Ultimate Guide to Pricing Your Online Course (With Earnings Calculator)19 minute read
Putting a price on knowledge is hard.
As for any non-physical product, it can be tricky to price an online course.
This is a step that puzzles many creators like you, so don’t worry if you are feeling stuck or confused at this point - you are not alone.
In today’s article, we will cover all aspects of finding the right price for your course and audience. Here is what you’ll learn:
- What to consider when choosing a price
- Reasons why you should avoid low prices
- When is it ok to sell a low-price course or give it away for free?
- How do you justify a high price?
- Other Pricing Strategies
- How to use discounts effectively
So keep reading below to find out the right strategies that will help you put a price on your online course, and don’t forget to check out our pricing calculator!
What to Consider When Choosing a Price
As you can imagine, choosing the right price for your online course is not an immediate process. There are many aspects to consider before making an informed decision.
The truth is, there is no right or wrong answer to the question ‘how much should I charge for my course’?
The only thing you can be sure of is that the price you choose can make a difference between profit and loss.
Let’s see now some factors you should take into account when evaluating your price.
1. What value are you offering?
An online course is not a physical product. You cannot set a price according to size, quality, materials. However hard it might be, try to quantify the perceived value. The perceived value of an online course can include many aspects: what your students will learn from it, real-life applications of your teachings, how much in demand is your topic, is it a life-changing experience?
If the downside of pricing an online course is that it’s difficult to quantify its value, the good news is that you can justify charging a higher price.
To give an example, think about luxury.
For instance, an expensive bag.
Surely an expensive bag is probably hand-crafted; it uses qualitative materials and looks beautiful, but at the end of the day, what justifies Hermes to charge as much as $200’000 for a Birkin bag (a woman’s purse)?
The answer lies in the experience, the perceived value, the feeling.
A Birkin bag is one of the “most-wanted” accessories in the world. Why? Because it’s unique and makes the buyer feel special (value, experience).
Now I am not saying that you should charge $200’000 for your course, what you should do is focus on selling values and experiences to your customers.
Whatever your value proposition may be, make sure to always communicate it to your potential students. Starting from your course title, your teachings’ value and results should be crystal clear to your audience.
For example, if you are selling a Yoga course, a great title could be “30-Days Challenge to Become a Yoga Master”. With a title like this, you can justify a high price - let’s say $1,000 - since you are delivering actual real-life results to your students.
If you name it “Introduction to Yoga,” most people won’t be willing to pay more than $100 for it, as they cannot foresee the benefits they'll get from investing in your course.
2. Does size matter?
A common mistake that creators make when choosing a price for their course is thinking that the longer the course, the higher the price.
It doesn’t matter how many lessons you’ve made or how many features you've added to the course; the price has nothing to do with this.
As the cliche wants, focus on quality, not quantity.
If you are confident that your students can achieve actual results with a relatively short course, you shouldn’t worry about pricing.
By the same logic, if you try to sell an extremely long course that doesn’t really offer any end goal or result, your students will most likely feel ripped off.
“Don’t fall into the trap of thinking that more lessons = more value. We are living in a world where time is precious and people want solutions fast. Price your course according to the results you get for your students and try to create lessons that get those results efficiently and without ‘fluff’.” Bradley Stevens. source
3. It’s not all about the cost
The price you choose for your online course should enable you to:
- Cover your costs.
- Give you enough margin to invest in marketing and making your course better over time.
While covering your costs is essential, you should aim higher than this, and here is why.
First of all, you are selling something unique. You might have competition in your niche, but your course is YOUR OWN product, impossible to replicate.
You’ve probably put in so much time and effort in building your lessons, and if you believe that time is money, your price should reflect this.
Then there is the value we’ve talked about before, so because of all these reasons, you cannot just settle for a price that will barely cover your expenditures.
4. Industry Research
Carrying out industry research can help you determine a few important aspects of the most suitable price range for your course.
Finding out insights about who your competitors are and how much they are charging can be a good indicator of how much your audience can and will pay for the type of solution you offer.
