Udemy Pricing Strategy
I have now been on Udmey for two and a half months and if I have learned one thing, publishing your course on Udemy is just the start. To be successful on Udmey you need to take a very proactive approach to the marketing of your Course and a key aspect of this is Pricing.
If you build it, they will NOT come!
This is a discussion on how to adopt the best pricing strategy on Udemy, but I believe many of these points will apply to any information products, whether published on a third party platform or on your own blog.
Let’s look at the basics of the marketing mix: Product, Place, Promotion, Price
Product: You have created your course and published it. You have carefully created the content, videoed it, created quizzes, included extra course materials including spreadsheets, mp3 audio files, text files, PDFs – all designed to make learning from you a great experience.
Place: Your course is available on the Udemy Platform and you need to give careful consideration to which category you place it in and who else has similar courses to you. How do you differentiate your course from the others in terms of content, structure, media, profile and expertise, length, ratings and comments? How many students do they have?
Promotion: While Udemy do an excellent job with the promotion of all the courses on the site, it is also down to you. I am planning a separate blog post on the subject of marketing, although Danielle at Udemy does a great job, through the Udemy Blog, sharing the experiences of other successful instructors.
Price: How much should you charge? I have analysed this extensively in my course – Udemy: Understanding Strategic Design – which I created for Udemy instructors (see offer at the end of this article).
Understand the Market on Udemy
The first thing I believe you need to understand is that Udemy is not a high priced platform. I believe, and I may be wrong, that it is very difficult to sell a full priced course over $199. There is so much information available around the Internet for free that your students are going to pay you for one of two reasons. Either they revere you as an authority or they are prepared to pay for the convenience of learning what they want know, quickly, because you have taken the trouble to package the information for them. We will look at the psychology of selling later in this discussion.
Key Point: Make sure your course is addressing a major pain point, or need, that they are prepared to open their wallets for. You should be aiming to either solve a major problem or helping them to achieve a significant goal.
Essentially you have four choices: High, Medium and Low and Free.
Lets look at the pros and cons of these.
High: A high price means that you do not cannibalise your other non Udemy products and services and, in theory, only a few paying students will make you a good return on the time and effort invested in your course. On the other hand, it is difficult to make a high number of sales due to price competition and the prevailing view that online information should be free or cheap.
Medium: The advantage of this approach is that your prices seem more reasonable and you still have the ability to make money, even if your courses are heavily discounted in a promotion, whether its by you, an affiliate or Udemy. The disadvantage is that you are still not well positioned for organic sales at the full price and the two don’t mix well.
Low: The pile it high sell it cheap strategy ought to work well on Udmey, but if you can not afford to join Udemy’s promotions, then you will lose out on access to their huge list of students.
Free: Free can be a great starting point for a new course or if it is your first course on Udemy. There are several benefits to getting students, ratings and comments quickly. This gives your course credibility when new students look at it and Udemy rewards you for attracting new students to the platform. On the downside, there is obviously no income.
Top Tip: One of the best ways to do this is to offer your course for free on Reddit or Ozbargins for a limited time and with a limited number of free coupon codes.
Top Tip: A Twitter campaign using hashtags such as #free # freecourse #deal #dailydeal # bargain makes your course more findable in Twitter search.
Top Tip: Another good Twitter strategy is to search for coupon sites and @ them on twitter to put your tweet in their stream and make them aware of you. I suggest you do this only once per site or they will think you are spamming them. Make sure you do this as part of your overall Twitter Campaign or you will be penalised by Twitter.
Key Point: These strategies need not be mutually exclusive, as there is nothing to stop you having a variable pricing strategy and changing your price up and down on a regular basis. For example, if you have a $199 price, you can offer your course at $29 for a limited time and then move it back to $199 ready to join the next Udmey promotion. This was not my idea – thank you to the instructor who suggested it.
