In today’s episode, I’m going to tell you how to price an online course for optimal conversion.
If you are working on an online course, membership or group program, and you’re worried about how you’re going to price it for optimal conversion, then this is the episode for you.
Let’s dive in!
There’s actually a really straightforward answer when looking at how to price an online course for conversion… and that is to lower the price.
BUT I want to do this episode of the podcast because we don’t want to just price based on conversion.
We want to price based on a number of different factors because it’s not actually as straight a line as you think. Sure, your conversion rate will go up as the price goes down in most cases. You’ll probably get better conversion at $100 than you would at $400… but it’s not the straight line that you think.
When you half the price of a program, you do NOT make double the sales.
I have absolutely seen that in my own business and with my own courses and programs.
For example, when I first launched my Udemy course 30-Day Business Blast, it was a $20 program that I was launching. I ran a webinar and did a proper launch for it and everything, and my conversion rate from that launch was about 28%. Now on evergreen, whenever someone comes in and grabs my freebie for that, the conversion rate is at or just below 10%.
My Take Off program is 100 times the price, and in launch, it gets about 4-5% conversion. On evergreen, it gets around 1% conversion – sometimes just under.
Even though the price is 100 times more, my conversion isn’t 100 times less.
We don’t actually want to be pricing just for conversion alone.
If we were pricing just based on conversion, then what I would be looking at is: At what point is it profitable with the lowest possible price? Because that’s going to make it really easy for people to say yes to it.
But we don’t price just on how to get the most number of sales, despite what most gurus out there will tell you.
Conversion isn’t actually what we want to be using as our only indicator or our only driver of pricing decisions.
I’ve got four factors you need to take into consideration when thinking about how to price an online course:
To maximise conversion, you want to keep the price point as appropriate for your audience as possible, and you want to push it down. If you want to maximise conversion, then you want to push your price point down.
BUT we’re not just pricing based on conversion.
I also want you to price based on profitability.
The higher the price of the program, the more profitability you’re going to have if you can keep your conversion rates up.
If your average cost per lead for your course is $100, then charging $120 for your programme isn’t necessarily the right decision because it’s got such a slim profit margin.
Profitability is an upward pressure on pricing. Conversion is a downward pressure on pricing.
Then we actually have another two factors that I want you to take into consideration…
3. Maximising completion
Generally, the higher someone invests in a program, the more likely they are to complete that program. They’re going to feel more invested, and so, therefore, they’re going to be more likely to complete that program.
Again, there comes a pricing cap where that doesn’t actually apply. Just because something is lower-priced, doesn’t mean you can’t maximise completion rates in other ways.
Using my 30-Day Business Blast as an example, even though it’s only a $20 program, it still has a really high completion rate. That’s because of the way that it’s built and constructed, and some of the things that I do to engage people and re-engage people in that program.
There are other ways that we can maximise completion, but maximising completion is an upward pressure on pricing.
We’ve got downward pressure based on conversion, upward pressure based on profitability, and upward pressure based on completion. And then the final factor that I take into consideration is…
Relativity is not to other things in the market. I don’t actually recommend you look at the price of other things in the market, because your product or service needs to be unique, niched and have a very strong value proposition.
That relativity is actually in relation to other ways that people could work with you.
If you also offer VIP one-to-one services that deliver the same or similar outcomes, then you want to make sure that your group program is priced with relativity to that.
In most cases, relativity is actually a downward pressure.
Let’s say your VIP package is $2,000, then people will assume that working with you one-to-one will get them the outcome easier, quicker, faster and cheaper. They’re going to get there sooner, they’re going to get there easier, they’re going to get there with more hand-holding, and they’re going to get support more specific to their own needs.
People will always assume it’s better to work with you one-to-one.
This is a really interesting assumption and buyer psychology space for us to explore, but that is what the research shows.
People will make assumptions that working with you one-to-one is more valuable.
If your VIP package to work with you is $2,000, then charging more than $2,000 for your group program is going to create an issue of relativity in most cases.
