A Pay As You Go Business Model for Educational Content
One of the most lucrative methods of making money online is to teach something. It doesn’t really matter what the subject matter is, if you have substantial knowledge that people want to learn and you have the ability to package it up into some kind of course, you can charge a lot of money. However one problem that I am seeing is that the two major methods of taking payments for educational material are flawed. Here is my proposed solution to the problem!
Two Flawed Methods of Charging
When I say educational material, I am talking here about substantial material – a complete course that takes a significant amount of time to work through, as opposed to something quick and cheap like a little ebook. Let’s take the subject of learning how to make money blogging as an example, as I have three concrete products to draw examples from.
There are two primary ways of charging for education material and subsequently delivering it:
- Charge the entire fee up front and provide the whole course up-front
- Drip feed the course in installments and charge accordingly
The Content & Fee Up-Front
Perhaps the easiest way to deliver something, whether large or small is simply to package it into a single self-contained unit and charge a fee for the whole thing. This is what I did for the Bloggers Bible. However this is a seriously flawed method. Why? Because human nature is such that the vast majority of people who are interested in your material will not complete the course!
What tends to happen is one of two things – either people buy the course full of enthusiasm and they end up wasting most of their money because they never finish it (happy marketer, unhappy customer) or they figure that they might not finish it and so don’t even buy it (unhappy marketer, probably frustrated customer). There is no middle ground here – it’s all or nothing.
The bigger and more expensive the course, the bigger the problem. The higher the price, the harder the marketer has to work to convince the customer to make the decision and this is where those awful long-form sales letters come from. This is also where the special one time offers come from. The marketer manages to work the customer into a state of enthusiasm for the product and whilst in that state hits them with a bunch of secondary offers that are never to be seen again. The customer will usually end up spending more money than he wanted to on a bunch of products that he’ll never finish. Some marketers may be happy with this model, but it certainly does not foster a healthy long term relationship with the customer.
So, to combat this we have the second business model which is becoming increasingly common:
Content & Fees Structured Monthly / Quarterly etc
Yaro Starak is very fond of this method. He has marketed both his blogging courses, Blog Mastermind and Become a Blogger as 6-month courses with a monthly membership for those six months. Note that these kinds of products are often billed as membership sites but I disagree with that description. These are finite courses that are delivered over a specific time-frame. A real membership site will be able to keep its members indefinitely. I have written about these in the past and given some ideas for membership site business models.
But I digress… I personally have signed up for at least 5 courses that were structured in this way. On the surface it seems like a good idea because the marketer doesn’t have to charge such a large fee up front and the customer can test out the water, try it out for a while before committing to the whole thing. If for some reason he is unable to finish the course, he can cancel his membership to avoid incurring further fees.
But this model is also highly flawed! The main problem is that the marketer has to decide the time frame over which the course will be delivered – the customer does not get a say in this and of course everybody is different, everybody has varying amounts of time to devote to the course and so on. In other words, whatever time frame the marketer comes up with, it will not suit all of his customers – it probably won’t suit many of them at all.
What’s the Ideal Method?
Think about how we consume things in the offline world – we buy food as we eat it, we pay for utilities such as gas and electricity as we use it. We only pay for what we use and we control how much we want to consume at any time. If we stop consuming, we stop paying. Wouldn’t it be nice if we could consume educational material in the same way?
One somewhat simple idea would be to simply cut the course into chunks and allow the customers to just purchase it one chunk at a time but this has several problems. With educational material there is usually a very structured sequence taking the customer from the beginner level material to more advanced stages and the earlier material is a pre-requisite. As the marketer you want to ensure that the earlier material has been consumed. Another problem is that you want to encourage the customer to continue to purchase extra parts of the course and this kind of system does nothing to aid that. The ‘membership sites’ that Yaro has setup will bill the customer automatically each month unless he cancels.
A Proposed Solution – Pay as You Go!
Imagine if there was a payment/delivery system that allowed you to divide your course into chunks and set a different price tag on each one. The customer has to work through the course sequentially – he cannot purchase part 2 before having purchased part 1 but he can do so at his own pace. As soon as he purchased part 1, part 2 is unlocked and so on. This would allow the customer to go just as far as we wants and at the pace he needs. If at some point he decides that he no longer wishes to continue, he has only paid for what he has used.
This makes for a happy customer but is the marketer happy? Perhaps not as there is no incentive to continue to bill the customer. This could easily be implemented. Perhaps the course could be setup so that each part will be delivered and billed on a set time scale unless the customer purchases early or cancels.
For example, if I was doing this with my Bloggers Bible course (you can still get that for the flawed up-front fee of $79 until the end of Monday 22nd!) I would split it into 12 parts – one for each module. They wouldn’t all be the same price as they are all different sizes. Also I might charge a bit less for the earlier modules than for the advanced ones to encourage the more experienced customers to work quickly through the introductory module. I would then set a default timescale for re-billing between each module and again this could vary for each one. So module 2 might be delivered 14 days after module 1 and so on. At any point the customer could either purchase the next module early or pause the course so that he does not get billed. Of course he could resume again later on if he wished.
The only downside I can see to this is that it might seem a little complicated but really I think its one of those things that easier to demonstrate and use than to explain.
This would be my ideal payment and delivery system for educational based content. I don’t know if such a system exists. If there is, I would love to hear about it. If you know of one please share in the comments. If there isn’t, I might just try and write one for my software project as I am still playing with ideas for that.
What do you guys think?
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George
December 19, 2008
I think it’s a fantastic idea, but I think that you will lose money if you use it. People often stay in continuity programs because they are too lazy to cancel their membership or they forget to. If you force them to pay as they go, you are going to have a much higher drop out rate. On ther other hand it seems like more ethical solution, so I am torn on whether or not I would use a system like that.
Very interesting idea, though!
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