Key Point: If you have multiple courses on Udemy, you can use them as a funnel for each other by moving the pricing around constantly. Use a free or low price strategy for one course for a limited time to bring in new students and then offer them a deal to take your other courses. Udemy have stated that they want instructors to limit the number of promotional messages sent through the course message system but I think that one a month is still acceptable.
Key Point: Cross promotion with other instructors is a good way to widen your audience and to share your list in return. To be effective, this should include a coupon offer incentive to students, which the instructor can present as a value creation opportunity from him. I would also encourage both sides to use the affiliate scheme to mutual benefit.
Key Point: One instructor (and she knows who she is) has put together a newsletter for her list of other courses which she feels can add value to her audience. The value this creates is that it is continually widening the net and bringing new students to the Platform. We must remember that it is in everyones interest to promote Udemy and make the pie larger. In this way, we will all benefit from the growth.
Udemy and Other Discounting Promotions
Whichever of these pricing strategies you adopt, you need to consider how this plays with Udemy’s own marketing strategy.
The folks at Udemy regularly launch promotions which you can chose to opt in to or chose not to participate in. They take the form of either a % reduction: 25%, 50%, 75% off, or a reduction to a fixed price like the $10 promotion they ran in Aug 2013.
If you chose to opt out you miss the chance to reach their list of hundreds of thousands of Students. In fact, Udemy recently announced they had crossed the 1 million students mark. If you are opting out of these promotions, you should be asking yourself why you are on the platform in the first place, as I believe a key aspect of it is access to the students who come to find courses, i.e. it’s scale.
If you opt in you then have to accept the discount. If you already have a $10 course, this means you could only make $2.50 before Udemy takes its slice.
Key Point: I think you have to consider whether or not to adopt in to Udemy’s discounting promotions. If you do you must expect to make most of your revenue from this approach, as students who pay the full price will almost certainly see the discounts and refund, signing up again at the lower price.
Why do People Buy?
A purchase decision at is its most simple is either Relational or Transactional.
What are the Characteristics of Transactional Shoppers?
Transactional Shoppers concentrate on the immediate purchase and do not think about possible future purchases. They focus on price and value and their primary concern is not over paying. They like to compare and negotiate and will, therefore, check out all the similar courses to yours on Udemy before making a purchasing decision. They do their own research and do not consider the time spent as a factor while making the decision. Having made their purchase, they are normally eager to share the information about their great deal with their friends and therefore make great evangelists.
What are the Characteristics of Relational Shoppers?
For Relational Shoppers a purchase is only one of a series and they are looking for a source they can trust. They fear making a poor choice and will purchase once their confidence levels are high enough. They do not enjoy the process of shopping or negotiating. They are looking primarily for an expert they can trust. They include the time spent shopping part of the purchase price and therefore attribute a cost to it. Once they have found “the right place to buy”, they are likely to become repeat purchasers.
Key Point: Which category are your students most likely to fall into?
Key Point: While your initial students are likely to fall into the transactional category, Udemy gives you an opportunity to communicate with your students to build that relationship. Once they come to know and trust you, you are more likely to convert them into Relational shoppers and they are more likely to respond to invitations to purchase further courses from you.
Key Point: By providing a free “lite” course or free lectures in your course, you give the student the opportunity to develop his/her trust in you and your ability to deliver on the promises you are making to them if they buy your course.
If you have a large audience of people who already know you, you will have already moved them through your sales funnel. They will have learned to Know You, Like You and Trust You. They will therefore psychologically be ready to buy from you. This audience will purchase full price courses from you all day and all night. That is great if if you are Chris Brogan or Seth Godin; unfortunately I am not.
On the Udemy Platform you are selling to people who don’t know you and who are reading your profile and taking on trust that you are the expert you say you are. So why do they make a purchase? For purely transactional reasons.
Here are a few reasons, but they serve to illustrate the importance of your product pushing the right buttons with your students.
Convenience: They have a need for the information you are providing and it is there all in one place. You are making it very convenient for them as you have already done all the hard work.