That said, you shouldn’t limit yourself to what your competitors are charging.
Instead, use this information to validate your price idea and make sure that your potential customers can afford it.
Charging lower than your competitors can work if you sell a physical product identical to others in the market. But an online course is unique.
If you lower your price thinking to have a competitive advantage in your niche, you will only send the wrong message to your audience. You will send the message that your course is not better than the competition, therefore cheaper.
Setting your competitive advantage based on a low price can be dangerous for any business. There will always be someone out there who can set a lower price than you and attract your customers.
Also, if your customers buy your course only because it’s cheap, chances are that they will leave you as soon as they find a more affordable course. Not to mention that they won’t engage with you as much and are less likely to grow with you and review your course.
While if you focus on marketing your course for its value - rather than its price range - you will attract loyal customers who choose you for what you are teaching, which will allow you to build a sustainable business.
5. What is your ideal revenue?
Another way to get an idea of what you should charge for your online course is to calculate the price backward from your ideal revenue.
Think about a (realistic) amount of money you’d be comfortable with: this will be your starting point. Then continue by calculating all the expenses and costs associated with building and marketing your course and subtract them from your number.
The next step is to get an idea of how many students you’ll potentially get after your course launch. To get a realistic estimate, always keep the numbers low.
Once you figure out the number of students you are aiming for, divide your revenue (minus costs) by the number of students, and you have your price!
To make things easy for you, we have created a fantastic calculator that will help you determine the ideal price for your course.
Online Course Earnings Calculator
Cost Per Acquisition (CPA): $0.00
|Costs: CPA × Sales & Card Processing Fees of 2.9%||-$867.10|
This calculator shows earnings for a single course. Over time, many creators offer additional courses or digital products for students to purchase, increasing potential earnings per student.
Membership Subscription Earnings Calculator
Cost Per Acquisition (CPA): $0.00
|Total Annual Gross:||$34,800.00|
|Costs: CPA × Sales & Card Processing Fees of 2.9%||-$1,009.20|
|TOTAL 1ST YEAR NET:||$33,790.80|
|TOTAL 2ND YEAR NET:||$33,790.80|
4 Main Reasons Why You Should Avoid Low Prices
While we cannot know how much you should price your course, we can tell you why giving it a low price is not a good idea.
To learn even more about this: How to Price Your Online Course or Group Coaching Program.
#1. Consumers think “you get what you pay for.”
Yes, that’s right. People tend to believe that you get what you pay for. If you settle on a low price, your potential students will automatically assume that your course is not worth buying.
Would anyone buy the new iPhone if it cost $50? Sure some people would. It’s a great phone! But the perceived value would not be the same, and over time Apple would suffer from this.
This is an extreme example, but it shows that when you are deciding on a price, you are sending out a message. You are showing your audience how much your course is worth.
So our advice is to always try to position yourself at a premium price, which will increase the perceived value to the eyes of your customers.
#2. Your students won’t be as engaged.
Like the “you get what you pay for” psychology, setting a low price for your course will impact your students’ motivation.
A premium price will incentivize your students to put more effort into learning and completing your course. They will want to get their money’s worth.
Even if your course offers incredible value, if your students cannot recognize that value, they won’t put any effort into committing to the lessons.
Imagine you have to buy a new jacket, and you decide to get a fancy one for $500. You would probably take super good care of it, at least at the beginning. If you could buy the same jacket for $20, you wouldn't feel the same pressure.
Same for an online course. If your students have to pay $1000 to enroll, they will put in a higher commitment to make sure they get enough out of the purchase, whereas for $30, they won’t feel the same obligation.
That said, your price should still be somehow reasonable and in line with what your students can afford. Ideally, your price should be the maximum your target audience is willing to pay.
#3. You won’t have enough revenue to invest.
Another reason why choosing a low price is a bad idea is the lack of revenue left to invest.
In other words, if your price doesn’t grant you high margins, you won’t have enough money left to invest in marketing or in expanding your course.
