Are there bulletproof pricing strategies in marketing your online course?
Some people are selling courses for just a few dollars and some people are charging thousands. But how do you know where yours lies in that spectrum? Your course and audience are unique, so what’s going to be the best choice for you?
Greg Smith, the founder and CEO of Thinkific has a unique perspective on course pricing… His platform has generated millions of sales, so he has a lot of data to base his findings on.
(He also knows the mistakes people make in their pricing strategies in marketing.)
What NOT to Base Your Pricing Strategy On
It’s helpful to start with what not to do, because it may not be obvious.
Many people ask Greg, “I’ve got a 2-hour course” or “I’ve got a 5-hour course, how much should I price it?” To which he replies, “Don’t price on length of course or volume of content that you have within it.”
There are some caveats to this though. For example,
“The length of your course is a gateway where you do a quick check like “Okay, I’m in the 2- to 3-, 4-hour range. I can price $200, $300, $400, $500 plus.” But, you know—and if you’re at 20 minutes, then you’re not quite ready to be pricing in the hundreds of dollars yet.”
So, length is a factor, but it’s not even close to the most important factor. Let’s look at another misconception:
Competition is great for gauging if there is a market for your course, but it’s terrible for pricing.
A bad sign for your niche could be, “Hey, nobody is selling anything in this space,” but as long as you see some stuff out there, that’s a good indication.
“If all you find is free YouTube videos and free blog posts, that’s still a good thing. It doesn’t mean you can’t sell a $2000 course in that space.“
Don’t let the glut of free content dissuade you from offering a premium course. There will always be free content, but your audience isn’t just looking for content. What they are looking for is what you should base your price on.
What to Base Your Pricing On
Follow these key concepts, and you’ll have pricing that allows for your business to scale while delivering value.
Your Student’s Outcomes
“If you’re going to take my course, how’s your life going to be different when you’re done? And then if you can quantify that, all the better.”
That’s the #1 question to ask yourself when thinking about what your students would be willing to pay. Here’s an example:
“You’re going to get a job that’s going to pay $20,000 more than you’re making now or you’re going to learn internet marketing techniques that are going to teach you to sell $100,000 worth of product in the next year. We’d all like to think that education is just about learning more and having a curious understanding and some of us go in for that. But if you’re selling education, you do have to focus on that outcome.”
Your student is going to consider the value to them of your course. Is your course priced such that the value is obvious?
The Cost to Acquire Your Students
This is the hidden cost that can make or break your business. And the cost of acquiring your students must be less than the value of each student, otherwise you’re just running a charity:
“If you’re charging $100 for your course, you’ve got to get 500 students into it to make your $50,000 which might be will do that. If you’re charging $2000, now you only need 25 people. So you can invest a lot more in going and acquiring those people. I find looking at it this way will tend to push your price up a little bit and increase your kind of confidence and desire to charge a higher price, which is a good place to be.”
Add to this that fact that many forms of advertising have a fixed cost. So if you price too low, you’ll limit your options for advertising:
“If your course is $50 and you spend $100 on ads and it generates a sale, you’ve got a loss. Whereas if you have a $200 course, you spend that same $100 on ads and it generates a sale, you’ve got $100 product. Pretty simple math, but basically charging more generally works better with paid advertising so it opens up more doors for you in terms of marketing your course.”
Also, if you’re doing a JV partner deal promotion, it become really difficult to incentivize them to promote you if your course is too inexpensive, since they have such low ROI themselves.
The irony of pricing is that people tend to value things that cost more money, regardless of any other indicators. Just look at Greg’s story:
“With my personal course, I came out at $29 which was way too low and I had a reason behind it, but what that did is it reduced the perceived value of the course and as I increased the price all the way up to about $389, I would actually sell more copies of the same course at a higher price because the perceived value was higher.”
That sounds insane right? If the content were the same, the value of a $29 course would be so much higher than that of a $389 course.
