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.
Challenges of Pricing Education Programs
Jeff and Celisa asked attendees how they decide on program pricing now.
- 59% try to gauge the perceived value of the program.
- 56% look at competitors’ prices and price accordingly.
- 44% determine the cost of the program and then mark it up by a percentage.
- 22% ask customers what they’re willing to pay.
Several challenges can affect your pricing confidence.
- Because they already pay a lot of dues, members think some educational programs, like webinars, should be free.
- People compare your prices to competitors who offer similar programs at a lower price or free, including chapters and supplier/consultant members.
- Since salaries aren’t keeping up with inflation, people don’t have as much money to spend as before.
- Employers have decreased or eliminated professional development budgets.
- Students and early career professionals students never had money to spend.
- In some professions, a culture of freely shared knowledge makes it difficult to charge for programs.
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.
3 Pillars of Pricing: Value, Price, and Communication
Jeff and Celisa discussed the three pillars of pricing—value, price, and communication.
Pillar #1 of Pricing: Value
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:
- Continuing education credits or digital credentials
- Subject matter expert (SME) reputation
- Proof (testimonials) of demonstrable improvement of knowledge or performance
- Access to SME
- Access to peers, people of power, or influencers
- Opportunity for practice and application
- Supporting materials provided
- Related costs (like travel) and who’s paying
- Venue/destination (for in-person events)
Summit attendees mentioned other value factors:
- Value of the topic or activity to the reward structures that impact the learner’s work status, promotability, and career
- Ability to alleviate an immediate pain
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.
- Conjoint analysis: Describe three packages, each with a different price and elements, for example, type of speaker, duration, credits, etc. The fourth option is “none.” Most organizations need an expert to help with this complex analysis, but it’s a useful exercise to determine which elements matter most to your audience segments.
- MaxDiff: Ask subjects to look at a single list of elements and pick a selection of their most and least favorite and valuable.
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.
Pillar #2 of Pricing: Price
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:
- At what price would you consider the product a good value? (cheap)
- At what price would you say the product is beginning to get expensive, but you would still consider buying it? (expensive)
- At what price would the product be so expensive that you would never consider it? (too expensive)
- At what price would the product be so inexpensive that you would doubt its quality? (too cheap)
Van Westendorp is a good choice when you have a:
- Well-defined offering
- Wide potential price range
- Knowledgeable audience who will understand what you’re offering, even if it’s a new product
- Modest sample size—you can get useful data even with 50-100 people
- Lower budget
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:
- At a price of $X, how likely would you be to purchase this product?
- At a price of $Y, how likely would you be to purchase? And so on.
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.
Pillar #3 of Pricing: Communication
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.
