The new LifterLMS 3.0 release introduces a new access plan engine that allows you to generate any kind of pricing model you choose. In this LMScast with Chris Badgett of codeBOX you’ll learn about the top 10 pricing models for online courses and membership sites with tips to help you choose the best one for your needs.
Chris begins with the basic one-time payment. You set a price, and the customer pays it. Access time may vary, but the price won’t. The next most common model is the flat, recurring payment. Again, the price doesn’t vary, but the payment recurs each week, month, year, etc. The third approach is the payment plan pricing model, which gives the customer a choice of making a single payment for your product, or paying installments which usually end up costing more altogether.
A popular option is the free with membership incentive to purchase one product, like a membership, and then receive a course or group of courses as part of the package. Members-only pricing offers exclusive courses only available to members. The dollar trial offers the first course of a series for a reduced price with following installments at regular price, while the free trial allows customers to try a course for free, or gain full access for a limited time. The advantage of a trial that requires a small payment is the level of commitment that payment implies, while the free trial can help build your email list or potential user base.
The next pricing model is known as the service fee and recurring payment. The initial payment is substantial, but subsequent payments are lower. This model is used where there’s some setup involved, or an investment of time and resources preparing the student for the course. Then we have launch pricing, also known as special occasion or sale pricing, where you offer a temporary reduction in price to attract new customers. This is usually done for launching a new product, for holidays, or as part of a marketing strategy.
The 10th pricing model is the free course or membership. Similar to the free trial, it’s completely free, and it’s a great way to gain trust and show people what your courses can do for them. A mini-course or introductory course is a great option to grow community and generate interest in your paid courses.
Chris describes each of these top 10 pricing models for online courses and membership sites pricing models in the podcast, and details how you can leverage them to your specific situation. For a detailed, illustrated coverage of these pricing models and how to build them, visit the LifterLMS blog.
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Chris: Hello, and welcome back to another episode of LMScast. My name is Chris Badgett, and in this episode, we’re going to be talking about the top 10 pricing models you can use for your online course or membership site. With the release of LifterLMS 3.0, our software for creating, selling, and protecting engaging online courses, we released a new access plan engine so that you can essentially generate any kind of pricing model that you can think of. If you offer multiple options at once, it builds a nice little pricing table that you can use to show your prospective online course customer or membership site customer what the various pricing options are and what they get. In this episode, we’re going to get into 10 of the most popular pricing models. You may have thought of a lot of them, but there may be some that you haven’t thought of yet. Then at the end of this episode, we’re going to be talking about how to choose which one is best for your particular online course, membership site, or learning management system.
The first one is just the one-time payment. That’s where a course just has a sticker price of $100. That could be it. That’s really simple, very straightforward. In another episode we’ll get into access length, like whether or not to do lifetime or during a specific date range or it’s good for a month or three months or one year. In this episode we’re just talking about pricing, so the first and the most obvious one is one-time payment.
The other one that’s very common is what’s known as a flat, recurring payment. That’s where it’s just a particular amount, $30 a month, $100 a month, $1,000 a month, whatever it is. It’s just the same amount of money that recurs over and over again. That recurring could be every week. It could be every year. So it doesn’t have to be monthly, but that’s what a lot … In online education or membership sites, the monthly is probably the most popular.
Then we have the payment plan pricing model. A payment plan is very similar to recurring, flat recurring. It’s more just like a specific flat recurring model that’s right next to a one-time payment option. If for example you’re offering a course for $2,000, you may also offer a course, that same course, for three payment of $699. Usually when you have a payment plan, those payments add up to greater, in total add up to a greater amount than the one-time payment option, so there is some incentive for people to, if they have the money and they’re ready to roll, they may want to save a little bit by giving the one-time payment, or if they’d rather reduce risk or spread out the payments, they can use the payment plan. Payment plans also sometimes have the first payment a little higher than the subsequent ones, so it really just depends. That’s a payment plan.
The next option is free with membership. This is very common, where you have a online course website or learning management system and all the courses have a single price or a single flat recurring price, or you can also get all the courses on the site by joining one membership level, which has its own pricing structure. That’s what free with membership means. It means if you become a member, then you get access to this course, this group of courses or all the courses on this website. The next is members-only pricing. This is for more exclusive training where you can’t even buy this course unless you’ve already bought or become a member of some kind of membership. That’s what members-only pricing is. If I don’t have the membership, I can’t even try to purchase that course.
The next option we have is the dollar trial. It’s like a flat recurring payment plan, but the first payment is very cheap. It’s $1. Often times you’ll see like, the first week or the first month is a dollar, and then it jumps up to $30 or $100 or $300, or whatever. The reason people do dollar trials, it does a couple of things. Maybe they’re trying to earn your trust and demonstrate that they have what you’re looking for. Sometimes they’ll do drip content so that you couldn’t just come in for a dollar and take everything, or go through everything. You would have to allow your recurring payment to go into the higher payments before you could actually start to access everything. A lot of times the reason people do that is just to give their audience a hint of what’s inside and to earn your trust.
The reason they put a dollar on it is to avoid just a flood of … If it was completely free, by putting a dollar on it, at least the person has to pay some money, which shows some level of commitment. In a lot of cases the dollar trial works in that way, but there is also the free trial. That’s the seventh pricing model that we’re going to talk about here. It’s really the same thing as the dollar trial, except for that first week or that first day or that first month it’s completely free. That would be more popular than the dollar trial if you cared more about maybe building your email list size or your potential user base. It’s very common. The free trial period is one of the oldest marketing models in the book. To get a free sample of something is an original marketing idea. The free trial works exactly in that way.
