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.
Related: Should I Sell Online Courses With a Membership?
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:
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.
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.
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 be a great way to make your courses more accessible to a wider range of students while also diversifying your revenue streams. However, it's important to carefully consider your target audience, financial goals, and overall business strategy before making a decision.
If, after considering them, you decide that payment plans are the right option for your online course business, you can enjoy the benefits of increased enrollment, improved customer satisfaction, and a stable income stream.
On the other hand, If payment plans aren't a good fit for your company, you can avoid the risks and focus on other revenue-generating strategies.
Ultimately, the decision to offer payment plans is a personal one that should be based on your unique circumstances and goals. By taking the time to evaluate your options, you'll be able to make the choice that is best for you and your business.
Speaking of making the best choice for your online course business, you also need a course hosting platform that is very easy to navigate and checks all the right boxes.
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.
To get notified when new content is available here at the Academy, you can subscribe here to our weekly newsletter:
Course Creator Academy
Learn (for free) everything you need to know to become a successful online course creator. Join Now
If you are looking to ask any questions on online course creation, you can reach me here on my Facebook group:
Join the Course Creator Academy Facebook Group
Ready to learn how to launch your first course on OnlineCourseHost.com? Here are the helpful guides for you to check out:
- Best Online Course Platforms (Ultimate Guide)
- How To Create An Online Course (In 15 Super-Practical Steps)
- How To Choose An Online Course Topic That Sells
- How To Record And Edit Your First Online Course
- Affordable Online Course Equipment - Complete Practical Guide
- How To Hire An Online Course Team
- The Ultimate Online Course Launch Checklist
- How To Create The Perfect Online Course Sales Page
- Create A Powerful Brand For Your Online Courses (In 5 Steps)
- How To Sell Online Courses? The Ultimate Guide
- How To Promote Your Online Course - Complete Guide
I hope you found this post helpful, let me know in the comments below what other topics you would like me to cover, or any questions that you have?
Thanks for reading… and enjoy the course creation process! 😉
Course Creator Academy, a community by OnlineCourseHost.com
Founded by Vasco Cavalheiro
Online Course Creator