This is not fair to you or your students: if you cannot afford your course development, you will deprive your students of learning opportunities, and it will reflect poorly on your reputation.
#4. It takes more effort to break even.
You might think that if your course is cheap, more people will buy it, making it easier to promote.
In most cases, this turns out to be wrong. We’ve already said that people don’t buy something just because it’s cheap; they buy it because it is valuable to them.
And even if you could gain a few more sales by lowering the price, is it really worth it?
At the end of the day, you will need to put in the same amount of effort to bring in customers, whether your course is expensive or not.
Promoting your course, getting new leads, and marketing to them will take up the same amount of time and money. If you set a high price, you will cover these costs faster and more efficiently.
When is it ok to Sell a Low-Price Course or Give it Away for Free?
Now that you’ve learned why it is crucial to set a premium price for your online course, there are certain situations where it may be ok to choose a lower price or give a course away for free; let’s find out.
You are validating your course idea with a pre-launch
Pre-launching or pre-selling means selling your course before the official launch date. Your students will purchase your course but won’t be able to access it until a set date.
Creators use this strategy to validate the idea of their course, find out if there is enough demand, and collect funds.
Learn more about pre-selling your course: How to Pre-Sell Your Online Course and Profit Before the Launch
Setting a lower price during your course’s pre-launch can provide an added incentive to your students.
For example, you could start pre-selling your course for, let’s say, $400, and raise the price to $500 after the launch date. This way, your “pre-launch students” will benefit from a discounted price, and you’ll be able to secure more revenue to improve your lessons (and therefore justify a higher price after the launch).
You offer a discount for lead generation
A powerful tool to promote your online course is email marketing. However, collecting emails (or leads) is not always easy.
Your potential customers will be more inclined to leave you their email addresses if they get an added incentive (like a discount).
So, in this case, offering a discount in exchange for email addresses will help you grow your mailing list, and you’ll have more chances to convert those leads into sales since you are promoting your course directly to them.
That said, be careful not discounting too much. If a low price can impact your course’s perceived value, the same can happen with massive discounts. Generally speaking, a small discount (5 - 10%) will do the trick.
You are promoting another course (or product)
Another marketing tactic that creators like to implement is to create a “mini-course” and give it away for free.
A mini-course is essentially a quick course that should tease your audience and convince them to purchase your main course.
By giving away a free course, you are offering high value to your potential students, and you are giving them a taste of what your real course could offer them.
If you manage to create a mini-course that gives enough information without spoiling your main content, it will leave your potential customers thinking, “if this small course was so great, I wanna see what I can learn in the full course.”
Overall, this is an excellent marketing strategy. It can give your potential customers the confidence they needed to purchase your course and see you as their mentor.
Learn more about this marketing strategy (and others): A Complete Guide on How to Promote Your Online Course and Boost Sales
Some creators also use a similar strategy where they sell a small course or product for a low price, and they run advertisements campaigns with it to collect leads and information about their audience. This way, they can cover their advertisement costs with the revenue from the “low-priced product” while attracting potential customers to their page and introducing them to their main (expensive) online course.
You are doing a product demonstration or training
Another scenario where it would be ok to give away a free course is a product demonstration or training.
If you are selling a product that requires a demonstration or training in order to be used, providing a free online course with instructions can be an excellent incentive for people to purchase your product.
For instance, software companies sometimes do this to facilitate new customers’ onboarding.
However, if you are a creator and are only trying to sell your course, our advice is to stick to premium pricing.
How do You Justify a High Price?
Now you know why it’s important to choose a premium price for your course.
And if you’re like most course creators, you’re probably asking yourself, “is my course good enough to ask for such a high price?”
There are certain things you can do and features you can implement in your course, which will make it stand out from the crowd and justify its premium price. Let’s see them below.
Justify a high price by: offering quality content and value to your students.
We can’t stress the importance of delivering and communicating value enough.
Consider your course’s benefits and how it will affect your students’ lives.
Are you teaching them a life-changing solution? Will they be able to get their money's worth after completing your course?
