Learn how to choose the best pricing models to sell your courses across client types with this free ebook!

You will:

  • Learn why the right pricing strategy matters and the impact it can have on your business.
  • Discover the most critical LMS factors that help you determine your pricing strategy.
  • See how vendors impact your pricing models.

  • Find strategies for pricing with scalability in mind.
  • Learn about the differences when pricing for small businesses vs enterprise client needs.
  • Closely compare pricing models, understand when to use which, and more!

Excerpt

Introduction

Selecting e-learning pricing models and strategies to sell your online training can be overwhelming! There is a wide variety out there, and you want to be sure the one that you select is the best fit for you and your business. This guide will help you become familiar with the available options and understand how they work, so you can determine the best way to price your online training for customers.

While it may be tempting to just slap a price on a course and start selling, take the time to consider the different ways that you can price your products so you can do it effectively and set yourself up for success. Tried-and-true e-learning pricing models and strategies will help you succeed by providing you with a framework with which you can confidently value your products. To do this, you will need to examine your pricing factors. 

You may be surprised by what you need to think about when setting prices, and you may find that more than one of the e-learning pricing models or strategies out there makes sense to use for your online training business. It’s okay to try multiple ones!

After you read this guide, you will be ready to examine your pricing factors and what your training brings to the table that other training doesn’t, and you will know which e-learning pricing models you are going to test before you take your training to market!

What Are E-learning Pricing Models and Strategies, and Why Do You Need Them?

So, what are e-learning pricing models and strategies, and more importantly, why do you need them? 

Think of e-learning pricing models and strategies as roadmaps and your business as a car. Your destination is your desired profit from your business, and e-learning pricing models and strategies will help you reach that destination. Your roadmap is designed to anticipate and avoid obstacles on the way. While no trip is without a slowdown or an unexpected accident, your roadmap will ultimately get you where you want to go. In other words, using e-learning pricing models and strategies will guide you in pricing your e-learning effectively and help you profit from your online training business.

E-learning pricing models help a business price its goods in the most appropriate and fitting way possible. A pricing strategy defines the value of the courses and the educational experiences that you offer to your customers. E-learning models and strategies will help you set balanced prices for your products. They will make sure you don’t charge too much, causing your potential customers to purchase online education from your competitors. They will also make sure you don’t undercharge, leading your potential customers to question the quality and values of your courses—and your reputation as a business! They will also enable you to price your courses with scalability in mind, helping you set initial prices that give you room to grow your business and improve your product offerings as time passes. By using an e-learning pricing model or strategy to properly value and sell your training, you are following a route that will get you to your desired destination.

Where Do You Start When Selecting an E-Learning Pricing Model or Strategy?

It’s likely that your natural inclination is to Google models and strategies and then pick the one that sounds the best. But before you choose your strategy and start adding prices to your training in an online store, you need to know your product. You already know everything about your product, since you’re the expert in its creation. However, that doesn’t mean you know the true value of your training. To figure out what that value is, you must carefully evaluate different pricing factors that will impact how you sell it and for how much. 

There are seven critical pricing factors that you must consider when selecting a pricing model and setting a price for your online training.

