How To Create An Online Course: The Ultimate Guide
Pricing Your Online Course
Pricing is an area that many new course creators find themselves agonising over.
Price your course too low and you may not make much money. And you risk attracting the wrong sort of customers and positioning your course as low value.
Price your course too high and you might price buyers out of the market and end up with very few sales.
The good news is that the price of your course isn't set in stone. In particular, it's very common to price your course quite low for your initial pilot, raise it for your launch, and then keep raising it over time.
Partially, the price rises reflect the additional value you'll add to the course over time. Partially, they reflect the increased confidence buyers will have as you add more and more testimonials and reviews from happy customers. And often, it's simply a reflection of the increased confidence you have and your comfort level at charging a higher price.
Set a Tentative Price for Your Course Before Working on Your Pilot
It's important to look at how you're going to price your course before you start work on creating and promoting your pilot.
Your pilot price will typically be a generous discount on the full price of your course. So naturally you need to have an idea of what that full price is going to be so you can talk about how big a discount it is.
That doesn't commit you to hitting that exact price when you launch. It may be the takeup of the pilot and feedback tells you the price could be much higher. Or it may tell you it needs to start a bit lower and work its way up. But either way, you need to have a ballpark figure for your full price before deciding on your pilot price.
Pricing is Both a Rational and Emotional Decision
There are many factors which influence the range of prices you can charge for a course. And there are also strategic factors which might make you want to price a certain way. We'll discuss all of these below.
But it's worth stating up front that pricing isn't purely a rational exercise designed to maximise your profitability.
The price you set for a course will also reflect how you feel about the course and about how you want the course (and you) to be perceived by your audience.
Do you want to be seen as a premium provider? Or do you want your courses to be seen as great value and affordable by a wider audience?
There's no right or wrong answer to these questions and it's worth bearing in mind this emotional influence on your decision making. It's also worth noting that your feelings about pricing have no doubt been influenced by your own experiences as a buyer and by what you're been told about pricing before.
As long as you choose a sensible price for your course it's absolutely fine if your decision is influenced by what price level you feel good about. In fact if you don’t feel good about the price you've chosen it will be difficult for you to commit to fully marketing and promoting your course.
Key Factors that Influence the Price of Your Online Course
Start With Economics
Basic economics dictates that there are two potential ceilings on the price you can charge for a course:
As we'll discuss below, there are many additional factors which will impact the price you can or decide to charge. However these two big economic factors influence everything.
If you want to increase the potential price you can charge, the first thing you should do is look at how to increase the value delivered by your course and how to make it stand out and be different to others on the market.
Psychological Influences on Price
The price you can charge for a course can move up or down depending on a number of psychological influences:
Strategic Influences on Price
In addition to the optimum price you could charge based on economic and psychological factors, you may choose a different price due to strategic factors.
Once you've looked at all these factors, make an initial assessment of what you think a fair price for your course would be. One that's a great price to buyers because of the value they get from it, but also one that offers you a good profit and meets your strategic objectives.
Benchmarking Alternative Courses
You shouldn't let the price of your course be dictated by what others are charging for similar courses - that's why we started off looking at what you believe is a good price for your course.
Nonetheless, the reality is that your customers will be looking at alternatives and they'll know what the prices of those courses are. If your price is significantly out of line you'll need to be confident that it's justified - and more importantly, that your customers will feel it's justified.
To do that, you need to know what the price of alternative courses is.
You probably already know some of the major competitive courses from your research so far. But make sure you do a search on the web so you haven't missed any.
Then make a table of the results showing the main outcome of the course and topics covered, anything you can on the size and format of the course and obviously the price.
This will give you a good idea of whether your initial idea of pricing is roughly in line with what others are charging.
If it's significantly less you may want to consider raising the price.
If it's significantly more, make sure you're confident that your course is adding more value and has more of the psychological factors that enable you to charge a higher price. But don't feel constrained by what others are charging if you feel the value of your course justifies a higher price.
Typical Prices for Different Types of Courses
In the absence of direct benchmarking information you can also look at the typical price of courses of a similar type to yours.
It’s perfectly possible to charge thousands of dollars/pounds for a big professional development course or an outcome based course that delivers significant ROI..
Usually though, if your buyers are small business owners then the price will often be in the range of $100/£100 to $500/£500 range for a pure online course or $500/£500-$3,000/£3,000 if there's a significant coaching element with direct support from you.
For entertainment based courses the pricing is more likely to be sub $100/£100. You're essentially competing with movies, TV shows or a night out at the theatre.
For professional development courses the price is typically thousands - but these courses are very big and not usually suitable for your first course.
Pricing Your Pilot
Based on your assessment of the full price you'd like to charge for your course you can set a price for your pilot.
Typically your pilot will be priced at a generous discount on the full price:
A typical pilot discount is to price the pilot at 50% of your final target price.
This is big enough to make it highly attractive to interested buyers, especially since this discount will be a "once in a lifetime" offer. But the price should still be high enough that sales give you a good indication whether there is real demand for the course.
And obviously you'll want to make at least a little profit on the pilot to make it worthwhile even if your main financial prize is likely to come from the full launch and additional products.
Adjusting Your Course Price After Your Pilot
In theory, when your pilot is complete and you launch the course fully, you'll switch to your original target price.
But in practice you should use your experience on the pilot to reassess what price to use when you launch.
If the pilot sells out really quickly, it’s an indication that you could adjust your full price upwards to take into account unexpectedly high demand.
On the other hand, if the pilot sells slowly it can be an indication that you may have started your pricing too high and it may be worth launching at a lower price than originally planned. Or even to do a second pilot with updated content at a mid-point price.
You may also get feedback from the pilot that causes you to add additional content or refocus the course to add more value. You may also get such great testimonials from the pilot that a more significant price increase feels justified.
One approach you can use to set your prices if you've had a dozen or more people on your pilot is to use the van Westendorp Price Sensitivity Meter (PSM).
In the PSM method you ask your pilot participants who've experienced the product 4 questions about the price they'd be willing to pay for it. You then use the answers to those questions to plot a range for optimal prices.
The 4 questions probe the outer reaches of acceptable prices (either to high or too low) and the plotted results show you how demand changes according to the price level.
Typical questions asked in the PSM method are:
Because you're asking a series of questions you tend to get more realistic answers than if you just ask people what price they would be prepared to pay.
The results of the survey are plotted on a line graph with price on the x-axis and the number of respondents on the y-axis. You directly plot the cumulative number of people who believe that the product is too cheap and too expensive on the graph along with the number of people who thought that the product is not yet expensive and not yet a bargain at each price level.
The end result will be something like this:
Source: Survey Analytics in Forbes
You can read off from the graph the point at which more people think the course is starting to get expensive than think it's too cheap (the Point of Marginal Cheapness) and the point at which more people think the course is too expensive than think it's a bargain (Point of Marginal Expensiveness). This gives a range of prices which feel acceptable to the majority of your audience.
Within that range is the point where the same number of people think the price is too expensive as think it's too cheap which in theory minimises dissatisfaction.
Of course, the analysis isn't perfect. It depends on people thinking somewhat rationally about the benefits they get vs the price. And on enough people answering your survey to get meaningful results.
But experience has shown the model to be surprisingly robust and a relatively easy way of getting to a potential range of prices you can feel confident with. If you have the numbers to do an analysis like this it can be well worth it and give you much more confidence to move forward with pricing after your pilot.