If your students can see the price of your course as an investment, you’ll be able to charge a higher amount.
For instance, let’s say that you are selling a course about making money with affiliate marketing. Your course name is “Learn how to make your first $5,000 with affiliate marketing”. Your students will be happy to pay a high price, such as $2’000, for a course which will help them make even more money - assuming that you can actually deliver your promises.
But what if your course doesn’t make your students rich? Whatever the topic, just focus on what value, experience, or benefits your students will get if they enroll in your course.
Learn more about this in our blog article: The Most Important Thing You Need to Know When Creating an Online Course - Build it Around a Result.
Justify a high price by: serving a specific niche.
If you are selling a specialized course targeted to a particular niche, you can justify a higher price.
As a course creator, imagine you wanted to buy an online course about social media marketing. You find two courses:
Course A is called “Introduction to Social Media Marketing,” and it costs $200.
Course B is called “Social Media Marketing for Online Course Creators,” and it costs $500.
You would buy course B, right?
Of course! Because course B is talking directly to you and - as a customer - you feel more confident about its validity. For this reason, you don’t mind paying a higher price.
So if your course is directed to a specific niche, don’t forget to communicate it to your audience effectively.
Justify a high price by: using a platform that helps students learn.
Your course’s goal should be to teach your students something valuable in an easy way.
To do this, you need to make sure that your students have all the necessary tools to succeed.
If your course is nothing more than a video and access to a Facebook group, you are not motivating your students to learn and improve, and you won’t be able to justify a premium price.
So how can you make sure that your students will get the most out of your course? A great way to do that is by providing one-to-one teaching.
One-to-one teaching can be done online if you have the right tools. For instance, you could build discussion boards for your students to interact with each other and share ideas. Or you could set up weekly one-to-one or group meetings with them to answer any questions.
To keep your students motivated, you could gamify their learning process and give out awards and badges for each milestone they reach. You should prepare some test questions at the end of your course or lesson to keep them engaged.
All of the above can and will justify an increase in your course’s price. But how can you do it?
Choosing the right platform to host your course is an essential step towards the success of your business. It is essential that you specifically look for software dedicated to course creators only. These platforms will provide you with the tools your students need in order to learn effectively (gamification, community building, discussion boars, and more).
If you chose Heights Platform, you already have the potential to deliver a far more advanced and better course to your students, rather than merely sending them a PDF or giving them access to a Facebook group.
Within Heights, you can build your own course with ease, and you can add downloadable digital products, attribute points to each lesson, set up awards and badges for your students, create a message board and projects for your students. On top of this, you can track each student’s progress within your course, and you have access to statistics to check how they are doing.
Other Pricing Strategies
If deciding how much to charge for your course was not overwhelming enough, you’ll be glad to know that there is one more decision you need to make: which pricing strategy should you choose?
Below we will briefly uncover the main strategies creators apply to their online courses and which one is best for you.
On Heights Platform, you can seamlessly set up one-time-price installments, subscription-type payment plans, and link together several products in a bundle. See our payment guide to learn more about the different ways you can sell in Heights.
This means that your students will get full access to your course by paying once. This strategy is very straightforward and easy to implement, especially for new creators. It works great if your course is structured around a result, and it is relatively fast for your students to complete.
For example, if your course is called “Master Japanese Cuisine in 30 Days”, it makes more sense to set a one-time price at the beginning, rather than charge a subscription each month (since they will achieve the result in just 30 days).
Our advice is to create one “flagship” course and choose a high one-time price for it if you are just starting out. An ideal range for a one-time price for your main course goes from $300 to $3000. This way, you won’t need too many new enrollments to break even.
To calculate your ideal one-time price for your flagship course, check out our pricing calculator. (link to calculator)
How can you do this? Learn how to set up a one-time price for your Heights online course.
Choosing an installment plan for your program can be a good idea if done correctly.
First of all, especially if your course is created around a result, you should only set this strategy as a secondary option to your one-time price.
