How to price your online course - A detailed guide

Course pricing is an important factor in driving profits for your online teaching business. Competitive pricing, when combined with brand value and effective marketing, can help sustain business growth. 

Most trainers finish designing their course content before they research course pricing and strategies, but this is not necessarily the most effective approach. You need a well-thought-out plan and a clear vision from the very beginning to hit essential business milestones.

When designing a course, you'll need a detailed understanding of content production and marketing costs, as well as appropriate pricing options. This initial planning stage will give you a realistic expectation of your business outcomes, and help you prepare for the hurdles of scaling.

You can follow the below practices to develop progressive pricing models for your courses:

1. Conduct learner persona research

You can zero in on one ideal learner persona, or multiple personas, depending on your course. Besides general characteristics, such as age, geography, and occupation, you should focus on defining your learners' goals and aspirations. Thinking from a learner's point of view can help you develop more detailed personas.

Popular ways to start your research are distributing online surveys, analyzing past sales experiences, and conducting one-on-one interviews. An in-depth analysis of your audience can help you figure out the best pricing range for your service and refine your marketing strategies so you can build a sustainable business model.

2. The production cost of the course

Determining your own investment in the course content based on your target audience is crucial. You do not want to invest heavily in professional cameras and animations for a minimally priced course. Focus on the value and the transformation your course will provide.

An unplanned initial investment in the content, without considering the value provided to learners and the duration of ROI, can contribute to slow business growth and constant price fluctuations.

If you are charging a high price for your course, citing quality alone, then you might struggle to accelerate your sales. Even if you spend heavily on marketing, you will find it difficult to acquire paid learners. 

So, before investing time in course content creation, research your target learners and their willingness to pay for the value provided by the course.

3. Determine your revenue goals: Top-down approach

Many online trainers feel they should not have fixed monthly or yearly revenue targets at the initial stage, but this is not true. It is difficult to build a workflow without a result in mind. Consider adapting a "top-down" approach by setting a revenue target and working towards it.

Trainers often begin with a mindset of "I will first start the course and see how much I can earn from it." But this will eventually result in too many pricing iterations and core business changes, which inhibit business growth. In other words, this approach is like throwing darts in a dark room.

When setting up an online course, fix net revenue targets. Tentatively calculate your marketing expenses and the number of course enrollments you'll need to achieve your desired profit margin.

4. Analyze competitors

Knowing your competitor gives you an advantage in the market. Basic research can give you a list of competitors who are offering similar courses in your target markets.

Dive deep into each competitor's course curriculum, pricing structure, and marketing activities to position your course accordingly.

In some cases, trainers simply imitate their competitors, hoping to share the market, but this is not a progressive business methodology. Use competitors as an inspiration to help get started, but don't try to recreate their exact strategy.

Do not offer lower course prices just to be the cheaper version and win customers. In the long run, business might slow down. Let's say you fix a course price that is 25% less than the actual cost, just to be competitive in terms of pricing. With this approach, you are losing 25% of your revenue in every sale, increasing the duration required to achieve your revenue goals. Focus on the quality of the enrollments rather than the quantity.

You can appropriately position your course by presenting a unique selling point and offering a price that is reasonable and affordable for your target audience.

5. Plan marketing expenses

So, you have created well-planned content in a perfect price range. The next step is to reach out to potential learners. The trick to developing a successful marketing plan is to be sensible and data-driven.

How do I calculate the marketing budget for an online course?

When planning a marketing budget, you should have a fair idea of the price range in which you will sell your course. You should also keep in mind your revenue goals. You can easily calculate your marketing budget range based on that information.

Be careful to stick to your budget. Overspending will eventually force you to increase your course pricing. If you do not increase the course pricing, despite a swell in marketing expenses, then your profit margins will suffer. Plan smart, spend judiciously, and test various ad types until you build a successful strategy.

To get started, you will have to identify the medium where your target audience spends its time. For example, if you are creating a business executive training course, then LinkedIn is the best place to start. If you are creating a fitness course, then Instagram is ideal.

Marketing is often a process of trial and error, so take baby steps in setting up ads and expand your budget based on the outcomes. Be sure to rely on ad performance data when making decisions; do not make assumptions.

6. Offer smart, flexible pricing

If you are targeting global audiences, then you should be aware of the term "purchase power parity." Purchase power parity (PPP) helps you determine how much your course should cost in each country.

It is prudent to adjust your course pricing dynamically based on each market's willingness to pay. For example, a $100 course could be considered affordable by your audience in the USA. But when that price is converted to other currencies without considering the PPP index for developing countries, the course is likely too costly.

Check the purchase power parity index here: link

If you fail to consult the PPP index, your course can either be overpriced or under-priced somewhere in the world.

You might be tempted to go after high purchase power markets, but it is always better to have a fair presence in different markets. Trying to reach audiences across the globe can bring different perspectives to your course and business. The course can also organically attract prospects with minimal marketing efforts in less competitive regions.

7. Testing course pricing models

As your business grows, you will have to adapt to changes and new challenges. What seemed like a perfect pricing strategy may not be feasible forever, and you might be forced to make pricing changes. This is normal. Businesses go through different phases, and you have to adapt your pricing model accordingly.

Slimming down profit margins and sticking to old course pricing, fearing that you might lose learners, is not a business-friendly decision. You can change the pricing, as long as you do so sparingly. Identifying the optimal price point is not something you can do overnight—it takes time and comprehensive testing.

8. Offer multiple payment models

You might be tempted to require payment in full, as it is an easy and reliable option for you. But flexible payment plans help you entice learners who cannot afford to pay a lump sum upfront.

Incorporating part-payments and subscription-based pricing models may encourage learners to commit to the course more promptly. You can also adopt a pay-to-unlock-courses structure to add more flexibility. 

There's no definite formula for success; every business is different. Try to stick to best practices and be willing to pivot if they don't work. You can leverage tools, such as country-specific pricing and flexible sales models, provided by online training platforms to streamline and grow your business.
 
Good luck building your successful pricing strategy!