How to Price Online Training Services
It’s hard, isn’t it?
Figuring out how to make money online, I mean.
Some people sell supplements, others write ebooks or sell ad space on their Instagram profile, but I think they’re overlooking something.
As a trainer — you have knowledge and skills other people want to pay for, but you can’t reach all of them. They either live too far away or can’t afford your in-person sessions, or whatever.
The point is:
You don’t have to sell supplements or books or ad space. You can keep selling your training services and still make money online.
It’s a simple solution to a complicated problem.
But how do you know what to charge? There’s a lot at stake here.
If you charge too much — you may not get any clients.
If you don’t charge enough — you might work yourself into the ground.
So, how do you find that sweet spot? How do you price online training services so you can actually make money online?
Keep reading to find out.
Market Rate Pricing
You’re at the grocery store looking at bananas.
Every bunch of bananas has a sticker on it:
But there’s one bunch that’s marked:
Which bananas are you going to buy?
I’ll admit, that bunch of $15.99 bananas looks interesting. I mean — is there gold inside there, or what?
Odds are, you’ll probably buy the bananas that only cost $1.49.
Because the evidence showed you $1.49 was the standard market price. You would have felt cheated if you paid any more.
But what if there was a bunch of bananas marked
“5 cents” ?
Would you buy them?
Maybe. But I bet you’d also think:
“I wonder what’s wrong with these bananas...why are they only marked 5 cents?”
Again, you recognized $1.49 as the market rate for bananas, anything drastically above or below that makes your spidey senses tingle, right?
That’s how market rate pricing works.
So — if you’re offering online training, you would look at the prices other trainers are charging for the same service and base your price off that alone.
But there’s a problem with market rate pricing by itself.
It’s hard to directly compare yourself with other trainers.
You don’t know what type of demand that other trainers has. He might be inexperienced and barely paying his bills, so he’s set a low rate to gain his first few clients. Or he could be a world-class trainer with people begging for his time.
Beyond that, he might have lower operating costs than you. Maybe he’s friends with the guy who created his online training software, so he gets it for free.
There are a lot of variables.
To get around this, you’ll need to look at a lot of trainers to get an accurate picture of market rate pricing for online training.
Now, imagine you own a banana company.
You know it costs 96 cents to grow, package, and ship each bunch of bananas to the grocery store.
So, you price your bananas at $1.96, so you can make $1 per bunch — which helps you keep your business afloat, pay your bills, and save for the future.
This is cost-plus pricing.
Instead of only looking at what everyone else charges, you determine what you want to charge by calculating how much it costs you to run your business.
So, if you’re offering online training and want to sell individualized programs, your cost breakdown might look like this:
Online training software cost-per-client: $5
Your hourly personal training rate at the gym: $15
Time to create individualized training program: 1 hour
Total cost to develop program: $20
In this situation, you factor in the cost of running your business ($5 per client from the online training software), the cost of creating the program (your hourly personal training rate: $15), and the amount of time it will take you to create the program.
Now, here’s the fun part.
How much do you want to make each time you sell a training program?
This depends on how in-demand your services are, as well as the market rate pricing for individualized training programs. That’s why you need to go a little further if you want to find the best starting rate for your online training services.
6 Simple Steps to Calculate Your Online Training Rate
By themselves, market rate and cost-plus pricing are helpful, but they aren’t the full picture.
So — how should you price your online training services?
Follow these 6 simple steps.
- Calculate all of your costs associated with online training (like we did in the cost-plus example above). This is generally going to be the cost of your online training software, as well as the amount of time it takes you to develop a program or train clients remotely.
- Find 10 trainers at the same skill/demand level as you. Find out what they charge for online services. Make sure you pick one single service, i.e. ongoing online training, individualized training programs, etc.
- Calculate the average of their rates. (Add up their rates and divide by 10.) This is the market rate.
- Subtract your costs (from Step 1) from the market rate (from Step 3). This is the profit margin, i.e. how much profit you actually make if you charge the market rate.
- If you’re just starting out, subtract at least 10% from the market rate. You can easily do this by multiplying the market price by 0.9, e.g. If the market price is $40 per training program, your price would be $36 per program ($40 x 0.9).
- Raise your prices when you get too busy to take on new clients.
This isn’t an exhaustive guide. It’s intended to get you started at a fair rate.
If you are diligently marketing your services and you still have trouble getting your first few online clients, you may have to drop your rates — or even train a few people for free. If you’re new to training, you want to build up testimonials from current/past clients and generate results you can use when marketing to new clients.
Making money online can be complicated, but it doesn’t have to be. What are your biggest challenges with online training?
Leave a comment below, and tell us!