Selling online training courses is a great way to turn a labor-intensive training service into a scalable, high-margin product. For customer education or product training programs that want to clearly demonstrate the value of their contribution to their organizations, monetization of courses allows a more direct comparison to other activities. Contribution to revenue is an incredible way to show your value.
This strategy is also a very useful way for SaaS companies to expand their margins during periods of economic downturn or uncertainty. As budgets get squeezed, turning your training team into a product development team can protect your role while also giving the sales team something of immediate value to sell. If you have existing courses, this can be a very short path to market. This article will describe a step-by-step process for monetizing your eLearning courses.
Once you have pricing defined,
Find out your program ROI with the Training Budget Calculator
How to price online courses
This article follows the Ladder Method for pricing online training courses. The goal of this method is to maximize the value of customer purchases using a highly effective and repeatable process. Another way of saying this is: The method tries to increase the sales value of your customer’s cart at checkout.
It makes a few assumptions, including:
You are selling multiple courses related to the same general topic
You have the ability to bundle courses in your LMS
To accomplish a high sales price at checkout, you will need to align the price of your courses with the perceived value of your buyer. This aspect is key: Price is related to value.
As with any pricing exercise, you want the value that a customer gets to be more than the price of the thing you are selling.
Step 1: Organize your courses into two groups
You should focus on content that is role-based or skills-enhancing knowledge, not product knowledge. Start by listing out all your content into the following two groups.
The first group is content related to how to use your product. These are courses or materials that describe features and functions. For example, if you are a customer education team, you likely have a lot of content that are effectively user manuals for your solution.
The second group of content relates to skills needed to complete the task. These are courses or materials that help the person apply the products they have built. Another way of putting this: These are courses focused on know-how and knowledge related to the role of the person using the products they have purchased.
After you have made a big list of your content and organized it into these two groups, get rid of everything from the first group. Customers expect that the user manual should come with the product.
Imagine you have purchased a lawnmower. Would you pay extra for the company to include the user manual? Most likely not.
However, if your buyer wants to know how to cut the perfect lawn or how to cut their lawn 10 times faster, that is know-how and has value they can’t easily find elsewhere.
When you decide to monetize courses, focus on the content that delivers know-how and skills, rather than descriptions of your product.
There are a few advantages of this approach:
Know-how is often harder to replicate
Because these are role-based skills, you might be able to tap into larger Human Resource budgets focused on professional development
Role-based or skills enhancement knowledge is applicable for even non-customers. You have a bigger audience of potential buyers than just your customers.
Note: This section is written assuming you are a product training or customer education team that is responsible for teaching customers or partners about your solution. This also applies if you work for a For Profit Training organization, however in those cases you will likely have most content in “group 2” to begin with.
Step 2: Create bundles of content
After you have identified courses that build professional capacity for your buyers, organize them into bundles that relate to similar topics.
Here is an example from Moz, an SEO software analytics company. They had several courses that developed skills needed to use our products.
We organized them into bundles based on common topics, in this case Local SEO, Keyword Research, and Backlink development.
And then further organized the individual courses into a logical, linear order of concepts needed first, second, third, etc.
Many programs do this naturally as part of their content development process. The key difference is to focus the linear order on value. Refer again to the Ladder Method for pricing online training courses and apply the concept of the first step, second step, etc to each course in your bundle. Consider which courses or concepts are essential and high value, for example.
Step 3: Develop a price for your bundle
As with all product pricing, there are no hard and fast rules to developing your initial price. There are however a couple of rules of thumb that I’ll outline here.
Average prices for online courses
According to some stats developed by SellCoursesOnline, the average price for an individual course is $137. This is a good target reference for your mid-value courses using the Ladder Method. Consider that when developing a bundle, you will likely have 5 or more courses in the bundle, so this reference price is just one course in that bundle.
Complexity of skill needed to use your products
If your solution caters to technical audiences where there are few solutions outside of higher education to develop skills, the price point can and should be higher. If the solution you have is more for individuals or requires less technical knowledge, then the price will likely be lower.
Common bundle target ranges
Taking into account technical proficiency and complexity, on a scale there are a couple prices where a bundle typically lands:
$150
$300
$600
$1200
$2400
Note that each of these is double the lower amount. At the low end of technical proficiency, a bundle’s list price (more on that later) often ends up around the $150 mark. For highly technical or specialized skills where you will be providing incredibly unique or hard-won experience from your SMEs, you can end up at the higher end of the range. To make life easy, pick one of those numbers above and use it as your initial test.
Most companies “augment” the numbers above so they don’t land on round numbers. For example, you will see $139 instead of $150. Or $2450 instead of $2400.
Step 4: Create individual course prices using the Rule of 12
Let’s use the $600 list price in this example. I will be applying the Ladder Method to this pricing exercise.
In this example, I will have five courses in the bundle. Together they will all add up to $600.
Foundations
Intermediate topic 1
Intermediate topic 2
Advanced topic 1
Advanced topic 2
I will apply the Rule of 12 to this bundle price. It is very simple. Just take the bundle price and divide by 12. Then apply prices according to the following logic:
First step / incentive course = 1/12 of bundle value
Total of Intermediate courses = 4/12 of bundle value
Total of Advanced courses = 7/12 of bundle value
1/12 of this bundle is $50
This would result in something along the lines of the following:
Foundations - $50
Intermediate topic 1 - $100
Intermediate topic 2 - $100
Advanced topic 1 - $150
Advanced topic 2 - $200
Of course, you can adjust these up and down to obscure the specific prices, but this sends a signal that the higher tier courses in the bundle are more valuable. Maybe one intermediate course is $75 and the other is $125, for example. The most important two prices are the lowest or entry point course price and the highest course price. If you take money out of the lowest course, put it in the highest course.
Step 5: Create a discount
What you have created thus far are List Prices. These are what you will show on the website and on each course page. They do not have any discount applied. Now you should create a Discount Price. This is where you give an incentive to purchasing all the courses together.
You will want to have this discount price be material which is another way of saying “significant.” We are all bombarded with discounts and incentives everyday and most of them are in the 5-10% range. Material discounts are those in the 20-30% range.
Why not have a higher discount?
When you get into 50%+ discounts listed on your site, you enter into mattress sale pricing. These diminish the value of the prices you have shown elsewhere. It also tells a person that your prices are inflated generally.
So after you create your bundle and list the courses individually on your site, develop a “purchase all” option for a discount of 20%. Start at the low end of material and see what happens.
Step 6: Monitor and adjust
This is potentially the most important step and it might sound counterintuitive. Ideally you want to find a price that only 30% of people are willing to purchase. If you set your price too low and get an avalanche of sales (70% of people who visit the site make a purchase) then you have not captured enough value.
Set a higher price than you think is warranted initially, and over time, use promotions to drop the price lower than your discounted price. Run an advertisement that takes the discount from 20% to 40% and see what happens. Try to determine what the market acceptable bundle price is and then set up your discount to be 20-30% off that number.
After you have created pricing,
update your Budget Calculator to estimate your program ROI