There are some exceptions to the rule, but in most cases, it creates an issue of relativity.
Relativity can be a downward price pressure as well because you want to make sure it’s relative.
This is why I recommend before you go out and launch a group program, membership, mastermind or anything like that, to do a price increase of your one-to-one so that you’re creating spaciousness in your time and what’s available for you to be of service and be able to launch and deliver on your group program.
It also helps with that relativity issue so that you don’t have to push the price of your group program down as far.
You can see that there is a range of different things that I would recommend you take into consideration when pricing.
Don’t just price for conversion!
It is a factor you want to take into consideration, but not the ONLY factor.
How do you then make those decisions around pricing? The way that I recommend you make those decisions around pricing is to first and foremost start with the relativity issue.
This is because the relativity issue gives you a number to start with.
Let’s say your VIP way of people working with you one-to-one is $2,000, and then you’ve got a large scale group course that hundreds and hundreds of people are likely to be going through in the coming years. You might start by dividing your VIP package by four. Your VIP package is then $2,000, and your group program is $500.
Then we can use that starting number (that’s not the actual price, that’s the starting number) to start taking into consideration the other factors.
At $500, will people feel that they are adequately invested to maximise completion of that program? If not, we might need to nudge the price up a little.
At that price point, is it going to be easy for you to achieve a really strong conversion rate? If not – if you feel like $500 is just so out of range for your ideal clients – then you might need to bring that price down.
Then the final question is around profitability is: At that price point that you’ve now come to, can you make enough profit for this to be a viable product in your business? If not, we might need to nudge it up a little.
You can see by putting those factors in order of starting with relativity, then completion, then conversion, then profitability, we’re going to get to a price point that’s going to make the most sense strategically for your business.
The last thing I want to say about how to price an online course is that you can always go up in price.
There’s nothing wrong with starting at a really really no-brainer, easy ‘yes’ price for people and moving that price up as you relaunch your program over and over again.
Price increases are a great motivator for people to jump into a program sooner rather than later. If we know that a price increase is coming, then it’s going to make us seriously consider whether we want to purchase right now.
I’m not suggesting that you go WAY down and bottom out your pricing, but if you’re feeling a little uncomfortable with the price point that you’ve come to, you can always put the price up in subsequent launches.
Another option is during the launch, you can have an early bird and a full price. This means you start with something that feels really comfortable for you and that you think is going to be quite comfortable for your audience as well, and then you can put it up ti full price.
The final thing I want to say when it comes to things that are comfortable for your audience is that at any point in time, when you attract 100 people in who are interested in the outcomes that you deliver in your program, your goal is not to create a price point that’s comfortable for every single one of those people.
There’s only a small percentage of people who are actually ready, willing and able to invest both the time and the money to get the outcome.
Your job is to focus on those people.
You will have more people than not for whom the price point is going to be an issue for them at that point in time.
If you’re getting three people saying that it’s not in their price range right now for every one person who joins, then that’s actually a pretty decent ratio.
We can get very caught up in thinking that it’s too expensive because that’s the most common objection that you get from people. But that doesn’t mean you need to lower the price.
Don’t make it mean that you need to lower the price!
I highly recommend you check out Episode 274: What should you do if they say “I can’t afford it”?.
If you do get a bunch of people saying they can’t afford it, this episode will guide you through that process.
Don’t make it mean that you just need to lower your prices, because often that is NOT the case.
Thank you so much for joining me for this episode of the Heart-Centred Business Podcast. I hope you’ve enjoyed this episode on how to price an online course. I would LOVE to know if you’ve got any questions or lightbulbs that have happened as a result of this episode.
Come on over to the Heart-Centred Soul-Driven Entrepreneurs Facebook group, use #podcastaha, let me know you’ve been reading episode number 287 and what your questions, lightbulb moments or comments are. Let’s continue the conversation in the community!
Until next time, I cannot WAIT to see you SHINE.