Knowing how to price your online training courses can be difficult. There are just so many considerations and pricing models to choose from. Two interesting pricing models to look at are course-start pricing and active-user pricing. Each model has its benefits and drawbacks, depending on your situation. This post breaks down both models and shows you the specific benefits of course-start pricing for your training business.
What Are the Benefits of Course-Start Pricing?
Using a course-start pricing model makes it easy to know the exact cost of each course per user. Figuring out this cost up front allows you to build that into your pricing so you can charge clients appropriately. This is especially helpful when selling on a course-by-course basis via an e-commerce platform, like Shopify.
If you’re selling online, you may have many users. With this pricing model, you can have unlimited learners, but you won’t necessarily pay for all of them in the LMS—you only pay when someone starts a course. However, access to that course is defined by the LMS admin/training provider. So, even if the learner has access to the course for a year, they’re still only paying once per course start.
This model works well for longer courses, such as compliance training that takes several hours. If a user starts a course in June but is still working on it in July, that’s a single course start in the month of June, even though the user is also active in July. This removes the risk of being charged for active users who aren’t actually active. For example, a user may launch a course for two minutes and then not touch it again, or they may log in but never launch the content. This inactive user takes up space for other active users and costs you money. But is this problem going to prevent you from scaling your business? Will you have to pay extra to your LMS vendor to add more active-user spots solely because of stragglers? This brings up the best aspect of course-start pricing: it’s easy to scale up—the higher your user volume, the cheaper the price per course start.
What Are the Benefits of Active User Pricing?
If you’re confident in your user volume projections, you may know approximately how much each user will cost, even with this pricing model, and you can build that into your price. But what happens when you scale up? How do you determine exactly what an active user is, and does your definition match that of your LMS? You need to be clear on how much they will charge you. A good question to ask is: once a learner meets the “active” definition, how long are they considered active? A user who was active during the current billing period is the standard. So, if the learner starts late in the billing period, they may bleed into the next billing period too, leading to multiple active-user charges for a single course.
Despite these drawbacks, active-user pricing can work well for micro-learning. For example, if you’re selling a large number of short courses or access to an unlimited library, it may make more sense to pay for the user as opposed to the course. But make sure to charge appropriately. Determine the value of each course in your library, and don’t undervalue your content.
Course-Start Pricing Is the Best Option
Now that you understand course-start pricing and active-user pricing, you determine what will work best for your training company. In most situations, course-start pricing will be the better option, though a few specific cases will call for active-user pricing. With course-start pricing, you will only pay for users once, even if they are active in multiple billing cycles. With active-user pricing, you may end up paying many times for users who take a long time to start and finish courses. This alone makes course-start pricing the most price-effective model of the two and the better option for most training companies.
Deciding between course-start and active-user pricing is easy once you understand their differences. With both, you need to consider the cost for your base services and determine what that includes in terms of starts and active users. If you have low volumes, your actual cost per start or per user will be much higher. It’s crucial for your training business to consider these variables in your cost versus price determination. As you figure out these details, the benefits of course-start pricing become clear. Ultimately, it is the best, most cost-effective option.
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