It is a difficult puzzle to solve. How do you price your online courses?
When asked how to solve this equation, most respondents answered “I look at my competition and add or deduct a bit”.
Understanding what drives value for your online learners is key. Many training businesses create online courses that do not address their learners needs. This forces them to discount, still receiving bad reviews and not selling the volume needed.
This insight was exactly the reason I developed a model to help directors of training companies get a better answer.
The benefits are clear: A good pricing strategy does more than optimise your revenue. It makes you competitive, solidifies your reputation in the market and, above all, enables you to understand your position and improve your profitability.
Here are the steps to follow:
- Understand your business objective. Are you trying to maximise profitability or get into a new market that is already serviced by others?
- Link this with your Training Delivery Strategy. (See my blog on that topic)
- What elements drive value for my audience? E.g. do they need the course for their profession? Is it crucial to deliver via a mobile app because the learners are on a construction site? Or does it need to be a highly personalised and adaptive course so my customers only learn the relevant items?
- What pricing strategy fits my business objective and TDS? Should I start with a tiered subscription model or a bundle strategy? There are many strategies to choose from. I usually consider 12 options.
- Take your time to finetune your pricing strategy. Find your optimum level by considering psychological pricing levels (not £100 but £99). Maybe you can test price elasticity.
Remember to regularly review your strategy. Market conditions change all the time
- One training company defined their business objective (step 1) as “market leadership” and in their TDS (step 2) they committed to the online only option as their biggest growth opportunity. They figured out that their biggest competitor was able to charge more for their online courses because the quality of the content and the learner experience was better. This led them to investing in the skills for their content creators so their courses improved in quality (step 3). Now they are able to command a higher price and their profitability improved considerably.
- Another training business entered a new market with a few established competitors. With their pricing strategy they were able to diversify themselves. Instead of selling individual courses online they offered a freemium model that enabled learners to get some basic content for free and pay for the advanced courses. The basis for this strategy was because their business objective was to build a community.
We would love to hear your own examples of how your pricing strategy enabled you to achieve your business objective, leave them down below!
As you might be able to tell we have spent a lot of time thinking about pricing, so much so that we have developed a model and a pricing calculator to make this process easier, by taking into account all different aspects of yours business and seeing how different strategies affect your profitability. If you would like some help going through this process, feel free to reach out, we are always happy to help.