Are selling online courses the golden ticket to building a lucrative business?
It’s easy to see the allure, given the plethora of courses filling our social media feeds promising to teach everything from coding to cooking. But the online course space isn’t as peachy as it may appear. Especially if you compare it to other business models like consulting or providing specific services.
Let’s dive into the complexities of selling online courses, breaking down misconceptions and offering insights into what makes a business sustainable in the long run.
We can count on them to bring new ideas to the table consistently
The Illusion of Big Money
The illusion of big money in the world of online courses can be a misleading siren call for aspiring entrepreneurs. The testimonies of how others have “won big” through developing courses often overshadow the enormous effort, marketing savvy, and upfront investment required to even get the course off the ground.
And let’s not forget the relentless upkeep it demands, both in terms of content and customer service. While it might seem like a “create it and forget it” business model, that couldn’t be further from the truth.
In essence, the tantalizing numbers dangled by industry giants serve as outliers that can misrepresent the true financial landscape of selling online courses.
Profit Margins and The Mirage of “More”
But what about profit margins? Many course creators enjoy high-profit margins, the most ambitious of which striving to achieve as high as 85% gross profit. While that sounds fantastic, it’s essential to realize that revenue isn’t the sole indicator of a business’s health or long-term viability.
Let’s talk specifics. Imagine you’ve got a course priced at $997. Sure, you can make decent revenue from it. But let’s flip the script: What if you could sell consulting services or any type of tangible good worth $10 million a year instead? The key here is not settling for less.
The question is, why limit yourself to a thousand dollars when the sky — or at least several million dollars — is the limit? Different industries have different ceilings and, in many cases, offering services can be much more profitable than selling courses.
The Downside of Course Creation
Adding to the complexities, the “enterprise value” conundrum throws another wrench into the gears of a course-based business model. For these businesses, determining enterprise value can be complex due to factors like fluctuating revenues, the intangible nature of digital products, and the varying costs associated with creating and marketing online courses.
Unlike SaaS companies or businesses with recurring revenue streams, courses typically offer less predictable long-term income. When buyers evaluate the attractiveness of a business, they’re often looking for stability and growth potential.
A course-based business may provide bursts of income, especially during launches, but it lacks the sustaining, consistent revenue that makes a company attractive to investors or buyers. Consequently, even if you manage to create a hit course, you might find it challenging to leverage that into a higher selling price for your business down the line.
Alternative Routes to Consider
So, if not online courses, then what? In today’s digital landscape, the possibilities are nearly endless.
Consider the success stories of different business models:
- HubSpot: This company has excelled with a SaaS (Software as a Service) model. By offering a suite of marketing, sales, and service software, they’ve created a recurring revenue stream that’s both scalable and sustainable.
- Google: This behemoth generates a significant portion of its revenue through advertising. By selling ad spaces across its various platforms, it capitalizes on its massive reach without directly selling services or products.
- Amazon: Originally an online bookstore, Amazon expanded into an e-commerce giant. It earns through diverse channels, including product sales, third-party seller services, and its AWS (Amazon Web Services) cloud computing platform, demonstrating the potential in both retail and technological services.
- Netflix: Transitioning from a DVD rental service to an online streaming platform, Netflix has become a leader in the entertainment industry. Their subscription-based model, focused on providing a vast library of films and series, including original content, has reinvented media consumption.
In other words, think outside the course-box. Could your knowledge and expertise be better monetized through a different channel?
Courses as Catalysts for Branding and Goodwill
Don’t toss out your course creation tools just yet! Even if courses aren’t your primary revenue generator, they can play a significant role as a branding and goodwill-establishing machine.
The idea is simple but potent:
Offer free or deeply discounted courses as value-added bonuses for your other products or services.
This strategy does more than just make customers feel like they’re getting a bargain; it positions you as an authority who is generous with their expertise.
Take Alex from Moz, for example. By giving away courses with the purchase of his book, he was doing more than just sweetening the deal. He was nurturing a community of learners and potential brand ambassadors who appreciated the extra value he provided.
This kind of goodwill doesn’t just make your brand more attractive; it can also turn satisfied customers into vocal advocates. So, while you may not build your empire on courses alone, they can still be the foundation blocks of a more extensive, goodwill-rich marketing strategy.
Last Word on Selling Online Courses Today
If you’re considering diving into the world of online courses, it’s essential to weigh your options carefully. Instead of going all-in on courses, perhaps think about a hybrid model. Offer some free courses to build goodwill and generate leads, while focusing on a core business model that’s more sustainable and potentially lucrative in the long term.
Selling online courses might still be a viable option for you, especially if you’re an individual expert in a niche field. But if you’re seeking to build a sustainable, scalable business, it might be time to broaden your horizons.
Remember, in business, as in life, there’s no one-size-fits-all approach. What matters is finding a model that aligns with your skills, market demands, and long-term goals. So, before you jump on the online course bandwagon, ask yourself: is this the best way to serve my audience and grow my business?
If you’re ready for some high-impact digital marketing strategies to help your online courses thrive, Single Grain’s online education experts can help!👇
For more insights and lessons about marketing, check out our Marketing School podcast on YouTube.