How to Price an Online Course — The Backwards Pricing Principle

Author 
Bradley Stevens   27

How much should you sell your online course for? Most online course creators will spend far too much time thinking about how to price an online course.

Choosing a price for your online course is complicated. Too high and you might not get sales, but too low will undervalue your product and limit your earning capacity.

When the ‘cost-per-unit’ of your product is nearly non-existent, how do you choose the right price? It’s not like each new student costs you extra in physical manufacturing costs.

In today’s post, you’ll learn how to price your online course.

But first, let’s find out if you need to review your course price...

More...

How To Know if Your Price Is Set Correctly

Three main signs should sound the alarm to let you know your course price might need reviewing:

  • You're getting traffic to your course page but no dimes — a low conversion rate might indicate that your target audience is not willing to pay the price you set

  • You're not getting enough income — which might mean that you're selling for a lower price than you should

However, despite these signs, maybe you do know how to price an online course, and the problem lies elsewhere. So, here's a checklist to help troubleshoot whether you're pricing your course right or not:

  • Are you targeting the wrong audience?

  • Are you addressing a need that's only real in theory?

  • Is your sales funnel broken?

  • Is your messaging strategy — the words in your email sequences, social media posts, sales page, ad copy, blog posts, and their calls to action (CTAs) — communicating the value of your course?

  • Are you telling relevant stories and appealing to emotions without being too pushy?

  • Are you clearly communicating the learning and business outcomes of your course?

Make sure that none of the above is occurring before you jump to the conclusion that you must price your online course differently. But before you do that...

Let’s have a look at some pricing psychology - the Thrive Themes way - to figure out what you should charge for your online course.

Rapid Pricing Approach

You must already know that we are big supporters of Rapid Implementation and overcoming any barriers to taking action. Our goal is always to help you run a better business. So the way we see it, spending days or even weeks trying to think of a price is a waste of your time.

The best thing you can do whenever you get stuck is make a choice, stick to it and measure results. That way, you can get direct feedback that will help you make the right course corrections instead of just continually guessing.

By the end of this post, you’ll be able to choose a price and move on.

A Note On Value Perception

We’ve already written about how to rapidly increase the perception of value for your online course with a bunch of useful tactics. But you still need to start by pricing what your course is worth in the first place before you can work to increase that value, so read on.

7 Reasons Why Your Course Should Sell For A Higher Price Than You Think

How do you feel when I say that you should create an online course that sells for $10? Now, how does that feeling change when I say it should be $50? What about $200? $500?

…$1000?

I bet that at one of those stages you thought, “Oh no, I couldn’t charge that much! That’s just too high!”

Now ask yourself why.

Pricing psychology is such an odd phenomenon. There aren’t enough concrete facts as to why you should set one price over another. But it’s safe to say that most people draw the line at what’s too much too early.

People often price out of fear: “No-one will want my course so I’ll just set a low price for it”. But doing that does you more of a disservice than you think, and shows the lack of belief in your own product.

So instead, let’s look at some reasons why you should charge a higher price for your course than you might think it’s worth.

1) Higher Prices Communicate Value

Selling a $10 course is not something that turns heads. It looks cheap and nasty. If you are looking to be taken seriously, then charging a substantial price is a necessary step towards getting noticed.

If you saw two different copywriting courses advertised on Facebook - one of them for $10 and one for $200 - which one do you think would make you a better writer based on the price tag alone?

When Brian Dean charges $3997 for the highest tier of his SEO That Works course, do you get the impression that it’s worthwhile or a waste of your time?

Setting a higher price directly influences the perception of your course's value, whilst also netting you greater profits. The exact same course at two different prices will be perceived differently.

2. Higher Prices Get Greater Student Engagement

Let’s stick with the same scenario: a $10 copywriting course versus a $200 course. Which one would get greater completion rates?

Online courses are notorious for attracting students who love the idea of getting an outcome but aren’t willing to do the hard work to get there. Or as Shane likes to call them, “Info Product Tourists”. Great term, right?