For instance, if your one-time price is $1000, you could also offer the installment option of paying $400 over three months.
Now, you might have noticed that 400x3 = 1200 and not 1000. This is not a mistake. Our advice is to offer the installment option for a higher price than your one-time-price for two main reasons:
- With installments, you always have the risk of people canceling their subscription before it’s fully paid. And sure, you can cut off their access to your course and try to contact them, but in monetary terms, having them paying your full price at the beginning is more beneficial for you. Your students will consider the full payment as a better deal, so it’s a win-win.
- Keep the number of installments low: avoid having more installments than the course length. From our experience, we've seen 3-months installments working well for creators.
A membership strategy is very similar to a subscription plan in terms of pricing. This type of pricing plan can be a great option, depending on your online course’s topic or style.
Membership can be a perfect option for ongoing courses, such as language learning, fitness, or hobbies.
If you are teaching a language course, chances are your students won’t be fluent in a couple of months, so it makes perfect sense to charge a monthly subscription instead.
Our advice is to choose the membership style only if it fits your course. Sometimes creators decide to adopt this plan even though their course is built around a result, and they end up creating something so hard and complicated that they can’t keep up with. A too complex structure to justify your membership plan will not help you or your students.
Is the membership program right for you? Learn more about setting up your membership site with Heights.
How to Use Discounts Effectively
Discounting is a widely used way to incentivize customers to purchase a product, and it can be effective if used with balance.
By offering discounts or limited-time offers, you’ll be able to leverage a customer’s FOMO (fear of missing out).
That said, you shouldn't discount your course forever and to anyone: there are certain situations where a discount is appropriate and others where it is better to avoid it.
As a general rule, it is always good to offer a reason behind your discount. You don’t want to look desperate or have your potential customers think that there is something wrong with your course. Explaining a reduced price will reassure your customers and leverage their fear of missing out.
A great reason to offer a discount is to reward your email subscribers. If someone is interested in your course but not yet ready to buy it, they might react positively to the incentive of a small discount. And even if they won’t purchase your course right away, you now have their email address, and you can keep promoting to them directly.
Discounts can also work well if you set up a referral program. This is a great way to promote your course with little effort. With a referral program, if one of your students brings you a new customer, they both receive a reward - in this case, it could be a discount.
Another approach to effectively use discounts is through your retargeting ads campaign. If you use paid advertising, a retargeting campaign allows you to show your ads to a warm audience who is already interested in your course (ex: already visited your website).
You can also use discounts and coupon codes to give a favorable price to a specific audience. For instance, you could set up a “family & friends” discount or reward loyal customers, etc.…
To learn more about these marketing strategies, check out our article: A Complete Guide on How to Promote Your Online Course and Boost Sales.
These are examples of how you can use discounts effectively for your online course. For whatever reason you decide to offer a discount, just remember to keep it realistic.
A strategy that works well for course creators is price anchoring, meaning to set a price in your potential customers’ minds and then offer them a lower one to exceed their expectations. Some creators like to avail of this strategy in webinars or in their promotional videos, where they announce the monetary value of their teaching to establish a price in the viewer’s mind, and in the end, they reveal their course’s price to be much less.
If you decide to do some price anchoring when you are promoting your course, it’s important to keep it reasonable. For instance, if you tell your audience that your lessons’ information is normally sold at $30,000, while your course only costs $300, it could damage your reputation and the actual worth of your course.
So overall discounts can be great if used correctly, for specific purposes and if you always try to provide a reason behind them.
Hopefully, by now, you’ll have a better understanding of how to choose a price for your online course. While we could not give you the magic number, we have outlined some of the best pricing strategies and factors to consider that’ll help you find the ideal price range for you.
The truth is, the only way to decide how much someone will pay for your course is to put it up for sale and see how many people actually buy it.
However, now you know that setting a higher price will be better for you and your students, and you’ll have more resources available to invest in improving your online course.
And if you are still as confused as you were before reading this article, maybe our pricing calculator can help. So give it a try and let us know how your pricing is doing!