  1. Costs: What are the costs of developing your training courses? Account for the time it takes to create and upload courses, LMS costs, related training costs, technical support costs, administration costs, licenses, marketing, advertising, etc. Evaluate all the costs associated with creating, hosting, and maintaining your online training.
  2. Customers: Who are your target customers? You need to know them well to properly market and price your online training to them. You need to know why a customer is looking for your training and what problems they are trying to solve by purchasing your courses. You also need to know what kind of financial situations most of your customers are in. Are they affluent? Are they financially insecure? Understand the demand that exists for the product that you’re offering. All of this will help you price your training more effectively.
  3. Competitors: Know your competition. How are they pricing similar training? Who are they selling their training to? What kinds of products are they offering? What factors might convince your customers to choose your competitors over you? While some industry experts will caution you not to compare yourself to your competitors too much, it is crucial for you to know who they are, what they are doing, and how they are doing it to position yourself well in your industry.
  4. Value: What is your training worth? Consider your education, experience, and background. Think about what problems your training solves for the customer who purchases it. Factor in the knowledge that the learner gains from your training. Consider the benefits that online courses offer learners over traditional face-to-face education, including self-paced learning, cost savings, and convenience. Also, remember that despite its reputation in its early years, the value of online education is not low.
  5. LMS: How might your learning management system (LMS) impact your e-learning pricing? Depending on the setup of your LMS, it may only enable you to use one or two pricing models. Make sure you know if your LMS has any restrictions that would prevent you from pricing your courses in certain ways. Conversely, your LMS may make it simpler to use and lend itself well to specific pricing strategies.
  6. Industry: What issues in the environment does your training respond to? What factors are essential to consider when pricing your training within this industry? Are there certain expectations for training within the industry that you need to meet? Does your training have a narrow focus? Will you need to market it to a specialty/niche industry, or can you market it to a broader audience? 
  7. Goals: What do you hope to achieve by selling your training? The obvious answer to this question is money. Consider breaking this number down and looking at what you need and want to make per quarter, month, week, etc. This will help you determine which e-learning pricing models and strategies will work best for you. Know what you must earn to profit from your sales. Also, while profit is a large part of the goals that you have for your online training company, you need to think about your customers, learners, and industry. How many customers do you need to make a certain amount of profit? How many learners would you like to reach? How do you want your training courses to impact the industry?

What Are the Different Types of E-Learning Pricing Models and Strategies? 

Now that you have reviewed the costs associated with the e-learning that you are pricing, the goals that you have for your training, the value of your training, and the industry in which your training will be marketed and ultimately sold, you are ready to review the different e-learning pricing models and strategies and select ones to try out!

Pricing Models

Pay per Course(s)

This e-learning pricing model is straightforward. If you select it, you will set a single price for each training course that you are selling. The advantage of pricing your courses in this manner is that you will have immediate revenue when a customer purchases one. You will also know the exact cost to you for each course per user, which you can easily build into your pricing and charge clients appropriately.

The disadvantage is that the revenue that you earn is not earned on a predictable or regular schedule. Customers benefit from this model because they get exactly and only the course that they need.

Pay per Bundle

Similar to the pay-per-course model is the pay-per-bundle (of courses) model. You decide how to package courses together—maybe by subject or difficulty level—and then sell the groups for one rate. The main advantage of using this pricing model is that you earn immediate revenue when you sell courses. However, like with the pay-per-course model, the earnings are not predictable or regular. Customers benefit from this model of pricing because they get the courses that they want and typically for a lower price than just purchasing a single course.

Pay per User

This pricing model requires that customers pay by the headcount of learners accessing the courses that they purchase. This model’s main advantage is that customers who respond to it are typically looking to register multiple learners who are taking multiple courses, which leads to an increase in revenue. Also, each user will typically have access to all available courses, which is especially ideal if you’re selling micro-learning courses. ​​However, you need to be aware of how your LMS vendor considers users “active.” In some cases, users will login to the system but not launch any content or merely start a single course and not finish it. So even though they are not actively taking your courses, you are still paying for them to have access. This can lead to excess charges as you scale up. 

 However, any time that you have a group of people using a system, administration is required to track progress, chart results, or even simply support the proper use of the training. Administration adds expense, which in turn, may mean you need to set your prices higher to account for that increase in overhead cost.

Membership/Subscription

The membership or subscription model has the main advantage of being a predictable and regular source of revenue. When customers sign up for memberships or subscriptions, they agree to pay for your training for a certain period and in exchange for access to a certain number of courses, whether that’s all the courses in the library or just a portion of them. This model of pricing may be determined by course access per number of courses and per amount paid or by the amount of time of access permitted by the price paid by the customer. The main disadvantage of this pricing model is that since courses are all grouped and sold for one price, the value of each one is not accurately reflected. It can be difficultThere is no way to track the popularity of the different training courses to design similar ones to increase earnings.

