And if you’re an already successful expert, teacher or entrepreneur looking to grow, check out the LifterLMS team’s signature service called Boost. It’s a complete done for you set up service where your learning platform goes live in just 5 days.
Prefer to read “how to price your online course”?
Joshua Millage: Hello everyone. We are back with another episode of LMS Cast. I am Joshua Millage and this is Christopher Badgett. Today we are talking about pricing and when it is important to choose a single price option over a reoccurring price option. These are questions that make my head spin, Chris. Where do we start with all of this?
Chris Badgett: I think to get this conversation going we can talk about the Lifter LMS plugin that we’ve created in that. If you use the built-in course cart, the shopping cart that comes with the plugin, no third-party plugin required, you have to assign a course to either have a one-time payment or have a recurring payment. With our plugin you can also integrate it with WooCommerce if you want to use their card system and all their extensions which include a recurring payment extension called subscriptions, which is a great plugin for their system.
Anyways, that’s the technology side but before all that is we have to have this conversation about I’m going to sell a course. Do I want to charge a one-time fee or put it on a recurring monthly revenue? That’s a big decision. Let’s talk about that in terms of how big should the price be, like if you were to think about the same course as one-time payment versus recurring. Then let’s talk about if we are going to do recurring, how do we continually add values to justify that monthly or weekly or yearly bill that product receive.
Joshua Millage: I want to start off in terms of single versus reoccurring payment. I think the big question is the business model behind it and reoccurring revenue means reoccurring value. If you look at the Software as a Service base, so SaaS as it’s called, that idea is that people paying monthly like for salesforce.com or Infusionsoft [inaudible 02:06] and the reason that they’re paying monthly is that as the product matures it’s going to get better and new features are going to be added in. The value is increasing because you’re paying more money.
It’s also good for the business because it will have some predict revenue and all these other things and it situates them to improve on that. The traditional model is you sell Windows 98 and you got to pay hundreds of dollar to go to XP and hundreds of dollars to go to the next to the next the next. That doesn’t always work. You’re waiting a year to get a bunch of upgrades all at once where it’s much easier to just go every couple of weeks get another few features and things.
That’s like the software side of it. I think when you apply that methodology to courses how are you going to be engaging your customer base. Are you going to have a system set up so that you can maybe do something like weekly people hang out or foster community behind the product? That I think justifies the reoccurring fee or maybe just continue adding content.
Some of the people that we work with in the legal realm the reason that they have reoccurring revenues that loss or waste changing so they guarantee that they’re always going to be up on the new latest, greatest law for IRAs or something like that and so therefore that justifies the reoccurring because they have to constantly do work to make sure that they are upon it.
In think if your selling a static like here’s an end-to-end product and I’m just going to put it out there, it’s going to be harder to justify that reoccurring fee. It’s going to be much easier to just do a straight ups and low cost.
Chris Badgett: There is a middle ground there. Let’s say you do have an end-to-end solution but you don’t really have value that continues after they’ve gone through the program. What you can do though is if you have 1000-dollar course that’s a lot of money for somebody to pay, but you could instead think about using that recurring thing just to lower the barrier, the entry to get people into your course so instead you could do a 2-payment options, 1,000 dollars or 100 dollars a month for 12 months or something like that.
Or just not even do the one-time pricing but put an end to that reoccurring payment so that the value come sure this period and you’re done. You don’t owe anymore money.
Joshua Millage: That’s good. When it comes to pricing, Chris, like 100-dollar course or it’s 1,000-dollar course, 2,000, how do you think about those different levels of pricing in a single format as well as reoccurring model?
Chris Badgett: Pricing is a huge topic but pricing is also really subjective. If you ask a real estate agent like, “How much is this house worth?” Some will say, “This house is worth, what, people are willing to buy on it.” They’re dodging the question because a lot of value is perceived. It’s in the head of the prospect.
Then there’s things like actual value like if you … your learning management system and your online course maybe it includes a live event in the price, you know you have a certain amount of overhead, cost to put on the event and host the event, everything so there’s value. That’s like more tangible hard value.
