Pricing education programs gives many of us the heebie-jeebies. Too high—you turn off prospective learners, perhaps forever. Too low—you leave money on the table and set a dangerous precedent. This pricing puzzle explains why Jeff Cobb and Celisa Steele’s pricing session at the 2024 Learning Business Summit was both welcome and necessary.
Jeff and Celisa asked attendees how they decide on program pricing now.
Several challenges can affect your pricing confidence.
Registration declines aren’t always a pricing problem; they’re often an awareness problem. Even your members may not know the extent of your association’s learning portfolio—that’s a marketing issue.
Jeff and Celisa discussed the three pillars of pricing—value, price, and communication.
Pricing always starts with value. Find out what learners value so you can build those elements into your programs and highlight them in marketing campaigns. Value factors to consider are:
Summit attendees mentioned other value factors:
To identify potential value factors, ask and observe ideal learners and their employers, talk to internal experts, and research competitor offerings. Continually assess your audience segments because value perspectives change.
Methods for determining value
Jeff and Celisa mentioned two methods for determining value.
Reconfiguring value
It could be time to completely shake things up. For example, include education as a benefit of membership. In a Tagoras survey, about 48% of associations include some education as a membership benefit.
About 18% of associations offer some type of learning subscription. In our recent post on subscriptions, we shared American Speech-Language-Hearing Association’s success: revenue up 300% and learner engagement up 200%.
Reconfiguration comes with pricing questions you must answer first.
Revisit the pricing across your existing learning portfolio. The Tagoras value ramp is a useful framework for portfolio analysis. Offer products that span the ramp, with different price and value entry points for everyone.
Know what reference price range people have in mind for your new product, i.e., what they typically pay for a similar product.
Know what the product costs. Customers should perceive products with higher team effort and cost as more valuable. The pricing process starts with confirming the product’s value to customers and, sometimes, their employers.
You also need to do competitor research. The learning landscape has changed considerably in the last few years. Make sure you know about competitors beyond the usual suspects. Ask your audience what specific organizations or websites they go to for online education not provided by their employers. Pay attention to pricing and value factors offered by competitors, so you’re comparing like products and experiences.
Two methods are commonly used to ask prospective customers about the price they’d be willing to pay for a product.
With the survey-based Van Westendorp Price Sensitivity Meter, you provide a detailed description of the product and ask these four questions:
Van Westendorp is a good choice when you have a:
Consultants, like Tagoras, can help you with Van Westendorp. A good survey product will produce a useful data visualization.
The Gabor-Granger Method helps you understand how price affects demand. You can determine how much you’d have to lower the price to stimulate demand and raise the price before it decreases demand. This survey asks questions like:
It’s best used with modest sample sizes for basic offerings with a known price range.
Attendees in the Summit’s chat box recommended the Van Westendorp method. Jeff said survey respondents are likely to low-ball, so adjust up.
A segment of your audience can’t afford whatever you offer. Decide how important it is to serve that audience and what programs you can offer them for free to keep them close.
The pricing pillars of value and communication are intertwined. Persuasive marketing and communication can influence the value perceptions of prospective learners.
Branding helps to distinguish your portfolio from your competitors. Does your online learning portfolio have a name that is easily tossed around and recognized by members and non-members in your industry?
Some product and format names carry baggage, like “boring” webinars. How can you distinguish, reposition, and rename webinars?
Perhaps you can create a product category that carries no preconceived notions, like TED did with their conferences. Would your market welcome an elite event or program with a unique format, application process, and prestige pricing?
Some associations are taking this approach with yearlong cohort programs for executives and rising leaders. The presence of these high-dollar products in your portfolio makes the other products seem more accessible while also showing customers where they too could end up one day.
A strategic and holistic approach to pricing helps you define the value of your products, refine your marketing, and give everyone in your audience a place to begin and to direct their learning journey.