When a student parts with hard-earned cash, they are making a commitment to themselves to get their money’s worth. So when a course costs $10, there is no real incentive to actually do the course at all! $10 is spare change worth ignoring.

But $200, or even $2000? Well, that hurts the bank account enough to incentivize the student to actually take action and to get their money’s worth.

In this way, you might even say that it’s your duty as a course creator to incentivize your students, and that means making them finish. Setting a decent price keeps them invested.

3. Greater Margins For Marketing

Online courses are a special type of info product in that they can attract a high price, despite their unusually low up-front costs.

The result? Incredible profit margins.

A common misconception however, is that low priced products are easier to market than higher priced ones. Although there is some truth to that, it’s not quite as direct a relationship as you’d expect.

Let’s say you want to drive some paid traffic into your online course sales funnel. If it takes you 100 clicks at $1 per click to find a customer, then your Cost Per Acquisition is $100.

And if that nets you only $50? You’re running at a loss.

By creating a higher value product with greater profit margins, you are more able to invest in your marketing, take risks and actually spend some money to acquire new customers. And it’s your job as a course creator to invest time and money into marketing to reach the people that will benefit from your course.

4. Incentivize Affiliates

Getting affiliates to market your course for you is one of the smartest marketing moves you can make. You’re a solopreneur, or at least a small business. Do you have enough time to consistently run adverts, email marketing campaigns, and create endless content marketing?

All these things are necessary for a successful business, but… do you have the time to do all of that before you’re making profits? Getting affiliates to market your course for you is a great way to take some of the burden of marketing off of your shoulders.

But affiliates take a percentage of the profits. When your course only sells for $40, even if you’re offering a large 50% commission to them, your affiliates know they’re only going to make a paltry $20 per sale.

Price your course higher and there’s a far greater incentive for affiliates to help you market it!

Marie Forleo’s B-School sells for $1997, and her affiliates can get a 50% cut. For those affiliates, they can make nearly $1000 a sale for promoting a product that they didn’t even make!

The lesson here is that you can only create a powerful financial incentive like this if your product is sold at a higher price. The less you charge, the less likely you are to attract eager affiliates.

5. Filter Out Bad Students

Teaching is a very rewarding experience. Even if you don’t consider yourself a teacher (yet), you’ll hopefully come to see that sharing your knowledge to help people overcome their issues is a very satisfying feeling, regardless of earning potential.

It sure beats starting an ecommerce store to sell cheap physical products. How many lives are changed when another website starts selling gimmicky mobile phone covers?

But hand-in-hand with the rewarding experience of teaching is the pleasure of having eager students who are ready to learn. By charging a higher price, you get students that are committed to actively achieving results. Sayonara, ‘info product tourists’!

That means you filter out the bad eggs, people who are more likely to complain, not take the course seriously, and not engage in any meaningful level of discussion or — most importantly — apply the knowledge they learn.

Wouldn’t you prefer 30 engaged and eager students that paid $200 each rather than 300 uncommitted students who don’t care that much about your topic because they only paid $20?

Both of those pricing structures equate to $6000 revenue in your pocket. Take your pick on which set of students you’d rather spend your time with.

6. Students Expect To Pay A Higher Price for Good Education

Certain products have a fixed price tag, and it’s difficult to charge more. Would you pay $200 for a book? What about a movie? These are products where the market has determined an expected price already.

But education is open to high prices. Education can really make an impact on someone’s life, and that makes it worth the price.

Here’s a cliche Chinese proverb you’ve already heard a thousand times, but it’s relevant:

“Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”

Universities charge tens or hundreds of thousands of dollars in tuition & fees for their courses and students have come to expect those prices as the norm, because we all know that gaining new skills and knowledge improves our personal potential.

Your course may not be accredited training, but when compared with a University price tag, it’s likely your course is worth at least 3 digits. And really, it’s only the wrong customer that would consider that too high.

