Should You Offer Payment Plans For Your Online Courses?

Are you thinking about offering payment plans to sell your online courses? Learn everything you need to know to make an informed decision for your business.

As a course creator, you've probably asked yourself at some point "should I offer payment plans for my online courses?"

Well, I've been in your shoes, and I can tell you, it's not as straightforward as it appears.

On the surface, offering payment plans might seem like a simple way to attract more students and increase your enrollment and revenue. But, before you jump on the bandwagon, it's important to consider the potential downsides as well.

But don't worry, I've done the research and am here to help!

In this informative and eye-opening blog post, I'll share my knowledge and give you the inside scoop on offering payment plans for online courses.

From the Pros and Cons to expert insights and best practices, you'll learn everything you need to know to make a well-informed decision for your business.

But first, let me give you a quick answer to the question:

Should You Offer Payment Plans For Online Courses?

Offering payment plans for online courses can be a great way to make your courses more accessible to a wider range of students while also diversifying your revenue streams. However, before making a decision, you should consider your target audience, financial goals, and overall business strategy.

By taking the time to weigh your options, you will be able to make the best decision for you and your business.

I'll expand on these in the rest of the post.

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You can also check out all the free guides available at the Course Creator Academy by clicking on the Academy link on the top menu.

So, are you ready to increase your course enrollment and revenue with payment plans? Or do you prefer to avoid potential pitfalls and headaches?

Keep reading to find out!

What To Consider Before Offering Payment Plans For Your Online Course

So, you're trying to decide if offering payment plans is right for your online course business?

Let's take a closer look at the things to consider:

Target Market

A good place to start when considering offering payment plans is your target market.

You should consider who your target market is and whether payment plans will benefit them.

Are they students who are on a tight budget, or professionals looking to improve their skills? These are questions to ask.

Understanding this is crucial because it will help you determine whether payment plans are a good fit for your business.

Financial Goals

Another thing to think about is your financial goals for your online course business.

Do you wish to maximize your revenue, or are you more focused on growing your customer base?

These goals will help guide your decision on whether or not to offer payment plans.

Business Strategy

Lastly, consider how providing payment plans fits into your overall business strategy.

Are you looking to spread out your revenue streams, or are you focused more on maintaining financial stability and consistency for your business?

For instance, if you're looking to spread out your revenue streams, then offering payment plans is a good way to achieve that, and vice versa.

In essence, your business strategy will help you determine if payment plans are a good fit for you.

Pros of Offering Payment Plans For Online Courses

If you're considering offering payment plans for your online courses, here are some reasons why this might be a great idea.

Better Affordability For Students

As a course creator, offering payment plans can make your courses, especially high-ticket courses, more accessible and affordable to a wider range of students.

For instance, if you have a $500 online course, most people might not be able to afford it all at once, even if it is worth the price, but if there is a payment plan that allows them to pay, say $50 a month, they will most likely consider it.

This makes your course's entry point more accessible to a larger number of people, which may help you enroll and retain more students, resulting in increased sales and revenue.

Improved Cash Flow

One of the things you want for your business as a course creator is a steady and predictable cash flow.

By offering payment plans, such as a monthly installment from your students, you can maintain a steady and consistent revenue flow throughout the duration of your course.

This allows you to manage your business and finances while also ensuring a stable source of revenue.

Enhanced Customer Satisfaction

Payment plans are helpful not only for you as a course creator, but also for your students, especially those who cannot afford a one-time payment.

It can be a way of showing that you understand their financial constraints and are willing to work with them to help them succeed.

This can result in increased customer satisfaction and loyalty, as well as positive reviews and referrals for your business.

You Can Charge More

With the added flexibility of a payment plan, it's only logical that the overall charges are slightly higher than the one-time payment.

As a course creator, you can charge more in total for the privilege of only having to pay a low entry fee if you use a payment plan. For example, you could charge 5%-10% more than the original price.

Here's what I mean:

If you have a $500 course that your students cannot afford to pay all at once, you could divide it into five payments of $120 each. So, in the end, they pay over $500 for the course but only get access to it for $120.

This allows you to receive more money for your course over time. It could also be a psychological trick to get your customer to pay for your course in full upfront if they realize they'll end up paying more later.

In any case, it's a win-win situation for you!

Cons of Offering Payment Plans For Online Courses

While offering payment plans has many pros, it's also important to consider the potential drawbacks of this option. Let's explore some of them.