But that’s not how your customer sees. To them, the only have a certain amount of time to learn something in order to get the outcome they want. So, are they gonna buy someone’s $29 cheapo course, or someone’s $389 confident, guaranteed results course?
Some pricing strategies in marketing take a wider view than just one course. They take into consideration the business a whole. For example:
“If you have a product and then you want to upsell to a higher, so that first one is actually more of a lead magnet or a tripwire where someone are buying at a small price point and then you’ve got something else to take it to or price testing”.
You can also upsell the same course, by offering different versions of it. Many people run a pilot course first that is less money because it’s rough around the edges. You can utilize this in ways such as:
“You’re going to be coming out with a $500 product but you’re saying, “Hey, if you get in for the pilot where we’re going to still be experimenting with it, we can give it to you for $250.”
This way you give a reason for a lower price for a certain amount of time. This reduces your price without reducing the perceived value.
Another way you can upsell the course is by increasing the price over time. Here’s a completely reasonable example:
“Hey, everyone loves the course. It’s amazing. I’ve added a few new things to it. Nothing major but a few new things to it. And so, next Friday, the price is going to double.
Pricing Strategies in Marketing that Maximize Sales
The Rule of 3s
This strategy is based in psychology. It’s called the rule of 3, and it actually increases overall sales. Greg has priced his course at three tiers: Free, $389, and $789. Why?
“You drive people generally to the middle one. That $389 is actually where I want people to end up. If someone picks up the phone and calls me and says, “What should I buy?” I’ll say $389, not the $789.”
That seems counterintuitive. After all, wouldn’t you want people to buy the most expensive version of your course? Actually, for most that goes against their nature and you can use this to your advantage:
“People don’t like to buy the most expensive thing there, so there’s actually not much more value added in the $789 course. I pack as much value as possible into the $389 to encourage people to go there, and that actually increases sales overall because psychologically people don’t want the most expensive thing. They’re going to go for that middle. They perceive a lot of value there because it’s not much different than the $789 course.”
So Greg intentionally makes the middle the most valuable so that people are more likely to buy it.
Once your course gets expensive enough, people will feel uneasy spending all their money at once. That’s where payment plans come in:
“If you’re pricing anywhere over the $200 mark, payment plans are great. Mine is $389 or $99 a month for 4 months. And just from credit cards and pay check schedules, that works really well for a lot of people and you’ll see more sales.”
Increasing the Value of Your Priciest Course
Obviously, these techniques won’t work if there isn’t a noticeable difference in the value that justifies your most expensive offering. There are a couple of ways you can do this with low impact to you.
Coaching as an Add-on
Coaching has a high perceived value in all markets, and no matter how good your course is, your students will have novel questions. But how do you structure coaching? There are many ways:
“It could be a Facebook group with 100 people or 1000 people in it. It could be, you know, a cohort of people who go through and you really help them for 4 weeks and then they’re done. It could be one-on-one coaching.”
Level up Your Outcome
Since your student’s outcome is one of the key motivators for them buying your course, if you increase their outcome, you can increase the value and the price. Here’s an example:
“If we look at the drone course that CineChopper is charging $1500 for, he could have a course that’s just ‘You’ll learn how to fly a drone.’ That would be level 1. Level 2 is you’ll learn how to fly a drone in the film industry.’ He’s actually certifying people and getting them jobs in the film industry. So, what he’s actually selling is your dream job. You’re going to be a drone pilot in the film industry and I’m going to take you there. So it’s not about the course at all anymore.”
To do this, you may need to think bigger, which is never a bad thing.
- Pricing your course is not about the length/volume of content or what your competition is doing. Even if your niche has no paid options, you can still make money.
- Pricing your course foremost about the outcome your potential customers want. So if you promise to get them a 10,000 raise, then $500 is a great value.
- Pricing your course is also dependent on factors such as your ROI, your course’s perceived value, and where it fits overall in your business.
- One of the most solid pricing strategies in marketing is the rule of 3s – have 3 options and make sure the middle is the best value for the price.