Then there’s what’s known a service fee and recurring. This is simply a recurring payment where the first payment is quite large or significantly larger than the subsequent payments. For example, the reason people would set something like this up is, if they know there’s going to be significant training for you in the beginning of the program, maybe some live coaching, a lot of things to get you set up with the materials you need to get going and started, a lot of effort there, the owner of the platform may be charging more upfront because they have to invest more of their time and resources to get the new learner started, but then maybe the next month, if it starts at like, “Okay, first payment is $300 and then it’s $30 a month,” that’s where you have the user invest big in the beginning, but then they’re staying at a much reduced rate. They probably have less demands on the business of the online course website and perhaps they’re staying for the community and so on. That’s what service fee in recurring is. Again that’s like the first payment is $300 and $30 a month.
The next one is launch or special occasion pricing, sale pricing. It’s very common. There’s all kinds of launches where people do a one-time launch or they a launch every month or they do a launch two times a year, once a year. During that launch they may, surrounded by a bunch of marketing activities, they may reduce the price temporarily of the online course, courses or memberships just to help try to convert more sales and also just as part of the marketing strategy for launching a course or relaunching a course or membership. Then there’s other sale pricing that people do. People are very accustomed to things in the digital space, like cyber Monday or around the holiday season or the new year when people are setting new goals and getting ready to start new projects.
Depending upon what industry you’re in, what niche you’re in, it might make sense to have sales at different times of the year, but sale pricing is an important part of any kind of strategy. You have to be careful with sale pricing. You don’t want to do it too much and develop this discount brand and train your audience that they can just wait around forever because you’re going to be having a sale all the time. You can do that if you want, but just be aware that you may become perceived as a discount brand. You’ve probably seen that before with the brick and mortar store, that always has the sale sign in the window and some thing is always on sale, there’s always a blowout sale and all these things. Just be careful with it. It’s very powerful. Just be conscious of what that does to your brand.
The last and most … Not most common, but one that is definitely a good one to leverage for different reasons is the free course or membership. Just like we talked about that free trial, you can also make something completely free forever or for a limited time. That’s very powerful for helping your audience earn trust in you to see what you have and to get people inside of your community and your ecosystem. I highly recommend having at least one free course on your site these days. The consumer market is very savvy. They’re very skeptical. You have to really earn the trust of people, especially if you’re not well known, so it’s always a good idea to give something away for free, a little mini course or your introductory course. Even though it might feel a little counter intuitive, it can actually help grow your community and get more people interested in your higher, more advance training or that has a price tag on it. Those are the 10 top pricing models that you can do with LifterLMS.
I would encourage you to go to blog.lifterlms.com. You can see this whole blog post and you can see in the screenshots exactly how you set those up inside the interface. Which pricing model is best for you? The answer to that one is definitely, it depends. The way to think about it is to think about long term recurring value or lack thereof, and how much value is there. if you don’t have any live components, you’re not having new stuff to the course or membership, you may want to just do a one-time price, potentially have a payment plan, and that’s it. It doesn’t make sense to charge $30 a month, $100 a month, $1,000 a month if your course never changes. If you some drip content in there, that maybe it drips out over the course of a month or three months, then yeah, that makes sense.
I see a lot of people sometimes mistakenly think that lifetime recurring is a good idea when there’s not recurring value. Just be really conscious about it. If you are going to offer something for lifetime and have recurring payment, you really need to do right by your people and think about how are you going to achieve that ongoing, continually adding value. One day to do that is to have a monthly webinar, monthly office hours, keep bringing in new content to your membership or new courses. That is just one way to think about that. In terms of how much money, like how do you know if you have a $20 course or a $200 course, that can be very subjective and objective. There’s a lot of conversations around perceived value and actual value, but really, at the end of the day, what I recommend the way you think about it and the way I like to think about it if I’m creating something, is I look for 10X to 100X value.
What I mean by that is, first of all your course needs to get real results, predictably. If the person does it, does the work, goes through the training, and your course really truly works, and whatever that result is, if you can assign a value to that, the cost of your course, if you want it to really go gangbusters, should be 10 times less or even 100 times less than that value. Let me give you a specific example. If I’m teaching you how to start a web agency and make, let’s say, $50,000 in your first year from just barely knowing how to use WordPress to having a business where you do web development and web design, web marketing for other businesses, individuals and companies, that is a result on promising that you will, if you follow my steps, you will be able to make $50,000 as a solopreneur web agency owner, and I’m going to take you to zero to hero on that in six months or whatever.
That end result is that $50,000 in a year, so one tenth of that would be a $5,000 course. One hundredth of that would be a $500 course. If I was going really high touch, lots of one on one, I might consider the $5,000 offer. If my course is more passive in nature, maybe a monthly webinar here and there, a monthly office hour, I might be more likely to do the $500 price point. Just looking at that 10X or 100X value is a good way to think about how to price your courses. It’s not so important. Some people say that $20 to $30 per hour of video in their course, but that’s not as important as what is the real true impact of that course in somebody’s life. I know sometimes you can’t always assign a monetary value.
If you’re training somebody in some kind of health or fitness goal, those results can literally be priceless to somebody, to have their health or regain their health, so it’s hard to put a value on that, but it’s also important to look at who’s your demographic, how much disposable funds do they have, whether are other trainers and things like that doing in the industry, so there’s different ways to look at it. Thank you for looking at this episode on pricing. Again, go to the LifterLMS blog. That’s at blog.lifterlms.com if you’d like to read through these 10 pricing models again and look at screenshots of exactly how to build them. Thank you for watching and we’ll catch you in the next episode.