Our pricing decision for the new “Startup Selling” course on Udemy
Our “Startup Selling: Sell More Stuff” course on Udemy is now live, and it’s free.
Straight up – choosing a price was an enormously difficult decision. After many, many customer development conversations and lots of sound advice from everyone all around, we decided that this very, very awesome course should be free. And so it shall be.
1. It’s impossible to price based on each user’s perceived value.
We’ve worked with Udemy along the way – production tips, marketing ideas, pricing guidance. Most Udemy for-pay courses fall in the $49-99 range. So think of our course as a premium comparatively and should be $89 – at the higher end of this price spectrum.
But… $89 doesn’t capture the value of the course. Helping just one company build their sales process equates to millions of dollars of economic value created. Seriously. I’ve put this course into action myself in consulting arrangements and watched companies improve their sales performance.
We know when we provide value to people, real value, that’s the peak of our professional life. It happens every day with our paying consulting clients. When a client that pays a $10,000 retainer watches their sales pipeline grow and multi-million dollar deals advance in the sales cycle, that’s real value.
Attempting to capture this sort of value in an $89 price tag feel cheap. In fact, $89 feels cheaper than free.
And besides, for every startup CEO looking to meticulously implement the course ideas and build their sales process, there are thousands of entrepreneurs, salespeople, sales managers, technical cofounders, and engineers that are simply looking for a few ideas to jumpstart their learning today, this week, this month. Look at this Quora question I recently answered.
Do we really think this person would be willing to spend $89 for one course on Udemy, let alone our course? Doubtful. If we offer real value to this person though, they’ll remember and will come back for more when it’s time.
2. Buyer behavior and price elasticity
I picked one of our course users to analyze their behavior. This person is pretty active on Udemy, with 111 active or completed courses, and another 70 courses on their Wishlist. I reviewed all of their courses to see if a buying or behavioral pattern emerges.
Active & Completed Courses
Most of the person’s paid courses were tech-based, ranging from Excel to jQuery/AJAX to Joomla. They did pay for two “startup/business” courses. The rest of their business-related course were free courses. Here’s the rundown:
- Startup “How To”: 7 Steps to Creating a Successful Product – Janice Fraser ($199)
- Startup & Go – First Steps to Building a Technology Company by Founder Institute ($99)
- Foundation of Business Strategy (Free)
- Startup FAQs (Free)
- Lean Canvas Course by Ash Maruya (Free – 2.2k students! Ash – you are the man…)
- An Entrepreneur’s Checklist (Free)
- Entrepreneurship – From Idea to Launch – (Free)
- Plus lots of free tech-based courses along with the for-pay courses I mentioned above.
The for-pay startup courses are led by serious brand names – Janice Fraser and Founder Institute.
All of the Wishlist courses are for-pay courses (obviously):
- Sales & Persuasion Skills for Startups $180 by Len Smith (373 students)
- The Ultimate Guide to Business Development at a Startup by Andrew Dumont $79 (550 students)
- A Young Entrepreneur’s Guide to Start & Grow a Business $79 by TeleTime Video (16 students)
- Become a Startup Founder by Founder Institute $399 (502 students)
- Running Lean Workshop by Ash Mayura $297 (336 students)
This person paid $99 for a Founder Institute course, but hasn’t yet paid for their $399 course; took Ash Mayura’s free course, but hasn’t yet paid for Ash’s $297 course.
See the trend here? I do. I’m detecting a price curve.
Bottom line – until this person recognizes SalesQualia as a brand name delivering quality content, they won’t pay for our single course.
I’m 100% certain that pricing our course at $89 would have put us in the “WishList,” if at all. Instead I have the opportunity to interact with this person, help them grow, and also learn about their buying decisions for future courses.
3. From a customer development call: “People buy sales training to make themselves feel good. They like to feel like they’re doing something positive.”
This may be true, and if it is, we’d rather give away ideas for free to help that person feel good than try to squeeze $89 from them. And in most cases, we won’t be able to squeeze the $89 anyway. And we can’t help the people that are paying $89 to feel good anyway. We’re about improving sales performance, not Tony Robbins motivation. And the thought of squeezing anyone for money gives me shivers.
