How to price your learning resources
Steven Forth is a Managing Partner at Ibbaka. See his Skill Profile on Ibbaka Talent.
Learning is part of performance. If we are not learning new skills and how to apply them we are stagnating. Over on the Ibbaka Talent blog we have written about the complex dance of adaptation efficiency and resilience. (The short short version is that a set of resilient systems leads adaptation to facour efficiency, which leads to brittle systems with lower resilience, until eventually an external shock or internal contradictions undermine stability and bringing adaptation back into play.) Underlying this evolutionary pattern is learning. Learning is critical to all systems.
Leading companies invest a great deal of effort in educating their customers and prospects. They create all sorts of user support, customer communities, training programs and online learning. Some operate universities for their customers, others have formal certificate programs. All of this takes money and we can assume that companies are not doing this out of the goodness of their hearts. So how are they generating returns on this investment?
These issues has bubbled up as companies have worked to adapt to Covid 19. It has become a popular topic over in the TSIA Community (the gated online exchange operated by the Technology Industry Services Association) where the people accountable for these programs have been asking about how to price them. In difficult times, learning is often one of the first things that is cut from budgets. (I know this is foolish and short sighted, but it is no less true for that.) At many companies, where sales people are incented to focus on selling the subscription, the hardware or whatever the core business offering is, learning is often steeply discounted or even gets thrown in for free. This is a big problem for the people in these companies who manage customer training, and who are expected to be a profit center.
As with any pricing challenge, the answer lies in understanding how value is being created and exchanged. Value-based pricing offers us a powerful lens.
Value drivers for learning
In the Ibbaka approach, value has three facets: economic, emotional and community. And it is always relative to the next best competitive alternative. To answer the questions “How should I price learning?” we need to begin by looking at value. The following table gives us a general frame for how to think about value in learning. When pricing learning resources we need to think about the economic, emotional and community of value of the learning from the point of view of the individual, customer and vendor.
The whole offer for learning can, and usually should, go beyond simple courses, whether these are instructor led or standalone. The four additional components to consider are
Certifications - Does the learning result in or contribute to a certification?
Community - Does the learning serve as an entry into a community?
Data - Is there data generated by the learning? Who is this data valuable to?
Tools - Are tools provided as part of the learning"?
As it is generally the vendor that needs to make a decision about pricing learning, let’s look at this from the vendor’s point of view.
Pricing learning from the vendor’s point of view
Ibbaka went through this process itself recently as we have begun to offer learning ourselves. Earlier in June, we offered an on-line workshop Scenarios & Pricing Action Portfolio Management. This workshop is accompanied by a microlearning program (microlearning is one of the most effective approaches to learning where the learning is delivered in small pieces over time). The microlearning is also offered independently of the online workshop, for those who are not able to attend the online workshops. We call our version of microlearning Impact Learning as it is meant to have a direct impact on how you approach pricing.
How much should we charge for an impact learning course?
First, we need to ask what value it provides to the individual and to the organization.
For the individual, this course is a way to learn some foundational skills that are going to become more and more important over the next few years. Scenario planning is a hot topic these days, see these thoughts from Tim O’Reilly, and it is critical that we learn how to apply it to pricing. The same is true of pricing action portfolio management.
On the other hand, many of the people who take pricing courses do so in order to become a CPP (Certified Professional Pricer). This course does not (currently) contribute to that certification, and for some people that significantly reduces its economic and emotional value.
We are working to build a community around these courses, and taking an Impact Learning course from Ibbaka gives direct access to some our people.
For the customer organization, value comes in two ways. One is having better trained people, who appreciate the investment that is being made in them by becoming more loyal and engaged. (There is an old joke in the learning world. “What is worse than training a person and having them leave? Not training them and having them stay!)
The other value is that these courses are designed to deliver an actual first draft of the most relevant critical uncertainties facing a company and to build these into scenarios. These scenarios are then used to inform the choice of pricing actions that are used to build the pricing action portfolio. In most cases it would cost six figures to hire a consulting firm to do this for you.
So what is the value to the vendor, in this case Ibbaka itself? Well, there is a lot of value created for Ibbaka in terms of intellectual property development and data collection. We learn a great deal and collect valuable data from everyone who takes the course. These courses are also a great way to drive awareness and consideration, the first two steps in the buying process. There is enough value for Ibbaka here that we considered offering these courses for free.
In fact many companies are offering free learning resources. In the current Covid 19 economy this has become a trend. There are now more webinars and free courses available on pretty much any subject that anyone could attend.
The Japanese have an expression, ‘tada hodo takai mono wa nai’ or ‘nothing is as expensive as what you get for free.’ And people all over the world tend to value what they pay for.
Taking this into consideration, we decided to charge for Impact Learning courses. Not a lot, just $295 per course, but enough to make people think before signing up, and to commit once having paid. If people don’t show up for a course very little value is created for anyone.
This decision process can be followed in the Simplified Decision Tree for Learning Resources below.
Learning vendors can learn a lot from video and mobile game pricing
The mobile and video game industry has a lot of lessons for learning vendors. Once upon a time, the video game industry sold cartridges through retail to individuals. Similar to selling a course or even a package of courses. Today the game industry has many revenue streams. People in the learning sector could learn from this.
From an insert by Junaid Qureshi on the ‘Evolution of Pricing Metrics for Mobile Video Games’ in The Strategy and Tactics of Pricing Sixth Edition:
Consumables help a player continue playing - what do learners need to continue to learn effectively, could that be designed in and priced?
Durables help a player succeed in the game - are there durable tools that can be provided in the learning that can be unbundled and priced?
Personalization enables the user experience to be customized. - There is a lot of talk about personalization in learning but not much action. Most personalization is limited to content recommendations. There is room for design innovation here, and with it revenue model innovation.
In general the learning profession has a great deal to learn from video games. This is not the simplistic idea of gamification. It goes much deeper, to understanding how people build shared mental models, what motivates action and collaboration, virtual economics and many other things. Revenue and pricing models are one part of this.
Learning is valuable when it is connected to the skills used to deliver work
For most of us, and for virtually all organizations, learning is not an end in itself. We learn in order to build new skills that we will apply to get results. This mapping of Learning to Skills to Application to Results is often missing. Without this, it is often hard to establish the value of the learning and to implement coherent pricing.
One way to address this is through skill and competency management systems, like the one offered by Ibbaka Talent. A good system makes these connections and embeds skills in the network of connections that makes them meaningful.
A simplified decision tree for learning resources
So how should you price learning resources? That depends on who gets the value. Does the vendor organization get value?
What happens when the vendor does not get value? Ask if the value is primarily for the organization or the individual.
Learning is becoming a core part of many different offers as well as being an important business in its own right. Understanding how to price learning is critical to operating a successful business. Understanding value is the key to pricing.
Looking for tips for enterprise software pricing strategies?
See our related posts
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How to use indexed pricing as the economy recovers from the pandemic
How to price your learning resources
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How to hire a pricing consultant
Pricing professional services is a challenge for SaaS companies