When working with my clients on pricing their online programs, I find that we tend to undervalue our services. It’s also an area that course creators make a lot of mistakes in which can be detrimental to their success. If you’re having difficulty pricing your online program, then you’re not alone. Pricing your online course can be one of the hardest decisions to make.
Mistakes to avoid when pricing your online program:
Mistake #1: Course creators think if I lower the price of my online program, then I will get more revenue. In fact, the opposite is true. Without getting too complicated, I wanted to take you back to basic economics and the concept of price elasticity. Most online programs (ones that deliver huge value to their students) are fairly price inelastic; meaning that a large change in price is followed by a small change in quantity demanded.
Mistake #2: They leave their program open to buy all the time, thinking this will increase sales. People need deadlines; otherwise, they will never make a decision. If they think your program is available for them to purchase “next month”, next month will never come.
Mistake #3: They provide too many pricing options. In general, two options for your customers to choose from is enough. I recommend one full pay option (that includes savings for paying all at once) and a payment plan to make your program accessible to more clients.
Mistake #4: They don’t consider the value they are providing their customer. When you are working on pricing your product, you will start by assessing the value you are bringing to your customer. What’s the result they will achieve by going through your program and how much is that value to them?
Let’s assume you are working on an online program where you help women break through the glass ceiling and move up the corporate ladder. The results you typically get for your clients---a promotion within 6 months of working with you. Your clients will gladly pay their hard-earned cash for results like this.
If you have a course where it is harder to quantify the end result, think about if your customer tried to do this all on their own, how much time, energy and money would they need to invest?
Mistake #5: They don’t pay any attention to their competitors. I want you to have a pulse on what your competitors are charging and how they have packaged their services. Not because I want you to copy them; it’s just the opposite. In your online program, I want you to ensure you are providing your “special sauce” and creating a niche in the marketplace that only you can fill.
Mistake #6: They don’t define their service differentiators. Worried about people “copying” or “stealing” your online program content? It’s impossible for them to do this when you are including your service differentiators in your online program. What can you offer that others can’t replicate?
More of YOU, of course! Consider bundling in group coaching, office hours or access to you via your private, members only Facebook group.
Mistake #7: They don’t consider how their course is “packaged.” While an online program is not a physical product, you can still display the packaging and branding in a way that makes a huge difference in your sales.
Here, you want to consider your webinar or training slides. Are they visually appealing? Are they in alignment with your branding? What about your sales page? Does it reflect the value you are trying to portray? This includes compelling images, clear call to actions (written in the 1st person), and effective copywriting that speaks to your ideal customer’s pain points.
Mistake #8: They are always providing discounts. I’m not a big fan of discounting your online program especially if it is an arbitrary discount. For example, recently, I noticed an online course creator who had positioned her program at $1,997. Good price, right, for a premium, high value program? However, in her sales copy, she stated that it was half off, meaning that her program typically sells for around $4,000. Since her sponsored posts continually show up in my newsfeed, I know that the 50% discount is “made up.”
If you want to provide incentives to buy, I would like to see you provide bonuses or extra features to encourage fast action purchasers.
Mistake #9: They don’t continually test their pricing. It may take you a few launches to get your price “just right” and to figure out your sweet spot. You need to test the demand curve for your course. Remember our discussion earlier on price elasticity? You probably won’t see much difference in sales if you price it at $697 versus $897. You want to test out a few price points until you get the one that delivers the highest amount of profit (noticed I said profit, not sales).
Mistake #10: Another mistake is that they don’t consider their end revenue goals or cost per acquisition. Let’s assume that your goal for a launch is $25,000. Your price point drives how many prospects you need in your sales funnel.
In looking at the spreadsheet below, let’s assume that your price point is $297. Assuming a 4% conversion rate in your sales funnel (which may be more for a warm audience), to meet your revenue goal, you would need around 2,104 prospects coming through your funnel. This number drops to 1,258 when you increase the price to $497.
Now, let’s talk about the cost per acquisition. For most products and services in saturated markets, you need to advertise to reach revenue goals. I hear from course creators all the time, “Most course is not selling.” My next question is, “What type of advertising or promotion are you doing?” Their response, “I’m not doing anything except organic social media and emailing my list.”
The thing is, you can’t constantly bombard your email list with your online course offer. You will burn them out at some point. Of course, you can promote to them, but email after email every single week suggesting that they buy your online course is not a good long-term marketing strategy.
It’s also important to note that it can cost just as much money to sell a lower priced program as it does a higher priced one. The cost you pay to get someone into your sales funnel (e.g. into your 5-day challenge or viewing your webinar) is an important metric to consider.
Just remember, premium prices attract serious clients. Ones who are serious about doing the work and getting results.
What about you? Do you have any questions about pricing your online program? Post them below!