This person urged me to charge for the course after I told him it would be free.
Him: Respect the wallet. Why charge a shitty price for a shitty product?
Me: It’s not a shitty product.
Him: Then why are you charging a shitty price?
This person has three sales course on Udemy – two free and one paid ($97). He experimented with several price points:
$199 to start: 0 sales
$97: some sales
$34: 0 sales (his price was pushed down by Udemy in a course promotion, not by his choice.)
His $97 course has more than 100 users – !$9k in revenue. Seems like we’d need to really hustle to earn that $9000.
Or we can give the course away for free and we can concentrate our effort on learning and applying this learning to developing more products with a lifetime customer value much higher than $97.
We think $89 says we’re a sales training company. A sales coaching company. We’ve done those things but that’s not who we want to be or who we want our customers to be. Sales training is a temporary fix. Sales coaching turns us into shrinks. We’re building our company to focus on the very best in sales analytics.
4. Information asymmetry
The people who know SalesQualia – workshop attendees, our Startup Sales Meetup group, tech group organizers, entrepreneurs, clients, and startup friends – know that we create really good stuff. They know we work hard to prepare and deliver awesome workshops. Our Net Promoter Score reflects this. (We’ve hit +40 in our workshops 🙂
For our advisory clients, they know that what we’ve worked on has improved their sales performance.
So if we’re so awesome, why not charge for the course?
Because this community is a micro-unit of all of the entrepreneurs, startup CEOs, and sales people out there that we want to find – that we NEED to find to build a successful business. For every person that knows SalesQualia, there are hundreds of thousands of people who don’t. Literally. This is the first of many courses and products that we’ll to build over the next millennium.
5. Conversion Rates – Free & Prepays
In the week prior to launch, we tested landing pages – nearly 500 page views of 6 different designs – targeted on Twitter with the hash tags #leanstartup #startup. We had 4 conversions – <1%. We think this proves the information asymmetry exists for our brand. We learned that even getting free conversions is hard.
We didn’t try paid ads – Facebook, Google, LinkedIn – yet. We did a Clarity call with a previous Udemy executive. He shared that the paid ads had proven unsuccessful for Udemy courses, and I suspect it’s because of information asymmetry.
(Yes, we realize that our Landing Page tests are incomplete. It’s the best we could do given time and resource constraints, and I think that this test is a fair indicator of conversion for our product in our market.)
I built a small “Friends of Scott” list that included friends in the sales profession and current/recent advisory clients. Of the 17 friends and clients that prepaid, only one joined the class the day we launched the course. A second joined the day after.(Sheesh. C’mon people – we’re depending on you for testimonials!) We now need to go back to the other 15 and hound them. I’ll repeat that – I have to go back and hound the my friends that paid to take the course!
(Sidenote: Maybe there’s some sense that they’ve served their duty by prepaying – “I paid Scott $19. I contributed.” Funny huh? I don’t care about the money and yet we charged the people most likely to do us a favor. Did I burn the favor by asking for $19 when I should have asked friends to take the course instead and leave a testimonial? Maybe. I’ll find out. The good news is that we have 15 people in the course as of this morning with another 15 that should be joining in the next two days. That’s a good start considering we’ve posted only a single tweet about the course yesterday.)
People are busy. That’s the point. Even “free” means spending time. Literally spending the scarce amount of time that our target market has available.
Then why did you charge friends $19 before the launch?
During production, we felt we needed to charge for the course. One of our core beliefs in sales is that charging any amount, even $1, yields different and valuable consumer behavior and activity. We planned to run a tiered pricing schedule over three months – $19 in November, $39 in December, then $89 in January.
We thought the $19 would be a fair introductory price to find a few “friends and family” people to prepay, and thus be able to say that we had X number of people in the course at launch. Our goal was 25 prepays before launch.