A lot of online courses are purely digital in nature so we get more into perceived value space but at the same time if you’re really talented expert in marketing and sales, if you were to put on a course about how to market your Learning Management System or just market your business, that comes from your entire life of experience and your education, everything which is valuable.
One way to think about it is what would it cost for me to have a one on one with you to teach me all that stuff. Maybe we’ll do surprise a little bit because it’s an online format, but that’s another way to arrive that like what the pricings worth. Obviously, if you ever have any one-on-one interaction either in a group of hangout, in person or whatever, that should substantiates a higher value.
If your course is 100 percent passive in nature, it may be worth less. With the Lifter LMS plugin if you use a certificate functionality, if you’re actually giving somebody a certificate that’s credited by something or allows them to fill continuing education requirements, that course is valuable and maybe be mandatory if the person has to continually submit these hours.
Pricing and value is a really big conversation. You can also use the interactive approach in terms of just asking your market, how much would you be willing to pay for me to teach you online how to do X. That’s another way to do it.
Joshua Millage: The thing I would want to add is that I think that most people, north to 90 percent of people are going to default on undervaluing themselves. My dad for better or for worse so he send triple what you think you worth and then probably be close to the markets willing to pay. A lot of that just comes from self-image, “It couldn’t be worth that much money,” and there’s this resistance for asking for more money.
I want to say that not that we need to be profiteers or price mongers and just charging a lot of money. We do want to find that happy medium of what’s the value and what its worth. I think naturally because people are naturally resistant to sales, they often undervalue themselves. One of the things too there’s an old saying that says, “Where money goes, focus flows,” and that’s definitely true.
The higher that someone … The higher the price of the course you’re going to get … you probably get less students but much more engaged students, too. That is that side of the pricing strategy that’s important to think about.
A lot of people go and they sell 19-dollar course and then they wonder why no one ever took it and there was an impulse why. It really depends. Maybe that is new strategies just a volume, volume, volume or maybe you’re like, “I don’t want volume so much as just starting the community.” I think it’s hard to start a really robust community at the lower dollar points in my experience, because people just don’t take it seriously.
Colleges as a great example of that, a lot of people take college pretty seriously but they’re also paying a lot of money. That’s one thing to remember but I would say that when people are thinking about their prices, leaning to the idea of having a premium price model or at least having premium price options because I think you’ll be surprised to see who shows up in those [defined locals 09:19].
Chris Badgett: Absolutely.
Joshua Millage: Cool. I think that’s a good nugget on price and pricing. I don’t know if we’re taking our medicine on this or not because I think our Lifter LMS is priced very, very reasonably at 97 dollars for a single set license and 297 from multi-set license. That probably won’t hold forever. That’s for this first group of people that get them on October 30th and then we’re going to shut the door shortly after that and open it back up January 1st. I don’t know what we’re going to try then really. We’re going to reevaluate what value we’re providing.
One of these things when we talk about getting a little under the hood of our pricing strategy is we want to make this really easy purchase for a lot of people and we want to limit the amount of time it’s being sold to capture the highest engaged people, the people that are paying attention to the content we’re putting out there, the people that want to improve online education and the people that will give us feedback so that we can rapidly improve this product and make it evaluation more valuable than when it launches on the 30th.
If you’re interested in that, you can learn more at lifterLMS.com. Just enter in your email and you’ll be taken to the first set of videos that we’ve produced on the functionality of the plugin and how it can really change the way that you distribute and engage with your students. We’re excited about that. Again, if you have any questions, you can always reach me at [email protected] and this is Chris at lms.com.
Chris Badgett: One more thing. If you purchase the plugin, one of the things of value that you get is access is to our support forum, but it’s also a community. If you want to put an idea up on the private support forum about how much should I charge or for my course it’s about X, Y and Z, this … We’re building a community here of people who are all trying to do this online education thing and build a business around it if you’re outside of the nonprofit sector.
Anyways, the community is here for you. You can see what other people are doing, what they’re charging, they’re pricing structures and so on. Feel free to reach out to us directly if you just want to run an idea by us or anything like that for your pricing or fixed price versus recurring revenue.
Joshua Millage: Right on. All right. Until next time, we’ll see you then.