Pricing update: introducing new list price practices

For the last two years, Udemy has worked to improve our pricing and promotional strategies to help instructors strengthen their businesses and students navigate the marketplace. To date, the bulk of our testing and improvements have focused on our discount model. We’ve built a system to calculate the optimal local sale price range for each course, and we’ve tested rigorously to hone our promotional strategy for each market.

Earlier in 2020, we began the challenge of developing a better approach to list prices for instructors who participate in our Deals programs. This requires research, testing, and some adjustments to the Promotions Policy.

Why is it important to improve list prices?

Today, we’ve heard from countless students that list prices on Udemy are not a reliable signal of a course’s value. They have no relationship to visible course attributes like length, topic, or popularity, and they don’t often correlate with sale prices. Instructors also report confusion on how to approach setting a list price, with nearly half of all courses set at the highest or lowest option. Finally, different markets regulate list prices differently, and we know we need to help instructors run their businesses in a more globally compliant way.

How have we approached creating a better approach to list price?

Over the last year, we’ve spoken in-depth with students and instructors about list price, and we’ve tested models based on instructors’ list prices and on Udemy’s pricing data in various global markets. The goal has been to understand how different ways of calculating and displaying list prices affect the way students feel and behave when choosing a course to purchase.

What do these tests suggest we do?

A recent, large-scale test in the US reinforced our global findings: there is real promise in using course factors and student response data to generate appropriate list prices for each course. During these tests, we’ve seen greater trust in list price, as evidenced by student purchasing behavior during non-sale periods, and continued strong performance during sales. As a result, we’re expanding our testing with the goal of refining this approach and implementing it in the United States and beyond.

We’ll begin testing in other markets, monitoring results carefully and continuing to fine-tune the model. Ultimately, the goal is to hone an adaptive approach that optimizes list price over time and remains sensitive to changes in the marketplace, much like our discount model does.

What else will change to support the new approach?

We’re moving quickly as we continue to see new students turn to your courses in record numbers, and we want to make sure other parts of instructors’ experience stay consistent with the new approach.

This will include some adjustments to your tools. For example, we’ll ensure the coupon system remains compatible with the new approach, and we’ll evolve the “Pricing” page of the course manager as we continue to expand tests that show different list prices.

We’re also making some updates to the Promotions Policy to support the new list price strategy. Here’s what’s changed:

  • We’ve clarified our role in determining and displaying list price, in keeping with what we’ve shared here.
  • We’ve deprecated the “Percentage Deals” program, which tied Udemy discounts to instructor-set list prices rather than course-specific pricing data. Having a single Deals program will give instructors a simpler, more intuitive choice when it comes to pricing: use Udemy’s marketing data to generate your list and discount prices, or exercise full control.
  • We’ve clarified the ways Udemy can distribute courses through third-party distributors and resellers. If your course is ever included in a bulk sale to a reseller or distributor such that the per-unit price is below what would be possible on the marketplace, we’ll make sure your revenue is calculated based off the nearest permitted marketplace price.

What’s the long-term vision?

When we first announced new efforts to improve pricing in 2018, we shared that we wanted to develop a pricing system that truly treated different courses differently, enhancing value for both students and instructors. By bringing list price into this vision, we move closer to a world where pricing is truly no longer one-size-fits-all, but fully contextualized for the course, the student response to it, and the geographic market. This more customized approach stands to drive responsible growth and a healthy, sustainable marketplace.

As always, we’re committed to making sure this approach is the right one for the Udemy marketplace. We’ll be keeping a close eye on the results and on your feedback. We look forward to hearing from you in the Instructor Community.