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 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 a rock-bottom price point to your content and services, you teach potential customers to expect low prices. And 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, choosing low prices for your offerings is a subtle indicator that you don’t believe them to be valuable or worthwhile. And if you, the creator, are doubting the importance of your offerings, how can you expect customers to appreciate their worth?It can be so tempting to join the “race to the bottom”—offering deep discounts or launching Groupons—but 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; Hone in on your niche, and ensure that you’re 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.
7 factors to consider when pricing your offerings
Yep, we know that sounds like a lot to figure in. But when you carefully weigh all seven, you’re guaranteed to land on a figure that hits the spot with your target market.
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. Which means you need to make sure that your prices are appropriate for the people who live within that community.
Demand: If you have a product that’s created for a specific audience, you need to 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.
Amount of content: A fully loaded, content-packed 12-week program should be priced 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.
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.
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.
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.
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.
Creating a fair, profitable, and attainable pricing structure for your business will take some research and careful calculation, but it’s worth the effort. In the end, you’ll have figures you can stand behind, and prices that appeal to your ideal clients.
How to price memberships
If you’re running an online community that offers paid memberships, we’ve got a few tips for creating prices that appeal and 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 used to spending more for in-person classes, they’ll be comfortable spending a bit more for online programming, too.
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 Namastream 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 Namastream teachers price their basic offerings between $18 and $45 per month.
What to charge for an online course
Pricing for ongoing memberships needs to be quite different from pricing for one-off products, such as a 12-week bootcamp or a 30-day cleanse. Within Namastream, fixed-price products—like online courses— vary widely in cost, much more so than memberships.
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 Namastream 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.