Increased Risk of Non-Payment

It's great in theory that offering payment plans lead to more course enrollment and revenue. But in practice, it's not always the case.

With payment plans, there is always the possibility that some students will default on their payments or miss a payment for several reasons, including failed credit card payments, customer cancellation, or card expiry.

In essence, the longer the payment plans, the more likely someone will cancel or default on the payment, resulting in lower revenue and increased stress for your business.

Management Complexities and Overhead Cost

Offering payment plans can be overwhelming at times because you'll need to manage and track payments from multiple students at different times, which can be too much for your business.

To handle these payments, you may need to invest in new systems or software. This, too, may be expensive.

Potential For Fraud

Another disadvantage of offering payment plans is that it may increase the risk of fraud, as students may try to game the system or exploit loopholes in your payment plan policy.

To detect and prevent this, you must be vigilant and have a solid system in place.

For example, similar to Kajabi, you can make your courses stream only or set up a system whereby if a student fails to make a payment, after a certain number of failed payments, you block them from accessing the course.

Reduced Upfront Revenue

On the flip side of having a recurring or improved cash flow, offering payment plans means you'll receive smaller, staggered payments over time, rather than a larger upfront revenue which adds more financial stability to your business.

As a result, this can negatively impact your cash flow, making it more challenging to manage your business finances.

Best Practices For Offering Payment Plans For Online Courses

If you're thinking about offering payment plans for your online courses, here are five (5) expert tips and best practices that could help you maximize your business revenue.

#1 Request a Higher Initial Installment

Requesting a first installment that is twice or three times more than the next installments is a great way of getting someone to commit to your course. This way, it might be difficult for them to pull out.

People are usually more inclined to see things through when they've already made a huge commitment.

#2 Strike a Balance Between Installments

Although requesting a larger initial installment is a good strategy, you must strike a balance between the first installment and the subsequent ones.

A good way to ensure this is to keep each payment in the double digits. This significantly increases your chances of making more sales. However, if your price exceeds the double-digit threshold, this may elicit a strong negative psychological response from your customer.

For example, payment installments of $100 or more will make a significant psychological difference and may turn people off compared to installments of $99 or less.

#3 Keep The Number of Installments Few

From experience, the longer the payment plans, the more chances for someone to cancel or default on the payment. So, to avoid that, keep the number of installments few and don’t let them spread across a year or even more.

Ideally, you may allow between 4-6 payments max.

#4 Set Up Drip Content Or Payment Processors

Using a drip content or stream-only format for your course is another good way to maximize revenue when offering payment plans. This way, if someone fails to pay, you can easily prevent them from accessing the course in the future.

Also, your website should have built-in payment processors or third-party processors to help you manage payment installments over time. Partial.ly and Paypal are great examples of payment processors you can use.

#5 Charge a Little More Than The One-Off Payment

When offering payment plans for your course, ensure that the total payments add up to be more than the cost of a one-off payment.

Whether it's 10% more or higher, the point is that people who pay in full should be rewarded by getting the best deal possible.

Conclusion: Should You Offer Payment Plans For Online Courses?

Offering payment plans can make your courses more accessible to a wider range of students, while diversifying your revenue streams. However, carefully evaluate your target audience, financial objectives, and overall business strategy before implementing this option.

If payment plans align with your goals after analysis, you can enjoy benefits like increased enrollments, improved student satisfaction, and a steadier income flow.

Don't forget that flexible payment options reduce financial barriers and make your courses attractive to more prospects.

Conversely, if payment plans aren't an ideal fit for your business model or audience, you can avoid potential risks and complexities by focusing on other revenue generation tactics more suitable to your circumstances.

Ultimately, the decision should stem from your unique situation, audience needs, and growth goals as a course business. So, take time to weigh the pros and cons through that lens to determine if payment plans are the right strategic move.

Speaking of strategic choices, selecting the best course hosting platform is equally important. Look for a solution that provides an intuitive user experience while robustly meeting all your core requirements as an online educator and course seller.

That's where OnlineCourseHost.com comes in.

It not only gives you access to third-party payment processors like PayPal to help you manage payment installments for your online courses, but it is also very affordable, beginner-friendly, and comes with everything you need to create and sell your courses.

If you need more information to grow your online course business successfully, you should check out the Course Creator Academy.

You will find everything you need to become a successful online course creator all in one place for free.

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Ready to learn how to launch your first course on OnlineCourseHost.com? Here are the helpful guides for you to check out: