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December 12, 2022
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Going, Going, Gone... How to Price Your Training Program to Sell

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Written by: Julia Borgini

How do you price your customer education (CE) programs? Do you have a strategy you use to assess the value of the program, the cost of the delivery method, and market competition?

Early-stage enterprise software companies may decide to offer it for free because it's a part of the service you're offering and your customers "expect" it to be built into the subscription price. Is this the best approach? Once you start offering your training for free, it will be much harder to convince customers that they need to pay for it later.

In reality, customers are willing to pay for training if they can clearly see the value they get from it, so let's look at a few pricing strategies you can use to price your customer education programs effectively and generate more revenue for your organization.

Pricing Elements

Before diving into your overall pricing strategies, make sure you understand the following elements:

Calculate your production costs: Determine what it costs to create and deliver a course, what to charge for it, and how many enrollments you need to sell to break even.

Understand what the market is doing: Investigate what your competitors are doing with their training. Ask yourself how they position it, how it compares to yours, and what it costs.

Estimate the demand for your training: This is a hard one to determine, especially if you've just started offering customer education programs. However, if your customers have been asking for training, you can estimate the demand based on those requests. The sooner you get a handle on the demand curve, the more strategic you can build your pricing model. As you sell more programs over time, you'll be able to estimate demand more accurately based on current sales.

Three Pricing Strategies for Customer Education

Now that you've done the homework, it's time to look at three pricing strategies for your customer education programs: Pay per course, membership, and price discrimination.

1. Pay-per-course Pricing

This is the classic pricing strategy, where customers buy individual courses as needed at a set price. It's a simple strategy for customers, as they're not locked in a large education contract and they're more apt to purchase. You'll generate immediate revenue and it's easy to measure and forecast future demand. You will also be able to see which courses are the top sellers, and which are not doing well, and can invest resources into creating more of what's selling.

Customers can pick and choose the courses to take, designing their own custom curriculum based on the knowledge gaps they have identified they need to fill. This increases their student engagement with the training, enhances their product expertise and ultimately, drives up the adoption and usage of your products.

2. Membership Pricing

Offering an all-inclusive training membership delivers a cost-efficient model to large organizations that want to provide their employees with unlimited access to your entire training library. To prove the value and show the return on investment (ROI) of this price model to your customers, simply divide the overall membership cost by the number of courses, the number of employees, or the total number of hours of instruction. It's also a good differentiator for you in the market, especially if your competitors are only offering pay-per-course models.

The membership offers ongoing, predictable revenue to your organization. Depending on your learning management system (LMS), you'll also be able to see which courses are popular with customers and which aren't, giving you transparency into forecasting and CE resource investment for the future.

3. Price Discrimination Strategy

Price discrimination is a pricing strategy that charges customers different prices for the same product or service, based on certain group (or market) attributes. That means you're pricing identical goods at different prices to different customers.

This strategy requires a little more time to use effectively, as you need to determine the price point for each of your customer types. For example, there are price-conscious customers who will never pay over a certain amount for training, while others are not concerned at all about the price. Some customers have large budgets and a culture of investing in training, while others have no budget and only ever buy training as a last-ditch effort to retain employees.

To use this strategy, you'll need to set a different base price for each training product type you have and then adjust as necessary. For example, a single course could be taught through eLearning; via live training with an instructor (in-person or online); as a public or private session; or as a customized course for a particular customer. The content of the course is largely the same, it's just the delivery method that's different.

General Guidelines for Price Discrimination Pricing

  • Low cost: Self-paced eLearning is the least expensive level, as it costs nearly nothing for you to deliver and typically helps customers with basic knowledge transfer.
  • Medium cost: Public, virtual, instructor-led learning is a medium-priced level because while it's just as easily scalable as self-paced learning, customers get the benefit of interacting with a live instructor.
  • Medium-high cost:
  • Public, live, in-person learning is a higher-priced training level, as there are limitations for both the instructor and the customer. However, students get a more intimate experience with a knowledgeable instructor, so it should be priced accordingly.
  • Private, virtual, instructor-led learning is another higher-priced training level because of the privacy of the session and the costs associated with the instructor, location, etc.
  • High cost:
  • Private, on-site learning is one of the priciest training levels as it adds the personal, high-touch experience some customers prefer.
  • Custom training is the most expensive training level because you are changing your standard course curriculum to your customer’s specific training needs. The price for custom training is similar to the private, on-site training costs, but also includes the time it takes to customize the training.

Notice we didn't talk about offering any free training in our pricing model recommendations? That's because for many software organizations, free training is hard to monetize later on. Customers are so used to getting the information for free that they may not want to pay for it later.

Final Thoughts on Customer Education Pricing

Training has value for customers, most are even willing to pay for it, so it makes sense for you to have a documented customer education pricing strategy. You want to make sure you're pricing "just right" so you're earning enough and generating revenue. Try these strategies to find that price and tweak it as necessary. The more you sell, the more information you'll have to make any necessary changes.

Learn more here.

Originally published on June 14, 2018

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