7. Greater Capacity To Earn & Scale

This one should go without saying: Online Courses are an excellent product because although you don’t need to sell in high volumes to make a decent profit (remember that your per-unit cost is virtually zero), you certainly can sell in volume.

Online courses are rapidly scalable. 1 student, 100 students, 1000 students… Your website can still easily handle the traffic. With a tool like Thrive Apprentice, the process of signing up, signing in, and moving through your course lessons and modules is all automated and managed by the student themselves.

Your website becomes your virtual classroom. For a solopreneur, this is an excellent business model because you invest the time and money up front, and then perpetually reap the benefits thereafter.

Now if you’re only charging $20 for your online course, even acquiring 100 students won’t let you quit your day job. But by charging $200 or more, those same 100 students can realistically make a big financial difference in your life.

After working hard to amass a small crowd of fans and creating multiple high-value courses, it’s not unrealistic to imagine that you could slowly shift your earnings over to becoming a full-time digital product entrepreneur in just a few years.

But for now, you should focus on learning to price your online course. And it's time to do some math.

What's the Average Price for an Online Course?

Actually, this is a tricky question — one we suggest you do not dedicate time to thinking about. Instead, you should consider:

  • Your desired revenue — for example, let's say it's $10,000 a year

  • The average conversion rate of online course landing pages — 2.4% is reasonable (we'll tell you why in a bit)

Landing Page Conversion Rate

According to The Unbounce Conversion Benchmark Report 2021, the average conversion rate of landing pages in the education industry is 5.8%. But we prefer a more conservative approach for first-time course creators. Let's consider the lowest rate of the scale — 2.4%.

Therefore, to hit the yearly revenue you wish, imagine two scenarios:

  1. A course price of $20

  2. A course price of $200

In scenario one, with a conversation rate of 2.4%, you'd have to sell your course 500 times. On the other hand, in scenario two, you'd have to sell your course only 50 times. That's quite a difference...

Now, how many landing page visitors would you need to sell your course that number of times?

  1. If you sold your course for $20, you'd need almost 21,000 visitors.

  2. And if you sold it for $200, you'd only need about 2,100 visitors.

Conversion Rates From Email Lists

Not everyone in your target audience will buy your course this year... or ever. This means that on top of your landing page conversion rate, you must consider the conversion rate of other channels.

And one of the most effective marketing channels is still email. In other words, the size of your email list matters, and you should know what that number is.

GetResponse claims that their customers' average click-through rate (CTR) in the education industry is 1.96%. In the case of your course's promotional emails, that's how many email recipients clicked on the link to the course's landing page (divided by the total of emails you sent).

When you combine the average landing page conversion rate with the average CTR in your industry — education — you obtain the average size of your email list. Going back to the two-price scenario, this would be the result:

  1. To sell a $20 course 500 times, you'd need about 11,000 email subscribers.

  2. And to sell a $200 course 50 times, you only need an email list with almost 1,100 addresses.

Looks like selling a $200 course is a better idea than selling a $20 course, right?

Bottom Line...

Pricing your course involves conversion rates, your desired revenue, and a few other things as follows:

  • Engage your subscribers with your emails — because your email list's engagement — or CTR — matters more than its size

    • Frequently and consistently send useful free content (even before promoting a course)

    • Write irresistible subject lines

    • Work on the messaging to communicate the course's value through storytelling

    • Include a compelling CTA

  • Optimize your landing page for conversion

    • Add social proof such as testimonials

    • Speak directly to a real problem or need shared by your audience

    • Communicate the value and potential transformation that your course can deliver

    • Include a money-back guarantee

  • Figure out which other channels you can (and should) optimize the most for conversion (without dismissing the remaining channels)

Move on to the next section to discover how to price an online course — with a specific price point included!

How To Calculate the Price of Your Online Course:

“Ok, ok, so I should charge a higher price… but how do I calculate the exact number?”

Must... calculate... price...