With membership or subscription models, you can also offer access to courses on a sliding scale based on the level of membership or subscription that the customer chooses. For example, a level-one membership might give users access to five different courses a month, while a level-three membership might allow users to take any courses that they want every month. There are various ways to set up membership or subscription models, so if this is a pricing model that you are interested in, be sure to consider all the different ways that you might define this model for your customers.

Members Only

Members-only pricing models offer access to courses at a higher price. The significant advantage here is that you can offer extras and perks to some members and not others. For example, you can provide limited content and unique perks to those who pay more. With this model, one-time users do not have access to the extras.

Pricing Strategies

Cost-Plus Pricing

This pricing strategy has you set a base price for a training product, and then you increase that price for pure profit, as the base price accounts for the costs associated with creating the product.

Competitive Pricing

This pricing strategy involves using your competition’s pricing as the standard and then purposely pricing your products under theirs to increase your sales. Your product must be very similar to your competitors’ before you can consider pricing your e-learning courses using this strategy.

Value-Based Pricing

This pricing strategy requires customer research, as you set your training prices based on what your customers feel that your product is worth. Value-based pricing works well if the training that you are offering is different from the training that is already out there and provides customers a different and more valuable learning experience than what they can get from your competitors.

Price Skimming

This pricing strategy has you price your training as high as possible while still keeping customers, then lowering the prices over time. The goal is to generate a large amount of revenue right out of the gate when competition is low. Sometimes, the high initial cost will lead potential customers to believe that you have online training that is exclusive and one of a kind.

Dynamic Pricing

Dynamic pricing is exactly what it sounds like: the price of your online training courses changes based on different factors, like competitor prices, supply and demand, updates in content, changes to the learning experience, etc. Dynamic pricing enables you to set prices with scalability in mind, leaving you room to grow as a business.

Economy Pricing

This strategy has you set your prices low for your training courses. What you don’t charge in price for your courses, you hope to make up for in an increased volume of sales due to the low prices.

Firmwater Offers Pricing Flexibility

Your LMS will significantly impact the way that you price your courses. Some LMS will make it difficult to use certain pricing strategies, while others may make it simpler. Firmwater LMS, for example, offers flexibility in pricing options depending on how you’re selling your products.

First, Firmwater’s Shopify integration makes it easy to sell courses individually or in bundles. While Shopify won’t sell your courses for you and get you to your goals without effort on your behalf, it is a tool with features that can help training providers be successful in building their businesses. It can take the headache out of the administration that is required for selling courses and collecting revenue.

On the other hand, you can also use Firmwater’s Client Site functionality to offer clients their own branded LMS portal, where you may price your content differently. For example, you may make a deal with a business to provide learning to a certain number of users and assign courses based on location or job title. Alternatively, you could charge clients for access to a course library where learners can pick and choose the courses they want to take. 

Your LMS will significantly impact the way that you price your courses. Some LMS will make it difficult to use certain pricing strategies, while others may make it simpler. Firmwater LMS, for example, offers flexibility in pricing options depending on how you’re selling your products. Firmwater with the Shopify integration offers models that are already developed to sell your courses online. The simplest e-learning pricing models and strategies to use with Firmwater LMS are the pay-per-course and pay-per-bundle models. While Shopify integration won’t sell your courses for you and get you to your goals without effort on your behalf, it is a tool with features that can help training providers be successful in building their businesses. It can take the headache out of pricing and the administration that is required for selling courses and collecting revenue.

Firmwater clients who use client site functionality may price their content differently than those using the Shopify integration. They may make a deal with a business to provide learning to a certain number of users.

How Do You Decide Which E-learning Pricing Model or Strategy to Use?

Now that you are aware of the different pricing models and strategies available, it’s time to select a few to try out. One isn’t necessarily better than another, but some may be more suitable for your business and goals than others. Making this decision is a twofold process: first, you must examine all the factors that impact the ways that you sell your courses. Second, you have to test the models or strategies that seem to meet your goals the best. Remember to consider your seven pricing factors!

