How to Charge a Pay-What-You-Want Fee for an Online Course9 minute read
The "pay-what-you-want" (PWYW) pricing model, also known as "pay-what-you-can" or "donations," is a pricing model where the customer is allowed to choose what amount to pay for a product or service, rather than having a price set by the seller.
This type of pricing can be used to increase accessibility and make the product more affordable for those who may not be able to afford the full price, while also allowing those who are able to pay more to support the creator or business.
In today's article, we will explain the benefits of charging a pay-what-you-want fee for your online course, how to collect donations from online course students, what are the best practices for doing so and when it is ok to use the PWYW pricing strategy.
We will focus on how to charge a pay-what-you-want donation for your online course or digital products specifically.
To learn more about coming up with the ideal price for your online course, check out this article from our blog: Ultimate Guide to Pricing Your Online Course (With Earnings Calculator)
This pricing strategy has two main objectives.
Firstly, the company that employs this method conveys confidence in its product. They are essentially saying: "Our product is so great that we know you are going to pay what it is worth."
Secondly, the PWYW pricing empowers the customer by giving them complete control to determine the value of the product and pay a price that they feel is appropriate.
This "weigh then pay" approach gives customers the power to decide what they think is a fair price.
In the best-case scenario, the customer will choose to pay a price that is aligned with the value they receive from the product, leaving them with a feeling of respect and appreciation for the company that trusted their judgment. This kind of approach is a great way to increase loyalty and reward your regular customers.
But what about the worst-case scenario?
The PWYW pricing model is indeed a risky one, and it comes with its limitations. Before you get too excited, you should know that this strategy only works in specific circumstances and should probably not be your primary pricing model for your whole business.
To understand when it is most appropriate to ask for donations and use the pay-what-you-want model, keep reading below.
Can You Charge a Pay-What-You-Want Fee for an Online Course?
Yes, the pay-what-you-want pricing model can be used for courses and all kinds of digital products. It is also a way for creators to collect and accept donations from their students.
In this case, the online course creator allows students to choose the amount they would like to pay for the course rather than having a set fee.
This approach can make the course more accessible and affordable for students with limited budgets, while also allowing those who are able to pay more to support the instructor or business.
It is important to note, however, that offering a pay-what-you-want pricing model can also present some challenges, such as setting a value on the course content and ensuring that students who pay a lower fee still receive a high-quality learning experience.
As we already mentioned, this model should not be your to-go pricing strategy for your whole online course business, especially not for your flagship online course (that may be worth thousands of dollars).
Which online course platform lets you charge a pay-what-you-want fee or a donation?
With Heights Platform you can easily let your students pay what they want to access your online course, download your digital product, join your membership or purchase any product you are selling. This can also be used to accept donations.
You can even set a duration limit or access expiration with the pay-what-you-want option, and offer multiple payment strategies in combination (a flat fee, a subscription or installments).
Heights Platform doesn't charge any transaction fees and what you earn is 100% yours to keep!
Benefits of the Pay-What-You-Want Pricing Model in Online Courses
Before we get into the dos and don'ts of charging a PWYW fee or accepting donations, let's see the benefits of this pricing strategy:
Empowers the Customer
One of the main benefits of letting your customers choose what to pay for your course or digital product is the empowerment that comes with it. You are turning the tables and empowering your students to assign value to your product. Generally speaking, customers who incur into the PWYW model will feel a sense of respect for the brand and creator who is letting them make this decision.
This can also lead to increased engagement and a sense of investment in the course. Students who choose to pay more may feel more invested in their learning and be more likely to complete your course.
Instead of promoting the benefits of your product and trying so hard to convince potential customers that your course is great, the PWYW is a simple way to show your confidence in the product you are selling. Since you are sure about the value of your course, you are not afraid of letting your new customers attribute a monetary value.
Another way to achieve the same feel and show that you are confident about your product is to offer a lenient refund policy. This can be a great idea for products that do not go well with the PWYW model, such as your flagship course. (Keep reading below to learn about the limitations of this pricing model).
Makes Your Product More Accessible
By allowing students to choose the amount they pay, the pay-what-you-want model makes courses more accessible to a wider range of individuals, including those who may not be able to afford a set fee. This increased accessibility can lead to higher enrollment and a more diverse group of learners.
When Is It Ok to Charge a Pay-What-You-Want-Fee?
The tricky part about PWYW pricing is that it doesn't go well with everything.
Perhaps one of the most famous examples of a successful use case of PWYW pricing is the one of the band Radiohead.
In 2007, Radiohead released their digital album In Rainbows on their website and anyone could download the album by choosing the price they wanted. The band used this approach as a way to fight online piracy and the increase in illegal downloads of their music.
As a result of their PWYW strategy, Radiohead made $3 million, and the largest portion of it was from digital downloads on the website. That is more money compared to their traditional sales strategies.
Other business owners were not as lucky with their PWYW strategies, such as Chinese restaurants that for its opening decided to let their customers order as much food as they wanted and set their own prices, as a way to grow a loyal customer base from the start.
The restaurant lost $15,000 in a week and most of the customers who tried the food didn't come back after the PWYW promotion was over, even if they stated that they loved the food.
