Udemy Changes Pricing Policy… Again

Udemy has decided to make another round of changes to their pricing policies in an attempt to help their online course marketplace grow. As Udemy instructors, you probably felt the ramifications of the last change that happened in April, 2016, just a few months ago. Some felt it more dramatic than others.

Let’s back up and remember what the pricing policy was:

• Prior to April 2016: Instructors could set their course price anywhere between $9 – $300. We could discount our courses by any percentage down to $1. Udemy could do ‘fixed-price’ sales, where all courses no matter the price were one low price (i.e. $15). The problem was that Udemy students were so used to the constant discounting that no one purchased courses for full price, and instructors continually decreased their pricing leading to lower and lower average selling prices.
• April – August 2016: Udemy made some dramatic changes. Instructors could price courses between $20 – $50, only at $5 intervals. We could only discount up to 50%. Udemy could only discount courses by 50%. And there were no fixed-price deals. Why? In hopes to increase the average selling price, and increase the purchasing of courses that weren’t discounted. The problem was a lack of incentive to purchase a course – discounted or not. If a course price is set at $25, why would a student purchase it right then and there if they can get it tomorrow for the same price. Revenue went down for most instructors.

August 2016 and beyond:

Udemy announced today a new policy, which goes into effect August 22:

• Instructors can price courses anywhere between $20 and $200, still at $5 intervals.
• We can discount our courses down to $10, no matter what price we set the courses.
• Udemy can discount our courses up to 75% in their normal promotions (if we opt-in to their promotion program).
• Udemy is bringing back the fixed-price discounts, discounted anywhere $10 and above

What does this mean for the market?

It’s hard to predict what this pricing change will do to the market. My gut is telling me that since it’s taking a step back towards the pre-April policy that sales will increase. It also means that students will be much more likely to purchase courses solely when discounted. Average selling price might drop, but I don’t believe it will go to pre-April levels.

With the $10 minimum, it limits course sales that would dramatically reduce the average course selling price. It also ends the ‘race to the bottom’ trend that we saw before, where to stay competitive, instructors were selling courses for $5, $7, $9 or lower.

One benefit, compared to the current policy, is that this allows us to charge higher for higher-end courses and differentiate our courses based on the pricing. When my Photography Masterclass is $30 and DIY Food Photography courses is $25, it doesn’t represent the fact that the masterclass is 10x longer with much more content. Now, pricing my bigger complete courses towards the higher end of the limit will help that differentiation.

How should you set prices?

For those of you with a range of course lengths and ‘completeness’, I would recommend setting your smaller courses between $20 – $100, and your more complete courses between $100 – $200. Many people will automatically put most, if not all, of their courses at the upper limit of $200 like they did before with the $300 limit. But I’d stay away from that, unless all of your courses are complete masterclass-style courses.

Realize that pricing isn’t just about course length. While course length does factor into it, sometimes longer isn’t better. For example, even though my Amazon Kindle: Write, Format, Publish, and Promote a Best Seller course is not as long as my other courses, I’m still going to price it between $100 – $200, because it does teach a complete set of skills. This is unlike my Flat Animation After Effects course, which only teaches a small style of using After Effects.

Don’t be afraid to set prices lower. I know instructors who priced their courses between $20 – $50 before the last pricing change, and did really well at those prices. So we might actually see a jump in course sales across all price points. I’ll continue to experiment with some of my courses at lower prices, to see if organic sales can be maintained at the lower prices.

Final thoughts

This pricing change makes me realize that Udemy is always going to be experimenting. In this relatively new world of online education, no one really knows what works best. While I supported the previous decision to change prices, I support this one too. I’ve found that whatever Udemy does to change the platform, the best way to have success is to continue to create high-quality courses. And that’s what I’m going to continue to do.

I’m completely re-doing a few of my older courses (After Effects, Premiere Pro, Lightroom), and will continue to create new courses to have a complete library of courses for video production, photography, and building an online business.

What do you think of the new policy? Leave a comment below.

Phil