Know Your Value: How to Price Your Online Offerings
One of the questions that we receive most often is, “How do I price my online products?”
Well, we’ve got a simple formula for you to follow for pricing your online programs and packages…
Pricing online courses can seem like a delicate art and one that can make or break your business. Should you be cheaper or more expensive than your competition? How can you pinpoint your customers’ spending comfort zone?
How can you settle on those final numbers? Aim too high, and customers will scoff and refuse to shell out. Aim too low, and you risk undervaluing your services, cutting into your profits, and driving yourself out of business. Neither is ideal, but we believe that underpricing is a far bigger problem in our community.
When you attach rock-bottom prices to your content and services, you inadvertently teach potential customers to expect low prices from you. And then if at some point, you realize you’ve been undercharging, you’ll have a heck of a time raising prices without losing clients.
Perhaps more importantly, pricing your offerings too low can send a subtle message that you don’t believe in their value or worth. And if you, the creator, doubt the importance of your offerings, how can you expect customers to appreciate their true worth?
Although it can be so tempting to join the “race to the bottom” by offering deep discounts or launching Groupon deals, you’ve got to resist the urge.
You can’t build the business of your dreams by trying to be the cheapest option in your area or within your online community. Don’t even try. Instead, aspire to be the best at what you do, focus on honing your expertise in a specific niche, and become the go-to person for that little corner of the market.
Convinced that undervaluing your services is a practice best avoided? Great! Let’s dig into the basics of savvy pricing
8 Factors to Consider When Pricing Your Offerings
Yep, we know that sounds like a lot to figure in. But when you carefully weigh all eight, you’re guaranteed to land on a figure that hits the spot with your target market.
01 Location
If you’re aiming to build a global brand online, location won’t be nearly as essential. But if you run a yoga studio in your hometown, or operate a hybrid of in-person and online services, your initial client base will come from your local community. This means you need to make sure that your prices are appropriate for the people who live within that community.
02 Demand
If you have a product created for a specific audience, you should take a hard look at how many other people are offering similar products to the same customer base. You also need to weigh how popular your subject is among the folks in your target market.
03 Amount of content
You should price a fully loaded, content-packed 12-week program very differently from a streamlined 3-week program. Similarly, if you’re hosting a community and can offer members 100 stellar videos, you’ll be able to charge more than if you’ve only got 10 videos in the bag.
04 Production quality
This is where most folks get hung up. If you’re a newbie to videos and handling everything yourself, you simply can’t charge as much as someone who employs a professional film crew. That said, you should absolutely start wherever you’re at right now! As your business grows, begin investing in better tools and more help, and let your pricing reflect those improvements.
05 Background and experience
If you’re a brand new teacher or coach, you’d be wise to charge a little bit less than someone with decades of experience. It’s what your customers will expect.
06 Competition
You want to carve out a place in the market for yourself where you’re not facing a tidal wave of competition. A little competition is actually essential; It validates the viability of your offerings. But throwing yourself into a saturated space and selling the same products as dozens of other experts is a recipe for disaster.
07 Revenue goals
Your pricing should account for your specific income goals, and the products you offer at various price points should be built around those goals. If you have to hit a certain dollar mark each month, you need to know how many of each product must sell to reach that goal. And you need to ensure that selling that number of products each month is truly feasible for you.
08 Value proposition
Evaluate the unique value your offerings provide to customers. Determine how they solve problems, fulfill needs, or deliver benefits that differentiate your business from competitors. The perceived value of your offerings will influence the price customers are willing to pay.
Creating a fair, profitable, and attainable pricing structure for your business requires thorough research and careful calculation. Although it may require some effort, the end results will be pricing figures that you can confidently stand behind, attracting your ideal clients.
How to Price Memberships
If you’re running an online community that offers paid memberships, we’ve got valuable tips to help you create pricing strategies that not only attract clients but also generate revenue.
A monthly online yoga membership, for example, should cost roughly the same amount as a single drop-in class in your area. If your customers are accustomed to spending more for in-person classes, they will be comfortable spending a bit more for online programming as well.
Offering both month-to-month and annual packages is a great tactic. We recommend giving 20% off to clients who are willing to pay for the full year up front.
Within the Hey Marvelous community, we have practitioners who charge as little as $5 per month for a membership and others who get close to $75 per month. Most of the folks who charge $50 or more offer something on top of access to a video library, such as one-on-one interactions or check-ins. We recommend that most Hey Marvelous teachers price their basic offerings between $18 and $45 per month.
What to Charge for an Online Course
When determining pricing for ongoing memberships, it’s important to adopt a different approach compared to pricing for one-off products, such as 12-week boot camps or 30-day cleanses.
Most experts price their offerings based on:
Amount of content: The more you offer, the higher the price tag can be.
Demand: A highly specialized package might appeal to a smaller audience and require a lower price point. A more general (but still niched!) offering can skew a bit higher. We recommend that all fixed-price products cost at least $97.
Any product you offer is going to take some serious work to build and hone, and you need to recoup your expenditures! Additionally, selling fixed-price offerings in the $20 to $30 range forces you to scramble to sell more units and devalues your expertise.
Some Hey Marvelous clients sell fixed-price products for $700 or more, but those are multi-month, in-depth packages that typically require direct personal interaction with the teacher or coach. If you’re relatively new to online teaching, you’ll want to hover between $100 and $200 for one-time products, series, and courses.
Finally, we’ve got to circle back to the concept of undercharging. DO NOT undervalue yourself, your business, and your entire industry by offering inexpensive products, programs, or services. We can’t emphasize this strongly enough.
Underpricing sets you up to be in a constant scramble to meet your financial goals and creates a negative energetic relationship between you and your clients.
Resentment is dangerous territory, folks. Charge what you’re worth. Period.
FAQs
Q: How do I determine the right price for my online offering?
Determining the right price for your online offering involves considering factors such as market demand, competitor pricing, perceived value, and your overheads. Conduct market research, analyze customer preferences, and assess the value your offering provides to set a competitive and profitable price.
Q: Should I offer different pricing options for my online offering?
Offering different pricing options can be beneficial, as it allows you to cater to different customer segments and their varying budgets. Consider creating pricing tiers with additional features, levels of access, or bundled offerings to appeal to a wider range of customers and maximize your revenue potential.
Q: Should I offer a free trial for my online offering?
Offering a free trial can effectively attract potential customers and give them a taste of your offering's value. It allows them to experience your product or service before committing to a purchase, increasing the chances of conversion. However, consider the costs and potential impact on revenue when deciding the length and scope of the free trial.
Q: How often should I review and adjust my pricing for my online offering?
Regularly reviewing and adjusting your pricing is important to stay competitive and ensure that it aligns with market conditions. Factors such as changes in customer demand, competition, or costs may necessitate pricing adjustments. Consider conducting periodic pricing analyses and monitoring customer feedback to make informed decisions about when and how to adjust your prices.
Q: How can I handle price objections or negotiations for my online offering?
When facing price objections or negotiations, it's important to understand the underlying concerns of your customers. Communicate the value and benefits of your offering effectively, emphasize unique features, and consider offering flexible payment options or additional incentives to address customer concerns without compromising your pricing structure.
Q: How can I communicate the value of my online offering to justify its price?
Effectively communicating the value of your online offering is essential to justify its price to customers. Clearly articulate the benefits, features, and unique value proposition of your offering through compelling marketing messages, customer testimonials, case studies, and demonstrations. Show how your offering solves a problem or fulfills your target audience's needs.
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