So what makes a successful PWYW strategy, and when is it safe to use this approach?
You Have a Loyal Audience
One of the differences between Radiohead and the Chinese restaurant example is that the world-renown music band already had a vast loyal audience of fans who wanted to support them.
If you already have a loyal audience, this can be a great way to reward your followers and empower them.
You Are Selling a Low-Cost Product
The pay-what-you-want pricing strategy does not go well with high-value online classes and courses. Asking for online donations for a $2000 course is not a good idea, and it doesn't benefit you or your students.
This pricing model is better suited for products with a low price point and impulse buys, such as digital products or downloads or even lead magnets.
You Are Sponsoring a Charitable Cause
PWYW is the perfect way to ask for online donations if you want to raise money for charity with the revenue from your course sales. This way students have an added incentive to pay what is right according to their own judgment, plus you are contributing to a good cause.
You are a Non-Profit Organization
Nonprofit organizations that provide educational resources or services can use the pay-what-you-want model to make their offerings more accessible and affordable to a wider range of individuals.
You are Looking for an Alternative to Offering a Free Trial
Offering a free trial is generally not the best idea for an online course or a membership site. We explain why you should avoid free trials in this article: Why You Should Not Offer a Free Trial in Your Online Course
If you are looking for an alternative to a free trial, it can be a good idea to let new students into your course by paying a small amount with the PWYW model and limiting their access in terms of duration. For example, you could offer two options for enrolling in your course.
Option one can be to pay a fixed fee and the full price of your course, and option two can be to access the course for a limited amount of time by letting the customer choose how much they want to pay for this "low-cost" trial.
This is a good idea since you are asking new students to commit and invest something in order to join your course, even as a trial.
You can easily set this up with Heights Platform using our Pay What You Want feature.
Best Practices to Follow for a Pay-What-You-Want Pricing Strategy
Now that you know that the pay-what-you-want pricing strategy is not for everyone, here are some best practices to effectively charge a pay-what-you-want fee or accept donations in your online course:
Set a Minimum Price
Consider setting a minimum price for the course to ensure that you are able to cover the costs of producing and delivering the content. This also ensures that students who choose to pay a lower fee are still contributing something towards the course.
Suggest a Price
Pay-what-you-want pricing can be confusing for new learners, especially if they are asked to pay before accessing the course or digital product (therefore before assessing the value of your product). Consider writing a description such as: "Most people pay XX $."
This can offer a reference point for uncertain customers, while also setting the bar for the amount you wish to receive from the donations.
Offer a Fixed Pricing Option
You can pair PWYW with another option, for example, a fixed pricing fee with added benefits.
On Heights Platform you can set a duration limit or expiring access that is specific for PWYW pricing. For example, you can offer two options to students before enrolling in your course:
- Pay What You Want with limited access (you can choose the number of days students will get access to your product).
- Fixed, one-time fee with unlimited access (or limited access but potentially longer than the access period for pay-what-you-want customers).
Be transparent about the costs of producing and delivering the course, and explain why you have chosen to use the pay-what-you-want model. This helps to build trust and credibility with your students and demonstrate the value of the course.
Encourage students to consider their financial situation and what they believe the course is worth when determining how much to pay.
How to Charge a PWYW Fee for Your Online Course Using Heights Platform
Heights Platform is an all-in-one solution for course creators who want to create and sell courses, digital products, memberships, and more while providing a great learning experience for their students.
Heights Platform allows creators to charge a pay-what-you-want option, which gives students the flexibility to determine the price they are willing to pay for the content.
You also have the option to set a time limit for this PWYW option, ensuring that the content remains accessible for a certain period of time only if students choose this option.
In addition to pay-what-you-want, Heights Platform also provides multiple payment strategies, including a flat fee, subscription, or installment plan. You can choose to offer one of these options or a combination of these!
This allows for a more personalized approach to pricing and helps accommodate the diverse needs of your students.
Furthermore, one of the key benefits of using Heights Platform is that there are no platform transaction fees or commissions, meaning that all the money earned is yours to keep.
To set the PWYW option for one of your courses or products using Heights Platform, put that product inside a Bundle and edit the payment plans of the bundle. A bundle in Heights Platform is a collection of products that can have different payment settings, however, it can also include only one product.
If you choose to only add one single product into a Bundle, your learners won't see the word "bundle" used at all.
Once you have created your bundle, go to its setting and select the payment method you prefer.
You can choose from charging a one-time payment, pay what you want, installment plan or subscription plan.
When you select "Pay what you want" you will be able to set a duration limit (how long students will be able to access the course by selecting this payment method).
You can set your desired amount of days, or if you wish to grant unlimited access, simply leave the section blank.
You can also set a minimum amount that students have to pay in the PWYW settings.
The picture above shows what a student checkout looks like after selecting both a one-time fee and the pay-what-you-want pricing.
To summarize, the pay-what-you-want pricing model for courses can provide a range of benefits for creators and students, including increased accessibility, engagement, value, and flexibility. It also allows creators to collect donations from their loyal customers. No matter what stage your business is in, experimenting with PWYW pricing can be a great strategy for growth!Create Your Online Course Today