How Do You Start Pricing Your Courses?

Once you have decided which pricing models and strategies to try out, you should determine a reasonable base price for your courses or course package. Then, consider your pricing factors: costs, customers, competitors, product value, LMS, industry, and business goals. 

When setting base prices, be flexible. You may try one model and strategy and find that it doesn’t work well for your specific business. Be open to trying others. Your pricing models and strategies may need to change from product to product, season to season, etc. Shifts in pricing and selling are normal and vary. You may also need to consider updating, adjusting, or even completely changing the training courses that you offer to more effectively price your products. Remember the following tips when setting the base prices for your online training.

  • Know what makes your product different. To accurately price your products, consider how your courses stand out from other e-learning out there. If you aren’t sure what makes your offerings different or worse, if they aren’t that different, take the time to ensure that your training has something unique. Offer more effective learning by making sure your training provides differentiated instruction to reach each and every learner who takes your courses.
  • Define your unique value proposition. Only sell your training at low cost when you know that it is generic and easy to find elsewhere and when you don’t provide a personalized learning experience to any degree. 
  • Price your training with scalability in mind. You want to plan for your business to grow. Don’t price your courses so high that there is no way to increase their costs reasonably as time passes and you improve your offerings. Leave room for increases and updates.
  • Remember that prices aren’t set in stone. You have the ability to change the prices of your products (and you should!) when you feel the need. 
  • Offer your customers different pricing options. Instead of limiting how a customer can pay for your training, offer multiple ways to access your courses. Give customers the opportunity to choose what works best for them by offering them pricing per course, per bundles of courses, per membership, discounts during special times of the year, trials of the products, etc. Explore all the pricing options that make sense for your e-learning business.
  • Be careful that you don’t give (all) your content away for free. When offering free trials or a free course to attract customers, limit the number of times that you run such deals and the access that you offer to your training through them. While free e-learning costs your customers nothing, it can cost you everything. Giving away too much of your content can damage your reputation as a reputable e-learning company and cause customers to doubt your legitimacy and expertise. There are only a few times when you should and can give your training away, and that is when you need to generate leads. However, instead of just giving your customers the content that they want for nothing, consider offering a sample of a course. Whet your customers’ appetites for the e-learning, so they’ll purchase the course in full after seeing what they get for free. Make sure if you offer samples, you collect learners’ emails and other contact information with those samples so you can use that information to promote training that you offer later. You may also want to consider offering free courses as a perk of purchasing a specific bundle or number of courses.
  • Follow a formula to determine the base price. There are several formulas out there created just to price online training. One simple one is: COSTS PER PRODUCT + PROFIT MARGIN + FIXED COSTS = BASE PRICE OF PRODUCT. Simplify this process even further by using a profit margin calculator.

Now What?

You’ve considered all the pricing factors, selected e-learning pricing models and strategies that you think will fit your business, and set a base price for your training. It’s time to start selling! 

You can jump right into offering your training to a wide audience, or you may opt to test your market to determine whether you’ve selected the right pricing strategy and completed enough research to properly sell your training. Identify a select group of customers to present your newly priced training to. Pay attention to the people who make purchases and those who don’t. Ask questions. Take surveys. Find out why some invested in your online training and others didn’t. Refine your selling strategy or try another pricing model until you have results that satisfy you and you feel ready to offer your online training to a broader audience.

Conclusion

Now that you understand the different e-learning pricing models and strategies and how to choose one and apply it to your online training business, you are ready to start the pricing process. Remember that you must conduct research, consider your pricing factors, set a base price, and use the pricing models and strategies that best fit your goals as a training provider to price your courses and set up your online training business to both sell and succeed!

Here at Firmwater, we don’t just sell an LMS for training providers. We partner with our clients, giving them the tools and insights they need to implement the best practices in e-learning course development, growth, and delivery. We care too much about our customers’ businesses to have them wade through forums and chatbots for help.Ready to use an LMS that’s designed for the way YOU work, with a team dedicated to YOUR needs? Book a no-obligation consultation directly with our team today!