How to find the fair price of your online course?

​The average cost of vocational school training in the US is around $33,000 that prepares you with practical skills for a specific profession.

Online courses are in no way inferior to regular courses in imparting education, value, and skills.

These are interactive filled with videos, assignments, downloadable material, giving the enriching experience to the student.
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The online courses are transforming people from what they were before taking the course and what they are now after going through the course.

Dr. Po-Shen Loh uses Thinkific to teach Mathematics to his students through an Online Course

• Before: Disliking Mathematics
• After: Concepts clear and you start enjoying Maths

James Clear's Online Course focuses on building better habits in life and work.

• Before: Repeating the same old bad habits stopping you from getting success
• After: Small changes transform your life             

The price of the online course says a lot about your brand, value, knowledge, and experience.

As a creator you should derive the right price of your online course to do justice with it.

Psychology of mind

​You are a first-timer, and If I tell you,

"Create an online course of your interest and price it.”

Most of you will price it around $20, $30 or $50

Why?

1. Because there is fear in the mind of being expensive and we want to keep ourselves in the safe domain, thinking that by keeping the price low, we can sell more.
2. Because you think that you might not deliver the value which buyers would be expecting from your course.
3. Because it is your first time, so keeping the price low is very much reasonable
4. Because you think there is a lot of free information available on the internet, keeping a high price tag on your online course is not acceptable and the visitors will not buy your course.
5. Because you perceive that there are already many online courses available and that too by very experienced creators. Nobody is going to buy your online course and keeping it's price low is the only option left.
6. Because you are not confident and are suspecting the quality of your online course
7. Maybe you don’t have a large audience to share your online course
8. You are not writing in profitable niche

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This psychology of the mind is stopping you from growing and realizing the true value of the course.

How to get out of low price mind-block?

Let us recall the line: 

“Create an online course of your INTEREST”

• If you have an interest in playing chess, can anybody defeat you easily?
• If you are good at cooking then who would not like to relish your servings?
• If you are adept in crafting then people would like to have your work hanging on the walls of their drawing rooms
• If you have an interest in making cupcakes then it is less likely that people will not like them.

Friends,

When you are creating something of your interest then how it could be possible that it will be of low quality, less valuable, and will not be liked by the people?

The same is the case with the Online course, you are creating it because you have an interest in that particular subject.

For example, you are a nutritionist and want to create an online course on:

“How to maintain a healthy lifestyle by eating the right food?”

I’m sure you know many techniques and tips that can give desired results.

It might be possible that being a first-timer, you don’t have the right equipment or gadgets for making the course but it no case it is of low value.

"The food cooked in an old pressure cooker in a small kitchen is no way inferior in taste to the same food prepared in in the kitchen of 5-start hotel."

With Interest, Knowledge and Passion you can build an amazing Online Course

It is your interest, passion, and knowledge that adds value and quality to the product or to be more precise to the online course.

How to ignite these feelings?

If I say, “create an online course of your interest and you’re going to sell it at $200, $300, $500 or $1,000 in the market”

What would be your reaction?

You would be surprised and excited.

It’s true that Passion, Interest, and Knowledge are indeed the inherent characteristics of an individual but adding a good monetary value can boost them to the next level.

"Premium pricing gives a boost to your interest, knowledge, and passion."

​When you know that you’re going to get a good price of your online course, you will infuse more energy in making it and it’s worth is going to beyond comparison among all the courses, of the same category, available in the market.

Why people use airplanes and pay many times more when they can reach their destination with bicycles or bullock carts?

Both airplanes and bicycles will get you to the destination but it is the journey that matters most.

People buy speed, comfort and convenience.

The same holds with your online course.

When they see the value attached to the result-oriented online course, they are ready to pay the price that you have set.
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Always keep this strong feeling in mind that you are creating something valuable which is going to make the lives of the people more comfortable.

Problems with low pricing

People perception:

First, people will be excited to know that the course is available at such a low price.

But the next moment, the feeling of doubt about its quality will take-over.

They will question themselves:

• Is this course going to add value to their lives?
• Is this going to be another course without any support?
• Has the creator kept the price low because of its low quality?

They already have made up their minds that the quality is low and it is not going to add value in their lives even before purchasing your course.

And you know, it is very difficult to change the perception once it is made.

"The cheap pricing instead of generating sales, creates a barrier of doubt in the minds of the prospective buyers."

More non-serious candidates

With low pricing you are going to attract more non-serious candidates who will never actually complete the course.

This will impact the service time of the serious ones and eventually you will lose them too.

Let us understand with the help of an example:

You priced your online course at $30 with a 2-hours’ weekly session for queries.

Further, assume that 40 candidates bought the course and out of which 30 are non-serious and 10 candidates are serious about taking the course.

Your 2-hours’ time is going to be divided equally into 40 parts.

The non-serious candidates will hardly care about the query session while the serious candidates, who wanted to add value through your course, found time devoted to them wasn’t sufficient for addressing their queries.

