While all the options have the right to exist, the correct answer is \u201cc.\u201d Unlike traditional physical products, the results of intellectual work are way more difficult to evaluate, so it\u2019s tempting to go with hours spent on production or equipment bought as pricing components. It\u2019s a dead-end road.<\/p>\n
When it comes to online courses, it\u2019s better to come from a hypothesis that the people who the course benefits will readily pay a certain sum for this value. But which sum? Well, there\u2019s no universal golden rule for that, so to some extent, it\u2019s a bit like playing a guessing game.<\/p>\n
But are there any pricing principles to consider along the way? Sure.<\/p>\n
Stick to value-driven pricing<\/h3>\n
As opposed to a university degree, the peculiarity of online courses is that they aim to deliver specific results to their learners quickly. Some sort of transformation if you like, so there\u2019s a clear before and after picture. How much is it worth to solve a problem for your learners or help them with this transformation? How much does it cost to guide them from point A to B?<\/p>\n
Imagine you\u2019re teaching the art of public speaking. There are plenty of people who become panic-stricken at the mere thought of being in front of an audience. If it was you, would you pay, say, $100 to learn how to gain confidence and finally get rid of that feeling in your stomach and sweaty palms? What if you can\u2019t get a promotion because your voice trembles every time you\u2019re making a presentation? Would you pay $1,000 to solve this problem?<\/p>\n
It doesn\u2019t really matter how many learning modules are there or how long is the course, as long as it helps people achieve the desired result.<\/p>\n<\/div>\n
The second thought here is that the amount of time put into a course\u2019s production doesn\u2019t necessarily directly correlate with its value.<\/p>\n
Let\u2019s say there are two public speaking coaches: John and Jim. John has over 10 years of experience and proven methods for turning a humble person into the next Brian Tracy. He can create a course on the fly simply by clicking the \u201crecord\u201d button. Jim has zero experience in this field, so he\u2019ll spend ten times longer to prepare the course (and it\u2019ll still be shallower than John\u2019s).<\/p>\n
So, remember: it makes no sense to estimate the price other than by its value.<\/p>\n<\/div>\n
Think of the goal first<\/h3>\n
A top-down approach can also help you set the price. \u201cDown\u201d here is the exact price you want your learner to pay for a course. So, instead of guessing if this price is acceptable to the audience, look at the issue from another angle and ask yourself,\u00a0\u201cHow much money would you like to earn with this course?\u201d<\/em>\u00a0or\u00a0\u201cWhat monthly revenue would you receive from it, in an ideal world?\u201d\u00a0<\/em><\/p>\n There are two issues to consider here:<\/p>\n First, try to be realistic. Don\u2019t get us wrong, we\u2019re for positive thinking and love the movie\u00a0The Secret<\/em>. The idea here is to believe that a certain revenue is at least possible.<\/p>\n Second, don\u2019t be afraid to be bolder. Although we\u2019ve just suggested choosing a realistic goal, it doesn\u2019t have to be so humble that you barely recoup your investment. If you feel that a certain sum sounds about right, it\u2019s likely you could charge a little (or even much) more. Your comfort zone has nothing to do with the value your course delivers.<\/p>\n Let\u2019s say you\u2019d like to get $5,000 per month. Great! Use this amount to do the math in the next step.<\/p>\n Having the goal set, we can now get a rough estimate of how many sales do you need to make that sum.<\/p>\n There are two things you need to balance at this step:<\/p>\n If you\u2019re charging $10 for the course, you need to sell it 500 times every month to get $5,000. If it costs $1,000, you need just 5 sales. It may seem that it\u2019s easier to persuade 5 people to buy something than 500, but here\u2019s where a conversion rate comes in.<\/p>\n A conversion rate in our case is the percentage of visitors who came to your course page and paid to enroll. If 1,000 people visit your website, and 10 of them make a purchase, the conversion is 1%.<\/p>\n If you google the average conversion rate for online courses, it\u2019ll be about 1,5% to 2%. 5% is a \u201cgreat\u201d result and less than 1% is obviously a \u201cbad\u201d conversion rate. Yet, it\u2019s not that simple, since the rate is strongly correlated with the price tag.<\/p>\n For example, we\u2019re still aiming at $5,000 in income per month.<\/p>\n The conversion rates in this table are somewhat average and generic, but here\u2019s an interesting thing to think about: How are you going to get sufficient reach to yield the targeted income? Do you have an existing audience that supports you?<\/p>\nCalculate how many people you\u2019ll need to reach<\/h3>\n
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\n \nCourse price<\/th>\n Sales needed per month<\/th>\n Expected conversion<\/th>\n<\/tr>\n<\/thead>\n \n $10<\/td>\n 500<\/td>\n 2,5%<\/td>\n<\/tr>\n \n $100<\/td>\n 50<\/td>\n 1,5%<\/td>\n<\/tr>\n \n $1,000<\/td>\n 5<\/td>\n 0,05%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n
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