The Psychology of Buying Decisions: A Deep Dive into Price Points for Online Courses

In the vast realm of online education, pricing a course can seem like a shot in the dark.

Too high, and you risk scaring potential learners away.

Too low, and you might undervalue the course or even question its quality.

But what truly goes on in the mind of a potential customer when they see a price tag?

I recently had a conversation on this with Jake Talbert from SixthDivision

The Story of the $3,000 Course

I was facing a dilemma. A client had a course offering at $3,000, and whilst many potential customers were clicking through to make a purchase we were experiencing a lot of abandoned carts.

So I posed the question to Jake.

"Why does this happen? Is the price too steep?”

Jake chimed in with some critical insights.

"So the question for me is... What's the journey they've gone on already to have got to this step that they are not checking out?"

Examining the path a customer takes before they reach the purchase page can significantly impact their buying decision.

Have they attended a webinar?

Have they had a direct conversation with someone?

Have they received an engaging email sequence leading them to this point?

The Psychology of Price Points

As Jake aptly pointed out to me, the issue might not necessarily be the price.

It could equally be the perceived value.

"Problem is not necessarily in the price, but 

• it could be in the webinar

• it could be in the value that's creating the webinar 

• or the urgency of the offer.

• It could be in the people you're targeting.

• It could be in the people we're targeting 

• and the webinar doesn't do a good enough job of filtering the people out 
  
  

• Or it’s not creating the right enough urgency for them to actually go and take action. 

So I wouldn’t jump to price point being the problem necessarily.”

In essence, if potential customers don't see the value in what they are getting, even a $50 course can seem expensive.

Diving deeper, Jake provided some more insights about price thresholds and buyer psychology:

Below $100: People often make purchases without giving it much thought.

$100 - $1,000: There's a bit more consideration, but generally, individuals are comfortable making purchases in this range without major reservations.

Once you go above $1,000: A significant mental check happens. Individuals start questioning the value proposition more thoroughly.

“As you cross the $1,000 threshold, it's less and less likely that you are going to get a direct buy unless you have an absolutely amazing webinar with an amazing CTA built into it.”

Finding the Sweet Spot

On reviewing the historical sales data, it seemed to suggest that the price point of $997 was where the most conversions happened.

This aligned with Jake's insights about the psychological barriers associated with specific price thresholds.

Jake's ultimate advice was clear: The key isn't necessarily lowering the price but rather enhancing the perceived value. He mentioned,

"I think you can easily sell from a webinar at $3,000 course through an automated webinar, if targeting the right audience and if the webinar creates great value and has a great call to action built into it." 

Always with the condition that the audience must see the value, and the selling process (like the webinar) needs to do an exceptional job at presenting it.

In Conclusion

The journey of pricing an online course is not a simple one. It's a blend of

1. Understanding your audience

2. Offering clear value, and

3. Being strategic with how you present that value.

While a price tag can indeed influence a buying decision, it's the perceived value behind that price which truly holds the key.

Big thank you to Jake Talbert for his invaluable insights on this topic.

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