Right now, as writers and entrepreneurs who create courses and develop email marketing strategies (and possibly try to earn that “side-hustle” income through freelancing gigs), we are no longer in anything like a “Blue Ocean.” The ocean is red with the chum of online marketeers. The waters are shark-infested.
The waters are crowded with offerings that want to separate themselves as being for those “serious” about their learning. Only the serious would be willing to invest hundreds or thousands of dollars for a course. While that may be true, unless your platform truly sets you apart, you should strategize with what the market will bear.
Tim Denning recently posted about how he is re-thinking how he earns money as a writer. As a fellow writer, publisher, course-builder and entrepreneur, his first point about the $5 online course really resonates with me and prompted to me to follow up on that idea with some of the “why” behind it.
There is no scarcity of your content
One of the most effective tricks to boost sales is to create the perception of scarcity. Price is likely to serve as an indicator of quality when buyers are uncertain about a product’s underlying quality. This happens when they are confronted with a product that is new to them or one which they rarely buy.
There is a scarcity on discussions involving pricing theory. There’s a whole field of thought regarding pricing. It’s psychology, but it’s far more than that. It’s brand strategy; it’s thorough knowledge of the industry you’re playing in. As Hermann Simon wrote in his well-known classic, Confessions of a Pricing Man:
“There is always one ‘right’ price or price structure and a multitude of ‘wrong’ ones.”
The Russians, he says, have a related saying:
“In every market there are two kinds of fools. One charges too much, the other charges too little.”
I first read Simon’s book about three years ago when I started writing full-time for a logistics startup. I wrote on economics, the tech sector (especially as it related to supply chains and the gig economy), AI and predictive analytics, and autonomous driving. It was a heady time. One of the things that stuck with me the most about the book, though, was the idea of volume and efficiency brands contrasted with elite and premium-service brands.
In some industries, you have no choice but to play the volume card. In others, it’s almost impossible. No one will out-volume the sophisticated supply chain efficiency that keeps Walmart’s prices uniformly and consistently lower than everyone else. For those who do compete in that space, good luck. It is entrenched. You can’t go lower than Walmart profitably. Aldi is trying. But even the likes of Target and Whole Foods (now backed up by Amazon) have to differentiate themselves as a better “brand experience.”
The automobile industry is another shark-infested space for an over-mature and now slowly dying industry. Luxury brands filled the space when the low-point volume was already thoroughly accounted for by Ford and Volkswagen and the like. People are willing to purchase a Mercedes at enormous comparative price points not just because of the quality (real or perceived), but because of the way it establishes exclusivity.
The maturation of the self-improvement industry
We’re failing to take something into consideration in our own industry. The personal development field (of self-help space) is actually quite mature. You could make a case that it came into being in the 50s and 60s with hits like Psycho-Cybernetics (1960) by Maxwell Maltz promising lasting change in as little as 21 days. You could also make a case that the industry hit a maturity peak in the 90s with the personas and wealth-building of Tony Robbins, Steven Covey, and Oprah Winfrey.
Self-help was given a shot in the arm in the early 2000s with the emergence of TedTalks and a more scientifically-based era of supporting claims. Malcolm Gladwell comes top of mind with hits like The Tipping Point and Outliers. Also, neuroscience went big in the 2010s.
Then, COVID hit. One the one hand, for a short burst, the industry became perhaps more relevant than ever. Then, two other factors collided at the same time. Everyone needed some mental health help, but everyone was also online now. The already-crowded field became even more crowded. Demand rose, but so did supply.
So why not give it away for free?
Well, a lot of us are giving away enormous amounts of value for free. You should, in fact, give a lot away for free. It’s part of the business and brand you’re building. Now that people are glutted with the sum total of human knowledge in their highly-intelligent phones, we’re creating what people are really starved for: experiences and community.
But free also signals to the consumer’s psychology it’s of little real value. This leads to another important point of pricing theory: You focus on nailing your profit above all other considerations because that is the dividing line between success and failure.
Profit means you get to keep going. It’s not greed. It’s being remunerated for your services. If you aren’t charging for your services you don’t have a viable business model.
If you are charging too much and no one is showing up, that’s a whole different problem. That’s the Goldilocks scenario we find ourselves in: Where’s the best price? My theory is that most of us should go lower, while still charging something.
Technology and the sum total of human knowledge
I was on a writer’s residency in Knoxville at a place called Sundress Academy. You got to write for a week for a little money on a farm. All they asked was that you helped out. I fed chickens, goats, ducks, llamas, and donkeys. It was a blast.
One evening as I helped the property owner mend fences, I asked him if he had ever owned a farm before. He had not. This guy was butchering his own meat, raising livestock, building and mending fences, growing produce, you name it, and he had no previous experience doing any of it.
“I just YouTube everything,” he said. “You have the sum total of human knowledge in your hand.”
It’s not just pricing theory that’s at play. And it’s not just new users engaging with a proliferation of content, and the democratization of knowledge. It’s something more akin to the Moore’s Law of technology. It’s the rapid and widespread adoption of technology that increases access to data and information at ever-expanding speed.
As a case in point, I took up the electric bass about a year and a half ago. In that time, I have taken lessons with world-class musicians like Stu Hamm, Ariane Cap, Kai Eckhardt, David Santos, and Andrew Ford. I have access to their courses 24/7 365 days a year, and they will play me each of the lessons note by note. They will slow down for me if I want them to. They will provide me jam tracks to play along with by myself. They will show me the musical notation, as well as the tab.
In most cases, I paid $5 for these courses. A time or two I spent $20.
What have these world-class musicians learned that many of us could take from? Sure, it must be painful not to have a student coming to your studio for months or years on end spending hundreds or thousands of dollars a month. And yet what these entrepreneurial musicians seemed to have learned is that this is part of the democratization of knowledge. It’s part of the online marketing game, and these low-priced video courses are but a new revenue stream, the whole “passive income” thing we hear way too much about.
Meanwhile, they’re also building their online social presence, and their communities. Not to mention, as the consumer, my own learning and development is dramatically sped up.
The ever-expanding online universe
Millions of new users are climbing on board the Internet highspeed rail. These users will be deluged with content. The Information Age is producing so much content. It is estimated that there are roughly 4,500 new books published globally each day. We are not lacking for content and curriculum.
- People are looking for experiences and community. With a low-volume entry point, you are building that community.
- You’re looking for a price threshold, a price point that triggers a pronounced change in sales whenever it is crossed, and a price that can sustain your path forward.
- Superior value is a must. Premium pricing will work over time and only if you offer superior value to customers. You should offer superior value no matter what, and build from there.