The true answer to this is: it depends. But since we’re all about giving you solutions and then getting on with it, we’ll make this plain and simple for you:

If this is your first info product, charge $197 for a video course (or $97 for a text-only course).

Rather than stress over this price point too much, work backwards. Ask yourself, “How can I teach my topic or skill in a valuable way that is truly worth $197 to a student?”

This is a strong starting price and makes for a great first info product. Without knowing you, I’m confident that you can put your mind to work and create a product that is worth that price tag. And here’s why $197 is such a good price:

$197 is high enough that it:

  1. Attracts quality students and communicates value,
  2. Has enough of a profit margin for affiliates and marketing spend,
  3. Can be discounted on occasion without eating up too much of your profits, and;
  4. Gives you the potential to earn decent revenue.

But $197 is also low enough that it:

  1. Doesn’t get you stuck in course-development hell trying to make an expensive product,
  2. Isn’t too much of a financial risk for students that don’t know your brand,
  3. Can be made within your means using affordable technology, and;
  4. Is competitively priced compared to other offers on the market.

By committing to providing $197 of value, you have a realistic goal and should be able to feel where to draw the line at what content should be in or out of the course.

Still not sure? Shane has made an excellent video that explores his reasoning behind why this price is the perfect 'sweet spot'. Check it out!

Reasons to Increase Your Price:

Perhaps $197 doesn’t feel right to you. Let’s look at some reasons why you could even charge more:

  • You have very little competition in your niche
  • Your topic is highly technical and cannot be learned easily
  • Your teaching methods save your students an enormous amount of time or money
  • Your course will greatly increase students earning potential
  • You are already an authority in your niche
  • You have already made an online course and have a customer list
  • Your branding is on point and already communicating value
  • You have amassed an attentive audience of fans eager for your content
  • You have a teaching style that is unique and superior to your competitors
  • You include highly valuable bonus material such as workbooks, checklists, templates, and course materials of higher production quality
  • You partnered up with another brand, course, or other relevant resource vendor to offer free access or discounts to your students
  • You have a visually attractive course landing page
  • You invite a guest speaker to share their insights on a particular topic with your students

For other ideas, keep reading...

Tips To Make Your Course Even More Valuable

Remember that I told you to start by pricing your course before working to increase its perceived value? Alright then.

At this point, you already know a few methods to raise the value of your course. But let’s explore even more ways to improve and communicate the value of your online course:

Choose a Precise Topic

A course topic that appeals to your target audience must be specific.

Although it would be great to sell your course to everyone on the planet, that's just not going to happen. You should concentrate on creating a course about something that calls the attention of a specific group of people.

To achieve this, you should know their problems, needs, and expectations really well. Clarifying your buyer persona might help with this. Then, your course must be a solution to their problems.

If you don't choose a precise topic, your course won't stand out from the crowd. Plus, the more specific the topic is, the more expensive your course can be. Why?

  • Because the course gets exclusive. A specific topic allows you, as the course creator, to really dig deep into a real pain point, need, challenge, or goal that your audience shares.

  • Because the outcome is real. Your course will make your students stand out from the competition and earn more business themselves. It’ll provide them with a real result that can help them move on to the next stage in their journey.

And that's why they'll be willing to pay a high price for your course.

Make Yourself Personally Available

Access to a subject matter expert like you should be priced high because your expertise took a long time and money to develop.

Here's a list of ways your students can get direct access to your expertise:

  • One-on-one coaching sessions. Individual coaching is time-consuming for you, but a lower price is not a better option. Your students are willing to pay for personalized advice that gets them on the fast track to achieving the results they expect from your course. Define a regular schedule for these sessions throughout the course and consider that some of your students might only be available after office hours. The more often you host coaching sessions, the higher your course price can be.

  • Group coaching sessions (live). This option for coaching sessions is less personalized and confidential. Yet, it helps you optimize your time with a one-to-many approach while preserving the value of coaching.

