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Evolution of Pricing

Evolution of Pricing

We’ve begun price tests to help you maximize your revenue potential, and information about these tests can be found here. Throughout 2018, our Pricing Research team will update this blog post with details about these tests, let you know what’s coming up, and share learnings.

Have thoughts about pricing? Please fill out this form. Our Pricing Research team wants to hear from you!

 

April 10th Update – Udemy is beginning a series of price tests designed to help you maximize your revenue potential by finding the price where your particular course sells best

 

Background

Today, the vast majority of you opt into our “Fixed-Price Promotions” program. As a result, students are regularly able to find many discounted courses, usually for the equivalent of between $10 and $20 USD. This strategy has been instrumental in making Udemy courses accessible to over 20 million students around the world. It’s also why thousands of you have been able to monetize your knowledge, and in some cases even make a successful living as a Udemy instructor. However, this one-size-fits-all pricing strategy doesn’t do justice to the nearly 65,000 diverse courses on our platform today.

We’re very excited to announce that we’re running price tests through the remainder of 2018 to help us evolve our pricing strategy. Ultimately, this means finding the price where your particular course sells best to help you maximize your revenue potential.

 

Revenue Maximization Point

Finding the price point that maximizes your course’s revenue is not an easy thing to do. If you price too high, you won’t reach as many students. If you price too low, you’ll reach lots of students, but they’ll pay too little for your course. The goal of these tests is to find that point in-between that drives the largest number of students willing to pay the highest amount for your course: the revenue maximization point. In other words, you want the product of (Price x Number of Students) to be as big as possible (and so do we).

Our existing pricing strategy hasn’t allowed us to test and find that revenue maximization point for each individual course. It’s possible there are some courses on the platform where selling for $15 USD is the perfect price for revenue maximization. For others it might be $10 USD, and for others it might actually be closer to $30 USD. We don’t know yet, but this is what we’ll be testing.

Something else we’re going to test is finding the revenue maximization point for each course by country. For example, a course’s revenue maximization point might be $20 USD when it’s sold in the United States, but $10 USD when sold in Brazil. Let’s dive into the details for a moment:

  • Imagine that at $20 USD, a course sells to 100 students in the U.S. but only 10 students in Brazil. Using our formula, that’s $20 per course x 110 total students = $2200.
  • Now imagine that we maintain the $20 USD price in the U.S. but drop the price to $10 USD in Brazil. We see the number of U.S. students stay the same (at 100), but the number of Brazilian students jumps up 5x (to 50): $20 per course x 100 U.S. students + $10 per course x 50 students = $2500, an increase of $300!

In August 2017, we announced that we were going to do “localized price testing” in 5 countries: Brazil, Mexico, India, South Africa, and Turkey. These tests provided some good initial learnings that in certain countries, the revenue maximization point for some courses is likely below $10 USD. We’ll continue sub-$10 USD tests in these countries this year.

 

“What do all these tests mean for my business on Udemy? I rely on a steady flow of new students and revenue. Will they be disrupted?”

Our #1 priority during these price tests is to learn as much as possible while doing as little as possible to disrupt your business on Udemy. We know how important it is to continue to reliably enroll new students, and with them, deliver you revenue. With that said, we also know that you expect us to evolve and take calculated risks to help further grow your business.

At first, you likely won’t notice these price tests since we’re focusing them on new students who aren’t yet familiar with our existing approach to pricing. Over the coming months, as tests show positive signals, they’ll expand to existing students and you’ll probably start to notice them more frequently. Today, none of these tests require any action on your part. If they ever do, we’ll notify you with ample lead time and provide details in updates to this blog post. These price tests also should be compatible with most instructor coupon strategies; however, this is something we will pay close attention to as we test.

 

What’s next?

In the short term, you might notice tests where different courses are discounted to different amounts. This is intentional as we strive to find the revenue maximization point for each individual course.

Please trust that we are going to take a very thoughtful, iterative approach to evolving pricing. When you are successful, we are successful. We cannot accomplish our mission of “improving lives through learning” without you, and we hope you are excited about our commitment to helping you maximize your revenue potential as an instructor on Udemy.

If you have thoughts about pricing, please fill out this form. Our Pricing Research team wants to hear from you!