Pricing strategy: How do IWT courses compete against “free”?
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I LOVE reading strategy books. A lot of people think business strategy is about boring business frameworks and pedantic cost-benefit analyses.
FALSE! You’ll find some of the most eye-popping drama and insane stories when you study why companies do what they do. For example, strategy gives you a front-row seat to war stories about Amazon’s Jeff Bezos, why Prada doesn’t discount, and what happens when a company like Nokia doesn’t change with the market.
So when I recently saw this question on pricing strategy on Quora, a question-and-answer site, I thought I’d share a small piece of the strategy behind IWT.
Q: How will expensive privately-offered online course offerings set themselves apart to warrant the cost, when a similar free course could come out on one of the many free or low-cost MOOCs (Ramit: “massive open online courses”) that are gaining popularity?
A: This is a great question.
I create high-end courses that range from $200 to $12,000. I have courses on psychology, careers, negotiation, and business. My students are people who are interested in personal development.
My courses don’t compete with free offerings. In fact, if you don’t want to pay a cent, 98% of my material on I Will Teach You To Be Rich is free. I encourage you to start there and get results like these from my free material alone!
But my premium courses are quite different than MOOCs. Here are a few examples why:
- We focus on very narrow subjects (“Earn1K: How to Start a Side Business”) vs. general, broad-based courses like “Introduction to Finance.”
- Each of our courses costs over $500,000 to develop, often including years of research testing with 100,000+ data points. Free MOOCs are not comparable in depth. For example…
- We custom-build the software and monitor retention and completion rates, tweaking until we get it perfect. We’re not simply giving people a reading list and a discussion forum, but actually curating an entire educational experience — including the analytics and research to validate that students are getting measurable results.
- We can provide more personalized support, including triggered emails when we notice inactivity, text messages, even phone check-ins from trained support staff. All this technology is a result of reinvesting course revenues back into creating a better student experience.
- We make big promises and build the lesson plans, software, and community to deliver. For example, in my Find Your Dream Job course, we include over 25GB of video, including interviews and hours of on-camera salary negotiations. You simply will not find these things in free courses, since it’s too expensive to produce this material without ROI. (It costs roughly $10,000/day to shoot the video included in my coursework.) That is why we see IWT students get results like this: Dream Job Success Stories.
Overall, MOOCs have a role in online education, and they can be an excellent way to get started on a subject. (Personally, I’m skeptical of the idea they’ll replace university courses, but if they expose people to a new area of study, I’m all for them.)
But premium, high-end courses do not sell “information” — they provide an outcome. It’s tough for MOOCs to compete with an artisanal, carefully constructed course that includes years of research and detailed videos, scripts, case studies, and strategies/tactics that I can only create because I know there’s a financial ROI.
* * *
Pop quiz on strategy:
I’ve talked before about how I give away 98% of my material for free, and how I intend for my free material to be better than others’ paid content. I’ve also shared how I prohibit people with credit card debt from joining my flagship courses, a decision that costs me over $2mm/year.
If you were analyzing the business and pricing strategy behind IWT, how would you answer these 3 questions?
- Who do I target and NOT target?
- Which decisions do I make that others in my space do not?
- Pick one area of the IWT business — pricing strategy, marketing, positioning, productization, process, etc — and compare it to a totally different industry. For example, how does IWT’s product strategy compare to the deodorant or luxury-shoe industry?
Share your responses in the comments below.
If you follow along with my work, you've probably heard me mention the mysterious things that go on behind the ...Read More