Brand Recognition: Even if you don’t have an established relationship with a new student, consistent branding will increase the possibility that the student will recognise one of your courses, even if they are only familiar with a different course. As you build that trust, consistent branding reinforces that trust and therefore the propensity to purchase.
Scarcity: The perception that something is scarce, and will not be around for very long, is a strong motivator. A time limited or number limited offer forces the buyer to make a decision now, in the belief that the product will not be available if they come back later.
Lower Prices: Everyone likes to get a deal and a discounted or low priced offer has great appeal.
Great Value: When the buyer believes that the value of a product to them exceeds its price, they will be motivated to buy. It is important that you take the opportunity to stress the benefits of your courses and not just the features or content.
Social Proof: People will make a decision to buy when they feel their decision is supported or recommended by people they know and trust. This is difficult to achieve on Udemy (much easier on Facebook) but you can use comments left by previous students to establish third party confirmation of the buying decision. Alex Mozes, the administrator of the Udemy Faculty Lounge left me a comment on Facebook saying “We were blown away by your course”. I now quote him at the start of my course description.
Key Point: When creating your Promo Video, writing your profile and course description, consider how you can find psychological hooks that will catch your students. Make sure you describe benefits not features. Take the opportunity to quote your students’ comments back in your marketing. Take a look at the end of this article to see how I have done this.
What is your Revenue Objective?
I think you need to ask yourself what you want to achieve on Udemy. As I often tell entrepreneurs, “If you don’t know where you are and you don’t know where you want to end up, how will you find the right path to get there?”
Are you looking to make a living from your online courses or is this just a supplement to your income? If you are aiming to make $1,000 a month from Udemy, which I think is totally achievable, how many sales do you need at what price?
1 sale at 1,000? Well Udemy take 30% of sales and 15% of promoted sales plus any affiliate sales cost you 50%. In addition to this you will have refunds, particularly if someone buys your course at full price and then finds the course for sale at a discount. With the Udemy 30 day no quibble refund policy (which I think is a good thing), they are likely to refund and repurchase at the discounted price. I know I had two this morning.
So if you are aiming for $1,000 income from Udemy, you should be thinking of a ball park of $2,000 sales per month. So what does this mean? Well almost no one prices at $1,000 it should be either $999 or better still $997 as research of online product sales has shown that a price ending in a 7 sells more than one ending in a 9. (No! Don’t ask me why!)
Course Price:$999 – two sales a month
Course Price:$499 – four sales a month
Course Price:$199 – eight sales a month
Course Price:$99 – 16 sales a month
Course Price:$49 – 32 sales a month, one a day approximately
Course Price:$29 – 70 sales a month, more than two a day
Course Price:$19 – 105 sales a month, three a day
Course Price:$9 – 222 sales a month, 7.5 a day.
And this all assumes full price sales. Now we are beginning to understand the scope the challenge. Given the Udmey promotion strategy, it is going to be very difficult to achieve this relying on full price sales.
It is worth touching on the advantages of having more than one course on Udemy, particularly if they are in related areas.
One strategy, which I am going to adopt very soon, is to create a “Lite” version of your course which you offer for free and market widely. You then try to convert your free students into paying students for your main course. This was suggested to me by Alex Mozes, who administers the Udemy Faculty Lounge closed Facebook Group for instructors. It also came up in a recent discussion of the benefits of free pricing.
Alternatively, you may have several paid courses and you can offer students from one course the opportunity to buy the other course with a Discount Coupon. In either case, this is likely to mean you offer your students a loyalty discount to access the other courses.
In my view, the advantage of having multiple courses is simply that you have to sell less of each course to achieve your monthly income objective.
Keep it Fresh
One thing is certain: like any retail business you have to keep “merchandising” your product. I have learned this from my wife, who is a bricks and mortar retail expert. She recommends continually re-presenting your product to your audience in different ways to keep the offering fresh and to keep your audience looking at your offering in different ways.