A Philosophy on Education Product Pricing Strategy

Marketing new education programs is always a fun challenge. In particular we are getting a lot of inquiries about how to market and price new educational programs – especially eLearning products. Before I explain some key philosophies on this, let me refer you to my friend and co-author Mickie Rops’ fantastic entry entitled, “Knowledgizing Associations” that speaks to four value-based services that all associations should focus on. They are simply the ideas of Connect, Context, Filter, and Feedback (see her entry for the details).

Focus educational programs and services around the four values Mickie describes. Work very hard to provide as many of these values to your members as possible. But in the short-term, focus highly on the context and filtering aspects of content. Perceived value is what drives participants to education programs. Identifying what that perceived value might be is absolutely critical to the marketing and pricing challenge. Many times it is saving a member time and money by filtering out irrelevant content and explaining how and why that content can be applied to someone’s professional or personal life. Time and money are the two most common “value” items. With this in mind, here is a philosophy on pricing…

Free is not good. Unless you have some sort of legitimate reason for not charging for a program (a grant funded program, for example) you need to charge something to participants. The more you charge the higher the perceived value of the program. When you offer something for free, the buyer’s mentality is that it is not as valuable, even if it truly is. We also see significant numbers of no-shows for “free” programs versus paid ones.

Bundling products and services creates higher value. If you offer an education product, be sure to think about other products you can bundle with it. For example, you offer a seminar on how to build a great tree house. Your organization also happens to have a research report on new trends in tree house building. Bundle the products together to add value. You could even simply send an email out to everyone who attended the ‘how to build a great tree house’ course that lists all of your other tree house resources, with links to each. This links back to the filtering aspect of value creation.

Comments

[Florida Freight Service]

What a well thought out post. I especially like the logic of bundling. Thank you for sharing

[Mary]

Amy, thank you for an interesting article. You write 'Free is not good', can't agree with you on this though. Recently I needed to convert my presentation made in PowerPoint to flash and came across iSpring free (http://www.ispringsolutions.com). Good software! (actually I still can't figure out the reason they made it free :))

[Kathy Smith]

I'd suggest that some other factors need to come into play, and they hinge on real costs and perceived costs.
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[Ellen Behrens]

Pricing online learning is a good exercise in attaching a dollar amount to value, but I'd add that it's not the only factor.

How many of us have considered registering for something online, saw a high fee, and thought, why?? Their overhead is lower -- they're not providing my refreshments, after all -- so are they just trying to make some easy money?

I'd suggest that some other factors need to come into play, and they hinge on real costs and perceived costs.

Real costs are affected by delivery mode, sponsorships, and other factors. You have real costs when you create any program, and pricing for online learning registrations shouldn't ignore these.

Perceived costs have to do with the issue I mentioned above -- what do you think someone might be *willing* to pay, regardless of the value you believe it should have for them?

The fact is that live events have different costs attached to them, so I disagree with Jeff that we should price them the same way. Live events are one-time events; depending on the type of online course, you might be able to leverage longer shelf life against the cost of developing it, and charge much less than a one-shot live program.

Much to consider with pricing!

Glad to see you back, Amy!

[Jeff Cobb]

Amy--Great to see you actively blogging again. And this is definitely one of the top questions I see come up in client engagements. If others reading this post/comments know of other places this topic has been addressed, it would be great to hear from you.

My own experience is that clients inevitably assume that the price for e-learning should be less than the price for classroom training. Again, it's a question of value--if the educational value is equal (and it should be with well-designed e-learning) there is no reason the price should not be at least equal.

More at http://blog.missiontolearn.com/blog/2007/06/from_balancing_.html
Jeff