How To Price Your Online Course Correctly
Most instructors would agree that choosing a price is one of the trickier decisions involved in the course creation process. On the one hand, the price needs to maximize revenue potential so your knowledge business can grow properly; but on the other, charging too much might lead to fewer sales, or worse still, no sales at all. As a result, it's easy to become heavily influenced by perceived pricing possibilities in your niche. As a result, you feel a lack of control which inadvertently means pricing, kind of, takes a path of its own.
Whilst it's not possible to charge any price and succeed, it is possible to approach the task such that you control pricing, not the other way around. Here are 7 rules to help set the right price for your online course with confidence.
1. Don’t Price On The Length
It’s a common misconception to think that a course has to be lengthy in order to justify a premium price tag. In other words, the length of a course is a key determinant of its price.
This is incorrect.
Additionally, some course creators make the mistake of "bulking out" a course to justify a higher price tag. If you can teach the relevant knowledge and learning outcomes within three hours of instruction, don’t create a course any longer than that. Whilst most learners won’t realize the waste of time, anyone that does will not appreciate it and have a reduced impression of you, the "expert."
Instead, price your course based on the value of the content and not its length. Be sensible though. Whilst value relates only to the real-world benefits for learners, buyers will expect a certain amount of content for a given price. If your course costs $350 but is only an hour-long, there is a higher chance that students will react negatively, and maybe feel ripped off. But, to really make my point: Would those students feel ripped off if the hour-long course taught them how to turn household items into gold?
You can’t ignore length entirely; use a little common sense and focus on the value, which will naturally take more wholesome content anyway.
Rule #1: Price on value, not on length.
2. Don’t Be Led By The Competition
Pitching your course in between the most expensive and cheapest courses by your competition might appear to be a good idea. It seems logical and a safe bet that will, at the least, result in you making some sales (...phew!). This is a great plan if you want the competition to be the judge of how valuable your course is, not to mention how commercially successful it’ll be! There are ways to use competitor information to your advantage, but pricing isn’t one of them.
Instead, use the competition to validate market demand for your topic, gain strategic insights and identify potential opportunities for your knowledge business. You should read their customer reviews and check them out on social media to see what people think. As a real "edupreneur," you might enroll in a course to see what it offers and, more significantly, learn how to differentiate yours so it’s better. Whatever you do, don’t set the price of your course based on what your competitors are charging.
Rule #2: Price on value, not on the competition.
3. Make Learning Outcomes Real
So, we’ve established how not to choose a price and that getting it right is all about focusing on value. But, perceived value is intangible; so how do you make potential buyers realize what is on offer? One way is to quantify the outcome of your course in real terms. This is a tried and tested technique in sales and marketing, and was once called, "Features, Advantages, & Benefits (FAB)." Basically, you must make sure potential buyers know exactly what actual benefit(s) a product will give them.
All too often, promotions and descriptions do a great job of explaining the features and advantages but omit the real-life benefits. By stating clearly a product’s benefit (i.e., value) you exponentially increase the chances of someone wanting to pay the premium for it. For example, plumbers don’t sell boilers, they sell warm homes. Landscapers don’t sell terraced lawns and patios, they sell ambient garden parties. Salons don’t sell hairstyles, they provide the latest looks.
Once you get the hang of it, it’s quite simple. For online courses, it’s all about knowledge and expertise, right? Nope, they’re the features and advantages of eLearning. The benefits are what learners can do with the knowledge and expertise you impart. If you teach them graphic design, they can be a brand consultant; if you teach them cooking, they can be a chef; if it’s content marketing, they can be a pro blogger. All these benefits are very valuable! The price of your course should be influenced (heavily) by the real-world benefit it provides to customers.
Rule #3: Charge based on real-world benefits.
4. Customer Alternatives
How else would a customer get the (real world) benefit that your course teaches them? How long would it take them? How much money would it cost to hire someone to do it for them? What other costs and inconveniences arise from them not taking your course? The chances are that alternative options are a lot more costly and time-consuming than taking your online course. In fact, I would say some of them will be orders of magnitude more expensive.
Think about these things in detail when you’re trying to set the price of your course because the money they save, along with the knowledge they gain, underpins the value and price possibilities of your course.
Rule #4: Account for alternative costs.
5. Price Credibly
Whether you’re a well-known "expert" in your field or global authority on your topic, or not, you must price your course with confidence. It’s about seeing yourself as a credible expert who imparts tons of value to your students, then making sure the price reflects this.
In reality, your students are going to perceive you as an authority regardless of whether you possess any kind of personal brand or not. So, provided your course is "great" and customers gain the knowledge and associated benefit as intended, you’re credible! If this is your first course, and, truth be told, you’re not sure if it’s any good, then it’s a glass half full, glass half empty moment.
You have a choice to make, either you trust and believe in yourself and therefore price as if you’re a credible expert, or not. I know which way I’d go, and you should too.
Rule #5: Charge confidently for your expertise.
6. Commercial Aim
Ultimately, the amount of revenue generated by your course determines how successful it will be. For this reason, you must momentarily forget what the course does for others. Instead, focus entirely on what course sales will do for you.
Whilst this shouldn’t be the key determining factor on what you charge, it's a necessity for any knowledge business to succeed.
Ask yourself a bunch of questions:
- Why are you creating an online course?
- Is the course going to add an additional revenue stream?
- What do you want your course to earn in a year?
- Is the course being used as a benefit to existing customers?
...And, so on.
Clarify the purpose of your online course in relation to your goals, and make sure its price is tantamount to those objectives.
Rule #6: Incorporate revenue targets in your pricing.
7. Find Your Pricing Sweet Spot
The last tip I have focuses on optimizing your course price after you have chosen one and gone live. Your optimal price is the highest amount of money that can be charged whilst experiencing the highest number of student enrolments.
This is revealed by testing different prices over a set period of time (per price). It’s a simple task that assumes you’re not currently overcharging for your course (which given the topic of this article, and the fact you’re still here, I’d hope not!). Basically, keep increasing your price (say every month) until your sales numbers start to decrease. Make sure you go beyond any normal fluctuations in sales, and then, all else being equal, you’ll begin to find the ceiling of what your target market is willing to pay.
Your optimal price will be industry-specific, obviously, but the goal is the same for everyone: Find the pricing sweet spot that maximizes the number of sales and the revenue generated.
Rule #7: Find the optimal price when sales resistance appears.
Takeaway
If you’ve created an online course, then you know there is a lot to learn and many decisions to make along the way, from choosing your topic and picking the best course creation platform for your content to marketing your course and growing an audience, plus anything else in between. Pricing your course is fundamental to its success. Instinctively you know the right premium is vital but naturally don't want to put people off by getting it wrong.
The key is to lift out the core worth of your knowledge business and apply it commercially. Use these rules to unlock your course’s value—all the stuff you are confident about—then, set your price with insight, purpose, and the best chance of success.