With this less attention time, they will lose their taste for learning and your course’s actual motive of adding value to the buyers goes in vain.

Remember, when a serious customer is happy, he will give more referrals and this means more sales

In the long run, it will affect your brand value and you will not be able to scale your online business.

You cannot market your course with low pricing

Creating an online course is only half work done.

To sell it, you need to take some time daily and market it on various platforms.

Let us understand with the help of an example:

You have priced your precious online course at $30 and now you are spending 20 hours per month on marketing it.

Your efforts bore fruit and you sold 10 copies in the first month of launching, it means $30 x 10 = $ 300 of sales

• Whether you made profit or loss?

Analyze the value of your efforts in making an Online Course

Let us say that the average working rate per hour is $25.

You spent 20 hours in the first month of launching.

It means your expenditure is $ 25 x 20 = $ 500 in 1 month.

Now, you can compare yourself.

It is a loss of $300 - $500 = ($200)

You end up making losses that you don’t even know unless you rationally evaluate things like I did in front of you.

So, this is the problem with low pricing.

Instead, you priced your course $100 and sold even fewer copies say 6 in numbers, sale of 6 x $100 = $600. Keep the marketing efforts the same that is $500.

Are you still at loss?

Come on, you made a profit of $100 in the first month of launching.

You can see that even selling fewer copies you made a profit because you rightly priced the course.

Is selling at a lower price is always a bad idea?

Not exactly,

• When you have a large dedicated audience size then you can keep your online course at a lower price band.

But that doesn’t at all mean that you sell it at peanut price.

• When you want to collect more leads and want to sell another product at a higher price through your online course.

Let us discuss different techniques for deriving the right price of an Online Course.

The costing approach

In this technique, you price the course based on different costs incurred in making it and adding them all to get the price of the course. 

Like you add:

• Equipment cost (camera, editing software, etc.)
• Hours spent in the making of the course (You convert the labor hours into equivalent monetary value. For example, a person works 6 hours a day and earns $240. His average hourly rate is $240/6 = $40 per hour. You too can calculate yours in this manner and multiply the rate by the hours spend in making and marketing the course. You will get the monetary value of your efforts.)
• Hours spent in the marketing of the course
• Expected profit Margin (%)

Use Costing Approach to derive the right price of your Online Course

Let me give you the excel sheet to calculate the price of the course using the costing method.

You can also monetize your knowledge and experience while calculating the price of the course.

The Market Approach

In this approach you look into the market to derive the price of your course.

Follow these steps:

1. Look for the top 10 courses in your industry.
2. Write down the price of each course and take the average
3. Go to each creator’s profile and note down her/his experience (years) in the industry and find the average experience
4. Now write down your own experience in years in that industry
5. Divide your experience by the average experience
6. Multiply the outcome in the previous step by the average price of the course
7. You get the price of your course

The price of your course is:

• (Your experience/ Average experience of the creator) x Average price of the course

Let us further assume that your experience in the industry is 2 years.

And the price of your course would be using Market Approach is =

• (2 years/5 years) x $530 = $212

The excel sheet uses the Market Approach to find the right price of the Online Course

The Value Approach

​In this type of technique, you derive the price of the course based on value addition or the cost-saving to the candidates.

In this technique, you derive the price of the online course based on the value addition.

For example, Mr X has made an online solar course

“Design the complete Home Solar Power System and know its financial feasibility”

and

He priced it at $200. 

How did he derive this price?
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The average cost of 5 kW home solar power system is around $16000
 
Mr. X thinks that the candidates after going through the course are most likely to save 10-15% of the total cost of the home solar power system that is they can save somewhere between $1600 - $2400.

And people don’t mind paying 10% or less (for the course) of what they are going to save after going through the course.

This is the basis of his pricing using Value Approach.

You should see how your course is going to add value in a candidate’s life and career.

If after going through your course, the candidate acquires new skill that can likely to give a boost to his career to the next level say a 10% hike in his annual salary.
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He won’t mind paying a fraction like (10% or 15%) of this hike.

Toe-to-head Approach

In this approach, initially you keep the price low and increase it gradually by a small percentage say 10% month on month until you feel the resistance and your sales start dropping.

In this approach, you look for the price resistance to derive the right price of the online course

This resistance price is the right price for the course.

The size of the problem approach

This approach derives the price by quantifying the size of the problem solved by your course.

The problems can be broadly classified into 3 categories, namely:

1. Small problem
2. Mid-sized problem
3. Big problem

 
In small problems, you provide solutions that have an effect limited to few persons and are short-lived.

For example, an online course on “How to get a haircut that suits your face?” has its effect limited to one person because others cannot derive any tangible benefits from a person who has got that haircut.

Moreover, the benefit is short-lived with the person, you need a second haircut after 2 or 3 months.

You can price it under $100 but it should be above $50.

In the solutions to the mid-sized problem, benefits are spread over more people and its effect remains for a longer time.

For example, an online course on “How to get your first job?” solves a mid-sized problem that involves a person, his career, and the dependents.

