. Your students pay a percentage of the course price each month for a certain number of months.
- Free trial + flat rate or installment. Just as it sounds, you give free access to the course for a certain number of days and then roll the student into either a pay in full or installment plan.
- Paid trial + flat rate or installment. Instead of a free trial, you charge a nominal amount, like $1, $5 or $10 for access to the trial and then after the trial period ends, the student rolls into an installment plan or pays the balance in full.
- Pay what you want. This is where you let your students decide how much the program is worth to them and they pay that amount to gain access to the course.
Essentially, your prospective students are going to subconsciously tie their expected results to the price tag. So it’s our job as we determine our prices and create our offer pages to help those prospects come to the “yes I need this” decision!
The value of your course is in the transformation that you’re set to create for your student should they follow your course material and take action every step of the way.
In addition to the transformation, the perceived value will be developed by the student and likely include:
- Course structure
- Course content format
- Interaction with you as the instructor
- Schedule requirements
- Intermediate milestones
- Practical Application
- Testimonials and Reviews
- Additional expenses to incur (such as purchasing supplies)
A course can be priced at $49 and check all the boxes for a student. Or a course can be priced at $997 and check all the boxes for the same student. But the $49 course and the $997 course are not going to have the same value proposition. Your student would expect to get quick wins on a smaller scale with a $49 course than they would with a $997 course.
If your course helps a student get from knowing nothing about playing the piano to being able to play a Mozart Sonata then the value is super high. It’s a huge feat to learn the piano and tackle a classic piece of work. Figuring out how to price this course is essential to having students come on board.
If you price this course too low then your prospective student isn’t going to take you seriously — because the stated transformation has a far greater value than price tag indicates to the student. If you price this course too high, then you’re going to hit an investment threshold by your students… not everyone has the ability to spend hundreds or thousands of dollars on a course.
This is also where payment plans come into effect.
Most payment plans cost slightly more over the pay in full option. Usually somewhere between 5 – 15% higher. This is an easily justifiable surcharge because it’s of benefit to your student, has higher costs and higher risk on your side. The costs are the cost of doing business but the higher risk comes from students receiving training or material before they have fully paid for them.
Which now creates a wrinkle in the administration side of things… what happens when a credit card payment fails or your student cancels their payment plan. We’ll talk about the options a bit later but for right now, the entire purpose of a payment plan is to help your student balance the cost of your course with the reality of their own life.
My 13 year old daughter dances. She takes 3 classes – ballet, jazz and contemporary. The studio offered us three different payment options, pay in full, pay quarterly or pay monthly. We chose monthly payments not because they were the cheapest option, but because they were the best fit for our family. Paying for the year in full was too much of a financial burden and the quarterly payments weren’t enough of a savings so it made sense to do monthly.
But that’s a full year commitment with a huge reward in the form of the recital at the end of the commitment. And should I fail to make my payments, the studio can simply take my daughter out of the recital.
Most of our online courses have a shorter run time; 6 – 12 weeks is standard. And many courses are completely self-paced and can be completed in as little as a weekend. So while payment plans are nice, they aren’t always necessary.
I like my clients to price their courses between $147 and $997. I feel like these are good price points for courses to be profitable, students to see the value and enough of an investment for students to follow through.
We’ve already talked a lot about student follow through so we’re not going to dwell on that here — just go back in the podcast to last week’s episode 107 where we discussed multiple avenues to support your students for ideas on supporting your students and for them to realize the value they place on the course.
The value that the students place on your course will determine if they purchase it and how far they get through it. As the instructor, it’s not you who gets to dictate the value of your course… but that’s not to say that we can’t influence the value assessment.
And it starts with course structure ~ or the way that content and experience is delivered. Things like… Is it all available at once or is it dripped over time or is it progressive where each module is available immediately after the preceding module has been completed. Are there quizzes and assignments and work to be done or is it education only without a practical component. Each of these decisions has to be made for a logical reason and then communicated to help prospective students build the course value for themselves.
A course that consists of videos and worksheets and assignments is going to have a different perceived value than a course that consists of text-based lessons and different than one that has downloadable audio lessons to learn on the go. There’s nothing to say that a text-based only lesson is going to have a lower value than one that has all the bells and whistles, but I can assure you that your students are going to feel more connection with you and the course material if they hear your voice and see your face.
And speaking of that — real time interaction with you can make or break the value proposition. If your students have access to you even if they aren’t in the same part of the world that can be huge! This access can be in the form of your Facebook community, live Q&A sessions on Zoom, personalized messages or critiques created with Loom videos or just from your phone.