  • Private groups. If you want to provide a private forum for personalized coaching, you can offer your students access to a private Facebook or Slack group. Besides interacting with each other, providing support, and growing their network, they can interact directly with you. Make sure that you put a way to moderate these groups in place.

Note that coaching sessions are only possible if you limit the number of students — because your time is limited.

If you don't find yourself in a position to charge a high price for your course, then keep on reading.

Reasons to Decrease Your Price:

Perhaps $197 is still a stretch. Here are some reasons why perhaps you’d shave a few dollars off that number:

  • You have no established audience to market to
  • Your skill is not considered particularly valuable
  • You do not have the technical capacity to create great online courses
  • You are entering a crowded niche with no unique selling point
  • Your course is similar to competitors and you need to compete on price

Q: Should the size or length of your course affect your price?

A: No (but maybe a bit)

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’.


That said, people are expecting a $197 product to be more substantial than what they can find elsewhere online for free. If you don’t know how to discern the difference between free and paid content, check out this article on 4 Types of Free Content that Attracts Buyers to Your Online Course.

There's no point in knowing how to price your online course, if you don't market it appropriately. And that's what the next section will give you a glimpse into.

How To Promote Your Product (Course) To Increase Sales

Besides the value of your course per se and an appealing landing page, you must promote the course. Here's how:

  • Email. It's the least any course creator should do to promote their online course... and it's super effective! Whether you're selling a $197 or a $97 course, you should promote it via email. Nevertheless, a $197 course requires a lot more from email marketing than a $97 course. The reason? Your subscribers will have more questions about why it's worth that amount of money. Therefore, you'll need a more dialed-in email sequence and strategy to explain your unique selling points to them.

  • Social media posting. Preparing your target audience for a product launch day via social media is time-consuming yet focused on selling quickly. However, you can nurture your target audience to buy from you in the longer term by posting consistently on your social media platforms.

Other ways to promote your online course can include more complex sales funnels or running pay-per-click campaigns — but since you're new to course creation, I don't recommend that approach to you right now. Instead, I suggest that you focus on email marketing (and some social media posting)... plus the course itself.

Are You Capable of Creating a $197 Online Course?

Is that a goal you think you can manage? Can you create $197 worth of value? It’s easy to doubt yourself, but I hope this number seems reasonable to you. This is also why we made Course Craftour premium program for helping you create and deliver high-value online courses.

By selling just 100 copies of your course at $197, that would net you nearly $20,000 in revenue.

And don’t forget, your course can be improved. It’s not uncommon to see course creators update and improve their course only to set a new, higher price for it. But don’t try to walk before you can crawl.

What are your thoughts on how to price an online course? Leave a comment below to let us know what you think!

by Bradley Stevens  April 9, 2019

27

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  • Hi Brad, many thanks for the really useful post on product pricing. You haven’t mentioned a Monthly Subscription as an option, maybe you could do something on that idea too. Thanks.

    • I think for the $200 price point, monthly subscription is more trouble than it’s worth. But when prices start getting a bit higher, it does make sense. It would be interesting to split test pricing methods and see what gets more conversions. I’ll keep it in mind!

    • Shane once wrote about his experience increasing the price of his first ever product, and he noticed no decrease in sales up until a point. So if you want to increase, I’d suggest doing it incrementally and see how your market responds

  • Good article and the thinking feels sound… but I’m in a market (the church) where many people expect things to be either free or low cost.
    Can I still apply the same principles and charge what you’re quoting?
    Also, since I already have a course for which I’m charging significantly less than that, what’s a good strategy for making improvements such that I can charge a lot more? (E.g. I’m about to try out a bundle offer, so there are 2 price points, but I don’t know quite where to pitch each one)

    • Absolutely, it does! The bottom line is that people are willing to pay for value. In a market where things are free or low cost, it’s often because no-one can take the time to communicate the value. If you’re product is higher priced, all it means is really showing that it is worth that.

