Pricing can be one of the trickiest parts of launching a new course. It requires a balance between providing value to your audience and setting a price they’re willing to pay—or deciding if you’re going to charge for your courses at all. 

Before you choose a course pricing model, it’s a good idea to compare the options and consider your revenue goals. Here are the four most common pricing models to consider as you plan and price your courses.

1. Free courses

Free courses are a great tool to help drive business and get people interested in the content you have to offer. A free course or sample lesson can also serve as a test strategy for something you plan to evolve or further develop as a paid course later. If you’re just beginning to cultivate your audience, a free course can be a good starting point as you build up a customer base.

2. Baseline courses

Baseline courses reach a wide audience by providing content that appeals to many people at an affordable price point. These should be courses that you can create relatively quickly. They also shouldn’t require a huge time commitment from students or cover topics that are too in-depth or technical. These courses may result in a lot of signups with lower participation because of the low-risk price point. 

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3. Premium courses

Premium online courses are the goal for most content creators when they are thinking about pricing strategy. These courses have the highest price points and deliver quality, in-depth content. Course material must be unique, taught by a reputable or well-known instructor, or cover a subject that you won’t find anywhere else—these attributes help justify the premium price point.

4. Subscription courses

Subscription model courses offer membership payment options for your customers. This can be in the form of daily, weekly, monthly, or annual subscriptions. After becoming a member, students have unlimited access to your gated course content.

Regardless of which pricing model you choose, how can you be sure you’re setting the right price for your courses?

The formula for setting your course price

Setting the price for a course isn’t an exact science, but you can use the formula below to take some of the guesswork out of pricing.

RELATED: How to Price an Online Course

To get started, you’ll need a few key pieces of information.

• Audience size. Take a look at your audience to determine how many people might be interested in your online course. You might start by adding up your total followers on social media or looking at the size of your email list. If you’re creating a course on a niche topic, your potential audience may be a smaller segment of your larger audience. The audience size might change for every new course you create.
• Revenue goals. Think about how much you want or need to earn from the course. Do you need to cover costs to break even? Do you have an income goal? What is the total amount of revenue you expect to earn?
• Conversion. How many people in your potential audience do you expect to actually purchase the course? Using data from your email list, social media following, landing pages, or other campaign information, you can come up with an estimated conversion rate for your audience. This rate should be a percentage represented in a decimal: For example, if you expect 10% of your audience to convert, use 0.10 in the formula below.

Now you’re ready to try out the formula:

Revenue = Audience Size x Conversion Rate x Price

Plug in different numbers to see how the course price changes based on your revenue goals, or how revenue increases or decreases at different course price points and conversion rates.

The optimal course price is one that allows you to meet your revenue goals given your audience size and estimated conversion rate.

Reach your goals while staying grounded

The final element of pricing strategy is ensuring that course content aligns with the price. If you use the formula and it suggests an exorbitant course price, you might need to reconsider your goals; it’s unreasonable to charge $10,000 for 10 minutes of information, for example.

Ultimately, thinking about the different pricing models with the pricing formula as a guide will help you choose a pricing strategy that works for you and for your customer base.