This was a good test to see which of our friends were really willing to support us. We slowly expanded the circle of people as we asked for the $19 prepayment. We had to watch the face of people and deal with silent replies to our emails. Asking friends for $19 is really hard because you know you need to bring them value or damage your relationship with them.
Funny how you weed out people – who say they’ll do it and which people follow through. Most people followed through, a couple did not. Now we know who we can depend on for future projects likes this.
6. What about the people that sign up and don’t finish the course because it’s free?
That happens with for-pay courses too. See above – “People are busy.” We verified this with other Udemy course instructors.
Following people through the course also helps us discover which of the sections are cumbersome or difficult. Knowing that people sign up for a course and never take it measures actual saturation rates – not just customer transactions. We have more than five (5) hours of video on the course. I’m already thinking that this is too much. What? Yes, really. Maybe people would rather take five one-hour courses rather than one five-hour course. Guess we’ll find out, and real users yield that data.
Plus we have the opportunity to overwhelm our users with value. We can test new content ideas to see if that moves any of the stalled users to action. If it does, then maybe we’ve hit on a hot topic to explore more.
7. We’re still learning our marketing channels.
Here’s a partial list we’ve defined (suggestions welcome):
- LinkedIn, Twitter, and Facebook to reach my immediate network.
- LinkedIn Groups
- Email campaigns to our lists and groups.
- SlideShare and YouTube where we’ll publish course previews.
- Hosted Webinars & Google Hangouts
- Influencers and Multipliers that have agreed to amplify our message about the course.
- Meetups and Technology groups willing to share the course with their members.
- Universities & Entrepreneurship Groups
- Incubators, Accelerators & Shared Workspaces
- Communities like StackExchange and Reddit
We have a list of ~2000 people on Quora that either follow me or have viewed at least one answer on mine of Quora. We can send a personal message to each person asking them to join the course. Quora publicly posts who are Followers of specific topics. Entrepreneurship: 448,638. Startups: 292,103. Lean Startups: 232,573. All the way down to SaaS Sales: 475. We can send each of them a note as well.
If we ping each of these people about a for-pay course, we’re spammers. If we message them about a really cool free course, we’re helping them. Will it work? We don’t know, but we’re about to try.
8. Add value, add value, add value.
$89 is a premium price in this market. For $89, people expect something to be pretty freaking awesome. And while we think our course is pretty freaking awesome, we’d rather someone take the course in utter disbelief that such a course could possibly be free.
“Free” also blows up the for-pay market on Udemy in our segment. Sure, there are a few excellent courses by the brand names or courses with content contributed by leading sales experts. Some of those are free too. For anyone else that wants to build a sales course on Udemy, it needs to be free or much, much, much better than our course. Or maybe just better at marketing. And we’ll work until our eyes bleed to make sure that never happens.
9. We can always charge later if we really, really want to.
We’d rather start with the course as free, then charge for new courses down the road.
We believe it’s better to have one course as free – forever free – then create more value down the road than to come out of the gate at $89, sell very few, then drop have to drop price dramatically (or have Udemy do that for us…) or changing it to a free course, giving the appearance that the course must not be very good otherwise more people would have spent $89 on it.
10. We’re building a company, not selling an online course.
This course is the one of many products we have on tap. If we’re wed to making money on this one product, we risk running a two-variable experiment. The first variable is whether or not the content is useful to the broader community, and the second variable is price.
Our goal is to reach 1000 users by the end of 2013. That’s 25 new people every day that will take the action to register for the course. Our goal by March 2014 is 2.5k users. We’re more concerned about reach, learning how to develop a great course, and learning how to reach our market than the money right now.
Of course it sounds like a cop out for those demanding that a product’s true value cannot be tested until it’s sold. I agree – for this product. We’re building lots of products and to isolate our learning, we need to reduce the variables in this experiment.
Heck, we don’t even really know the market wants this course in the first place. Sure, we did customer development and saw a demand based on in-person workshops hosted all over the country. This doesn’t mean the world wants this content in an online environment.
We can, and will, build more products. We’re committed to this market for the long, long run. Like the next millennium long run.