THE "PILE ‘EM HIGH, SELL ‘EM CHEAP" online course model frequently marketed to trainers as the best means of productizing almost never works.
Either for content creators, or consumers of content.
And for the trainer, the cashflow implications of pursuing the ‘low ticket, high volume’ concept in isolation can be fatal.
Most trainers have a genuine desire to help other people, which understandably draws them towards the idea of a ‘low ticket, high volume’ business model.
In theory, the lower the price, the more people will buy and therefore get the benefit, right?
In practice, attempting to sell low ticket online courses in high volume is a classic example of The Product Trap.
Because actually what typically happens when you sell 'em cheap... is you pile 'em LOW!
You spend a ton of time creating something, and try to sell it at a low price to appeal to the broadest market...
...only to discover that creating large volumes of new customers is far HARDER than anyone told you.
Result: enormous time and energy ploughed into developing and marketing low priced, no margin products... multiplied by almost non-existent sales...
That's the Product Trap, right there.
Sure, you've 'productized...' but you're also out of cash.
The point is: you have to create the RIGHT product, supported by the RIGHT business model.
And there's a much better way to approach all this - which we'll say more about shortly.
For now, realise that most books written by trainers in support of their business fall into The Product Trap.
And there’s a special place in Product Trap hell for low-ticket membership websites (in all but a handful of unusual market niches – more on those some other time).
But let’s just stick with low-ticket online courses for a moment.
Don’t take my word for it.
Let me show you the evidence.
It comes from top universities like Harvard and the Massachusetts Institute of Technology (MIT), and popular online course ‘marketplaces’ Udemy, Coursera and SkillShare.
I'll share it in a moment and you can judge for yourself.
***
SURROUNDED BY HIS OWN TRAINING MATERIALS, Mike glanced out of the window of his home office at a cobalt blue sea.
No doubt about it: that sea view, that sea air… always made him feel better.
Sprawled sleeping alongside him on the floor, his dog breathed quietly.
‘The first thing I did was just to sit down and review all the content I already had.
'I had so much that I’d created over the years.
‘And I suddenly thought… maybe I can do this after all.’
Copy… paste… copy… paste… delete… edit… copy… paste…
‘It was literally four weeks of hard work to create the product.
'Three weeks putting together 500, 600 slides from material I already had.
'I decided I’d make them into a “system,” which was the first version of the program.
'It added up to about 18 hours of training content.
'Then five days in the film studio recording bits to camera.
‘But I made one really, really foolish assumption.
‘I assumed that, well, I've been training for years, I've trained thousands of people, I'm good at this.
'So I'll just stand in front of a camera, and I'll be brilliant.
‘Then I did a rehearsal.
‘I watched the videos back… and I was crap!
‘I practiced and I practiced and I practiced at home.
‘I was still crap.
'I’d be lying if I said I didn’t have a few doubts about the whole thing at that point.
‘But the studio was booked, so…
‘The night I flew out there for filming, I tried again in the hotel room.
'Repeated the same video.
'Filmed it about six or seven times until I had it right and I was ready.
'Next morning I was in the studio for five days of filming.
‘The first version of the program I filmed definitely had a few flaws, from my point of view.
'I was learning by doing.
'But as the modules went on and on, I got better and better towards the end.’
‘It wasn’t anything like as good as the second version.
'So one of the things you absolutely have to chuck out the window is perfectionism.
‘“I'm okay as long as I've done my best” is a much better belief than “I'm okay as long as I'm perfect.”
'Because you're never going to achieve perfection. It doesn’t exist.
‘And do you know what?
‘Most of it is in your head anyway.
'Because nobody in the market cared!
‘Nobody came back and said “Mike I would love to buy the program from you but you're a little bit uncertain in front of the camera on module two after two minutes 14 seconds.”
'Nobody said that to me!
‘I noticed it. But actually the product was still good enough.’
‘It cost me about 4,000 Euro (about USD $5,000 at the time) to develop the whole program.
'That one guy in Lithuania did all the filming and editing for that. 4,000 Euro and three or four hard weeks of very focused work.
‘Got it all finished and then the fun started because...
'Bloody what do I do with it now?!
'How do I sell this thing?!
'I didn't have a clue.’
I smile.
Based on what I know now, I would advise a slightly different approach to launching a product like Mike's.
It takes away that uncertainty, and creates positive cashflow almost from the outset.
But I didn’t know about that three years ago, and nor did Mike.
So how would he sell the product he’d just created?
To be continued…
***
HERE’S WHY THE LOW TICKET, HIGH VOLUME MODEL ALMOST NEVER works for content creators.
The maths of low ticket, high volume are truly horrible.
Online course marketplaces such as Udemy, SkillShare and Coursera are websites where you can upload a course and – in theory at least – tap into an existing audience.
On their platform, SkillShare claim 'top teachers earn upwards of $3,000!'
Udemy’s own claim is that the average instructor ‘makes $8,000’ (they don’t say whether that’s per year, or ever).
Hardly setting the world alight, is it?
And it’s easy to see why.
Let’s look at Udemy as an example.