Knowing that you have access to a judgement free and warm environment increases the value ~ and here we are again supporting our students. The greater the opportunity for support the greater the perceived value.
You have to provide the clues so that your prospective student can come to their own value determination. And this is one of the reasons why there are copywriters who specialize in course sales pages — they understand how to take what you’re promising in your course and translate it into the words that can help your prospective students become your active students. And people like me to help you create a succinct digital strategy to make sure that you don’t go down a rabbit hole that you don’t need to go down.
I said it before, I like courses priced between $147 and $997 but that’s still a huge range. And your course isn’t the only expense that your student is going to incur as they embark on your course.
What supplies or equipment are they going to have to purchase or rent to complete your course? The cost of the supplies or equipment has to be in alignment with the price of the course. If your course is $147 and the supplies and equipment is also $147 then the value of the course needs to be at least double the price tag!
If you’re teaching something that can help your student in their business, then generally speaking your course price can be higher than something that provides only personal value. But this isn’t a steadfast rule. It really comes back to the value proposition.
So let’s talk a bit more about pricing psychology… and I mean coupons, discounts and slashed prices. The online space is overrun by discounts and coupons and price slashes… for both products and services, so should you issue coupons, provide discounts and slash your prices?
Well… would you do that in your offline business?
- Do you offer your students a discount if they enroll in more than one of your classes?
- Do you have coupons available for the general public?
- Do you have an advertised price that is higher or different than the actual price you charge?
You’re at a distinct advantage over course creators who do not currently have an offline model to leverage. You can follow your already established guidelines and translate them online.
The one big difference that you’ll want to consider is that online courses might not take up as much of your time as offline courses do, once they are in motion. Which might help you justify a lower price than your offline course might command.
And let’s talk about slashing prices — because I threw that term out without much context. What I mean here is that you list the “retail price” of your course at $997 and then put a slash through that and say for a limited time the course is $200 off and only $797. This is a gimmick but it works because it is an anchor to the value.
The price of your course is one data point on the perceived value matrix that our students construct. It’s not the only piece nor do I believe it’s the most important. And you know what? The nice thing about online courses is that there is no requirement to keep things static. You can close the doors on your course and revamp it so that it’s got more perceived value and then increase the price, or close the doors and break it into several smaller courses and charge less.
I promised earlier on that I would talk a couple of minutes about what to do if a student stops paying their payment plan. There are two sides: what to do about the money you’re owed and what to do about the student’s access to the course content.
On the money side… Start by reaching out to the student, let them know their most recent payment failed and ask them to update their credit card. Sometimes people forget to update their credit cards when the expiration date passes or the cards get reissued. Sometimes I suggest providing an alternate method for paying the balance in full instead of trying to get the existing subscription back online. Most of the time these cases need to be handled on a case by case basis.
On the content access side… non-payment means that access to the course content, community, email communication, live interactions should all cease. It’s imperative to include this information in your course terms of service so that you avoid objections from delinquent students.
One of the reasons why some people don’t do payment plans is because they don’t want to deal with the non-payment issues. And that’s up to you.
Finally, before we wrap up, let’s talk a couple of moments about the other couple of payment methods I mentioned at the outset — that is free or paid trials and pay what you want.
Trial periods are really good if you can provide a ton of value at the start of the course because that content can act as mechanism in your sales flow. Trial users can be soft-sold while increasing the know-like-trust factor for them to fully invest in the course.
With a trial period, we don’t want to give away the entire course and then for the prospective student to decide not to purchase. So a limited trial should include enough to showcase your expertise and how you work and how you transform your students! A trial is just that, something to whet their appetite for more.
Now the pay what you want option was popular a couple of years ago, but is less so right now (but that could change again.) The idea here is that you know your value and your worth, and you want your course to be accessible to as many people as possible. You’re willing to use this course as a lead gen tool and are less concerned about a personal financial upside. I don’t really like this model because almost every student will give the course a lower perceived value and will get less out of the course than if the published price was exactly what they paid.
Or put another way — in general your pay what you want students will pay less than ½ the perceived value. A course with a perceived value of $200 would garner less than $100 on a pay what you want model whereas a $200 perceived value could have a published price of $125 or $147 and get an equal number of sales.
Whoa… I think I might have thrown a lot more into this conversation than I initially thought I would! I knew I was passionate about perceived value and pricing but had no idea this much would pour out of me!
Next week, we’re going to continue the conversation about courses with a specific lens on running your course with cohorts (because we both know that students have a better chance of showing up and succeeding when they are surrounded by their peers!)