The #1 question I am asked: How should I price my online course. I get it. Pricing your online course is HARD! Even for the Fortune 10 firms.
You don’t want to overprice because you believe this would keep potential students from enrolling. On the other hand, you want to be sure to charge what your online course is worth.
Before you start on the process of pricing your online course, I want you to consider this question:
Are you willing to confidently charge what you’re worth?
If you said, “yes!”, then you’re ready Step 1.
If you said, “ummmm…..I don’t know”, consider this.
People WILL really pay for higher end offers when they are positioned, packaged, and marketed the right way.
Higher prices attract premium clients, the ones you WANT to work with.
There is a strong correlation between the price of your online course and it’s perceived value. Remember Marketing 101 in college?
Let’s jump right into Step 1 so you can find the SWEET spot for your online course pricing. WARNING: You will need a calculator for this exercise!
Step 1: Determine your revenue goals for your online course and the number of course sales needed to achieve your goals.
Let’s assume that you need to make $10,000 per month with your online course to sustain your business and support your family. Keep in mind that the number you project here is BEFORE taxes and expenses and not your take home pay.
You need around 34 course sales at $300, 20 at $500 and 10 at $1,000. These numbers also drive the number of prospects you need in your sales funnel which we’ll talk about later.
Action item: Write down your monthly revenue goal for your course and the number of course sales you need at two different price points you’re considering:
HINT: FORMULA FOR NUMBER OF COURSE SALES NEEDED TO MEET REVENUE GOAL: REVENUE GOAL / PRICE POINT
Step 2: Determine the value of your online course.
Next, determine the result your student will achieve by going through your program and how much those results mean 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?
Action item: On your paper, write down the value of your online course to your student.
Step 3: Define your online course differentiators.
What differentiates your online course from the competition, makes it impossible for people to steal your online program content and increases the value?
More of YOU, of course! Consider bundling in group coaching, office hours or access to you via your private, members only Facebook group.
In addition to this, consider adding extra bonuses to your course to increase the value.
Examples include workbooks, templates and anything that will help your students get results faster.
Action item: On your paper, outline your online course differentiators.
Step 4: Review your competition.
I want you to have a pulse on what your competitors are charging and how they have packaged their online course. What are they doing? What can you do differently to stand out in the market?
Action item: On your paper, outline what your competition is charging and how they have packaged their online course:
Step 5: How many prospects in your funnel?
Now’s the time to think about how many prospects you need in your funnel to meet your revenue goals.
Here's how you calculate how many prospects you need in your sales funnel to meet your revenue goal at the different price points you’re considering.
Formula: Number of sales needed (from step 1 above) / Funnel conversion rate
Note: if you don’t have a typical conversion rate for your sales funnel, use 3%.
Repeat for each price point you’re considering.
Action item: On your paper, for each price point, calculate how many prospects you need in your sales funnel to meet your revenue goal at the different price points you’re considering:
Step 6: Based on the work you have done so far, determine your payment-in-full price.
Action item: On your paper, write down your payment-in-full price.
Step 7: Determine your payment plan price.
In this step, it’s important to ensure that your payment plan price is higher (in total price), than your pay-in-full price. In other words, you want your pay-in-full price students to get a discount because they are paying you in full.
For example, let’s assume that your pay-in-full price point is $997. Your payment plan price could be $97 per month for 12-months. This will give your pay-in-full students a discount of $167.
Action item: On your paper, write down your payment plan price point.
Step 8: Test and Tweak
Note that it may take a few launches to get your pricing “just right?” You need to test the demand curve for your course.
For instance, 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).