      When it comes to price increasing, I believe Ramit Sethi famously told his mailing list he was about to double the price of a product. Many of them thought he was calling their bluff. He wasn’t. If you’re going to make improvements, I think the approach is: tell your target audience when you intend to increase the price (scarcity helps get sales afterall!). And also justify it. If you’ve added new content, or you feel like you’ve polished your product and want to charge what it’s worth, simply state that clearly in your marketing.

      Good luck!

      • Thanks, that makes sense and from what you’re saying, having a higher price product can actually make it stand out in a low price market!
        And thanks for reminding me of the need to justify the increase. I’ll give it a go.

  • This came at the right time, I have an issue, I promised my subscriber a free course I took a year to build (very informative and worth every dime).

    After giving them the course for free, how can I charge them, what conditions should I set.

    I seriously need someone to put me through.

  • Excellent post. I’ve been selling online courses for guitar for several years now, but it’s even more possible with Thrive Apprentice. I feel as if I’m in the “Reasons to Increase Your Price” category, and you’ve given me some incentive to change up my pricing!

  • Nice presentation of the thinking around the price point of a course. Before I read this, I have already started working with a couple of courses I’ll make, plus decided to buy your Course Craft course. I feel certain that I can offer plenty value for an interesting price point, but you gave more clarity, which can’t be bad. 🙂

  • Hey, Brad. Thank you very much for the post, as always.

    I totally agree on everything you have detailed, I even had that same price structure before becoming a course craft student, which I honestly recommend to everyone looking to initiate or improve their current online course business.

    This is my course/price structure:
    – 1 free course.
    – 7 paid courses that can be purchased individually at $197 each.
    – 1 bundled deal for all of the above at a one time price of $597.

    Just in case this can help…

    Thank you.

    • This is a beautiful thing, Luis. Love a good set up like that! Also makes the bundle a justifiably good price. May I ask how well the free course -> paid course is going? I’m going to guess you drive cold traffic to the free course first

      • Thank you, Brad.

        That is correct, the intention of the free course is for students to experience with the content, format, teaching methodology and overall quality of the product. This makes them feel comfortable (or not) with the system that´s been set and helps with the decision of pursuing additional premium content. By that point, they already know what to expect, plus there´s always a 30 day money back guarantee (no questions asked) to secure their investment. There´s nothing to loose and lots of proven knowledge to gain.

        Thank you for your interest.

  • Great article Bradley! I am currently doing the Course Craft program and it has opened my eyes to pricing and how important it is to get this right! It is too easy to let fear stop you from creating courses based on confusion over how to value them.

    • Yep, 100%. But the fact that people are fearful with their pricing is often a good sign, showing that they want to do right by their customers. Ethical business people are better business people

    • Thrive Apprentice is very user friendly. We build our plugins to avoid you having to touch any code, so that you can build what you want without needing any developers. I’d encourage you to give it a shot, and remember we have a 30-Day return policy on all of our plugins, so try it out and if you don’t like it, you can get a refund.

  • Andy idea, when course craft will be online again because i wanna create my first online course next month 🙂

    thanks, Chris

  • Hi. A really geeky question. I like the $197 price point for the course. We are in Canada and offering courses primarily to our Canadian clients. Do you recommend adjusting the $197 for the CDN/USD exchange rate? That would make our magic price ~ $267CDN. Basically, is there something speical about the number itself, being just under $200, or does this have something to do with the perceived value of the offering.

    • Good question, Joel. I’d say it’s about perceived value of the offering, which has to do with your target market’s relationship with prices. Extreme example: the equivalent of $200 USD in some countries could be more than a month’s average wages, depending on exchange rate. In those countries, your product would be ridiculously expensive. So unless Canadians earn an average of 33% more than their US neighbours, I’d aim for $197 CDN.

      • So true Bradley. I have a $297 course in US market but can only sell a similar product in South Africa for $57-$97.

  • Thank you so much for creating this article. This article really helps me rethink my courses price. I was worried that I might price too high but I now know that I should always focus on the result. Thank you, Brad.

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