You can price it in between $200 to $500 depending on your knowledge and the practical experience in that industry.
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Whereas courses dealing with big problems need to be pricing accordingly because their solutions have a wider impact.

In this price technique, the online course is priced according to the size of the problem.

For example, an online course on “How to revive your business and make it profitable?” is dealing with a big problem.

The solution is going to impact the lives of many employees and their families.

These courses are priced over $500 and can go up to $3000.

So, you can categorize your course according to this approach.
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The price demarcation is general when you add a greater number of services with the course, the price can go up accordingly.

Monetary goal approach

Some people price the course that helps them in achieving their financial goals.

For example, you aim for earning $10,000 in a year from the sales of your course.

And you have 500 subscribers in your e-mail list.

How to price your course that you achieve your target in the given time?
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Let us draw a table:

You price the Online Course to achieve your monetary goal

You can see that when you keep the price low, you need high conversion rates to meet your target.

When the price is $50 then you need to sell to 200 subscribers out of a total of 500 to achieve your target.
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As you increase the price of the course, you achieve your target despite low conversion rates.

You price the Online Course in a way that it gives you maximum sales.

You can see that price options 3& 4 that are $200 and $500 with conversion rates 10% and 4% respectively are quite acceptable and achievable.
 
So, you can price your course between $200 to $500.
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In this approach of pricing you choose that price in which the conversion rates are achievable.

Tips for premium pricing

Teach something very specific

The content of your online course should be very specific because general content and topics are washed very quickly.

For example, you are a housewife who knows cooking very well and is very motivated to create a course on it.

Don’t create a course like How to do the cooking? Or How to prepare great food?

These are very general terms.

Rather create like:

• 10 Home-made South Indian Recipes

Or

• 30 Healthy Salad Recipes

to make your course topic and it’s content more specific.

Because specific things look different and unique and people value unique things and are ready to pay high prices for that.

Create a result-oriented Course

Tell your viewers that you can achieve the goal in a given time when you go through the course.

Like "learn 10 Home-made South Indian Recipes in 7 days"

When you create a time-bound and result-oriented course, the people get excited to learn and get impulsive to buy the course at the premium price that you set.

Live calls 1 to 1

You can offer 1 to 1 live call to your buyers to solve their queries. This kind of personalized service creates confidence in the course and gives a kind of relief in the mind buyers that their query will be addressed suitably.

Different Plans

Offer different plans with different prices.

One is a basic plan in which you include all the essential features while the premium plan offers more customized services like giving extra time to solve the queries through video calling or access to some of your premium material etc.
 
Bonus material

Offering different bonus materials like E-books, PDF, Assignments, Quizzes, Excel sheet increases the overall value and hence the price of the course. This makes the course more engaging and gives enriching experience.

Keep updating

The material which is relevant today might not be the same in the next 1 or 2 years. The same is the case with the content of your course, some of it will get outdated.

Therefore, you need to keep updating the course content, making it fresh, latest, and relevant forever.
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And the customer always pays for the fresh product.

Benefits of premium pricing

The direct benefit of premium pricing is that non-serious candidates are out.

The candidates who are serious about learning will buy your course.

This will not only increase the value of the course but also you can devote more time to each candidate in handling her/his queries.

In this way, you can make them learn better.

The candidates will be satisfied and happy.

You know happy customers bring more referrals and will bring more sales.

You can attract more business partners or affiliates through the premium pricing of your course.

Because you can offer more monetary value to them if they bring sales through their reference.

Let us understand with the help of an example:

Let us say you are offering a 30% commission to your affiliate for each sale done through her/his reference.

When you price the course at $50, he will get 30% of $50 = $15 as a commission for each sale done.

While on the other hand if your price your course $200, he will get $60 for the same efforts done.

In the latter case, the affiliate will be more excited and motivated to do the sale as he is going to get more value.

So, premium pricing creates an energetic team, accelerating your online business.

Another aspect is the credibility of your online course.

When you offer premium pricing, the visitors will look at your course offering something valuable.
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While on the other hand low pricing creates doubts about the course quality in the minds of people.

Conclusion

Look and aim for the place where you can value and can derive the right price your online course.

This place is filled with customers who are ready to buy your course at that price.

Gradually, increase the price of the course and make it premium by offering exclusive services.

This way you further filter out the extremely loyal and serious candidates who are ready to buy the course at any price.

Finally, keep serving those selected candidates.

Online Course long term strategy

• The prices are general in nature you can always increase the price of the course by adding the value in the course.
• The average price is between $140 - $180 for the new creators with minimum experience of 2 years in their respective domain
• Keep your course crisp, precise, and result oriented with engaging videos, examples, quizzes and assignments
• The optimum length of the course can be 2-3 hours
• Judge yourself on the basis of experience, knowledge and degrees
• Improve with time to time and create your new category with time
• Be flexible and accessible to your students
• Podia and Thinkific are the two great platforms for launching your Online Course