And to keep it simple, for a moment we’ll even ignore the fact that Udemy grabs 50% or even 75% of the revenue as a fee unless you supply the course buyers yourself.
The maximum a creator can charge for a course there is USD $200 (or GBP £200), which provides little enough margin.
But guess what percentage of courses on Udemy are sold with a discount voucher?
The answer is a staggering 88%.
Yes: almost all course sales there are driven by a discount voucher of up to 50%.
And most courses on Udemy are sold for less than USD $50.
So let’s do the maths on this.
If you're selling courses for USD $50, you need to do an awful lot of volume for it to be worthwhile.
Even to generate USD $100,000 in gross revenue, say:
- At a $50 price point, you - obviously - need 2000 sales
- At 1% conversion (a general rule of thumb for online conversion rates of low ticket products), you'll need 200,000 visits...
- So: where are you going to get those 200,000 visits?
- Do you have 200,000 people on your email list?
- Does your website even get 200,000 visits in a whole year?
- Would it get 200,000 visits even if we gave it TWO years?
- Almost certainly not - that's just not the reality for 99.999% of trainers
- Bottom line: getting 200,000 sets of eyeballs on any web page without paying out huge sums on advertising is hard, even forgetting about competition
- Don’t imagine that a course marketplace will somehow magically provide you with a flood of buyers. The platforms’ own earnings per instructor figures suggest otherwise
- Finally, double the traffic requirements above when you take into account that Udemy’s fee is at least 50% of the revenue unless you supply the buyers to them
As a result, the typical trainer will find themselves completely unable to replace their earnings with low ticket products, unless by some fluke alignment of the stars.
The truth is that the low ticket, high volume online course idea is based on two fatally flawed premises:
Flawed premise #1: The broader the appeal of your product, the easier it will be to sell.
Reality: generic, ‘one size fits all’ information tends to have very little value to anyone.
No serious buyer actually wants generic information – these days they can most likely get it for free on the web, anyway.
Flawed premise #2: If you price low, you will naturally sell in greater quantity and ‘make it up on volume.’
Reality: it’s often just as hard – if not harder – to sell a low ticket, generalist product than it is to sell a really well conceived, focused, high end program.
Good clients don’t want more low-priced, generic crap.
They’ve already tried that, and it didn’t work last time.
Contrast all this with a high ticket model where you sell a program for USD $5,000, $10,000, even $25,000 perhaps, or $100,000+ if selling multiple licences to large corporations.
Depending on your market, you obviously need relatively few transactions to get a good result. And fewer transactions is generally less stressful for the provider.
To get to our $100,000 with a high ticket model:
- At a $10,000 price point, say, you need 10 sales to pull in $100,000
- Get the offering right and you may well already have 10 clients or connections in your existing network who could buy
- Sell one per month and you do it in under a year
Not a complicated concept is it? The challenge of course is in identifying, conceptualising and selling such a program.
Now, a counter-argument to all this says: ‘yes, but low ticket customers can then be upsold to higher priced things down the line.’
Hold that thought – we’ll address this ‘Funnel Myth’ shortly.
For now, I’ll just observe that trainers who really have a properly conceived ‘back end’ of high-ticket-for-high-value, systemised offerings that they feed successfully with low ticket courses are rare beasts indeed.
Unless you happen to be one of them, then following the low ticket, high volume model in isolation is typically financial suicide.
Want to add insult to injury?
Data from Harvard, MIT and Coursera suggest you’ll barely even help the consumers of your content when you sell yourself short with low ticket products.
The shame of it is that content creators imagine they’re doing people a favour – and capturing a larger share of the market - by making their information easily available at a low price point.
But the vast majority of consumers who pay a low price for information value it accordingly.
In other words, they value it barely at all.
As two of the top-ranked universities in the world, it’s fair to say that MIT and Harvard know a bit about education.
So if anyone can make self-paced online courses work, it should be them, one might think?
Well – look at these findings from Harvard and MIT into their own self-paced online courses.
Over two years and one million participants across 48 different courses, the average course completion rate (in their language, the percentage who became ‘Certified’) was just 7%-8%:
You’ll also notice (second line from the bottom), that only 14% in Year 1 and 19% in Year 2 of those who enrolled, ever even accessed half or more of the course content.
That’s right: over 80% of those who enrolled never even looked at most of the material.
Maybe the problem was that these self-paced online courses attracted sub-optimal learners?
Nope.
The top line shows that about two-thirds of those who enrolled already held a Bachelor’s degree or above.
In other words, the intake was heavily weighted to people who had already demonstrated their ability to concentrate and learn to a pretty high standard – and MIT, and Harvard, saw that result.
So what about the course marketplaces out there?
Might they have better techniques for pushing participants through courses, or a more committed userbase?
If anything they appear to be even worse.
A University of Pennsylvania study of over a million people enrolled in Coursera courses found course completion rates averaged just 4%.
We’ve known since Ebbinghaus that information alone is not enough.
Left to their own devices even the tiny percentage of participants who complete the material will do nothing with it, because without support
So, if you’re an ethical trainer who cares that what you present actually helps people gets results in the real world, what’s the answer?
The good news is that it is possible to create change, by doing things differently.
There are three basic steps.
