After ten years of doing business online, I’m trying to take the wins and the losses with a pinch of the same salt. Udemy, the online learning platform, was famous for deep discounting (a $999 course for just $9, for example). Udemy discounts made me money.
However, on April 4th 2016, Udemy stopped deep discounting in an attempt to increase revenues. From this point on, Udemy courses were to be priced between $20 and $50 and there would be no special offers of less than half price. Even at the highest possible discount, a $50 course will never sell for less than $25. And no course can ever be sold for under $10.
Udemy has information about their customers, they must know what they’re doing, I thought.
I had been delighted to make $5000 in royalties from my video courses on the online learning platform month after month, especially as it was a passive income stream.
But there had been a lot of resentment against Udemy from “experts”. People balked at this excessive discounting arguing that Udemy customers are now trained to only pay for courses at a reduction.
Udemy discounts and practices
Before and after the April 2016 change, if you’d spent any time on Udemy, you would sooner or later be offered discounts. It was very rare I got a sale of one of my courses at the price listed on the website. It’s just as rare now.
This is why it was working
Here are more reasons why I was comfortable with Udemy’s discounting practices:
- Because of the discounting, most instructors price courses at around $100. This is clearly a very high price for a two to three hour course. But it made the discounted price closer to $10-29 which is reasonable.
- Companies like Amazon (through their audio book arm Audible) regularly employ extreme discounting and nobody complains.
- The cost of delivery of digital products is negligible which makes pricing arbitrary. For thousands of years human beings have bartered, swapped, bought and sold items based on their cost of manufacture. This is not the case with digital products and new structures and pricing procedures are being developed. We are not used to this. But pricing will get weirder and Udemy’s old discounting strategy will probably look tame by this time next year.
- More people bought my courses at a reduced price. I liked that!
I have a question for you:
Would you rather sell one product at $100 or a hundred products at $1?
My answer: a hundred products at $1, every time! Why? Because I’ll have 99 more paying customers that I can upsell too.
I tried to stand back and see the bigger picture. I looked at the money I made at the end of the month rather than revenue received per unit. Sales were up. More people were being exposed to my brand. I was helping more students.
How did I make the money?
Udemy commission structure
The amount Udemy takes from the sale and the amount you keep depends on the origin of the sale. Here are the commissions you get on a sale depending on origin of revenue (this has been the case since July 2014).
|Revenue source||Percentage you keep|
|A sale from one of your coupons||You keep 97% of sale|
|An organic Udemy sale||You keep 50% of sale|
|A sale from one of Udemy’s Ad programs||You keep 25% of sale|
|An affiliate sale||You keep 25% of sale|
Let’s go through the revenue sources one by one.
How I made $1500 in one week with a coupon code and two announcements
Before the change you could sell your video course (2-3 hours long) for $99, you could create a coupon for $19, and email your list to say “buy my $99 course for $19” – a certain amount of people will make this purchase. You could also promote your coupons on social media, on forums (if they let you), on your website and to your existing Udemy customers using Udemy’s announcements system.
You can still do all of the above now. But you can’t reduce by more than 50%. So “buy my $50 course for $25” is about as sexy as it gets.
Here you can see how to create a Udemy coupon and how to promote it via an announcement.
You receive 97% of your coupon sales.
Organic Udemy sales
Udemy claim there are 10 million registered users. Organic sales are where one of these users happens upon your course whilst browsing the Udemy categories or searching the site and makes a purchase (maybe at a discount; maybe not). In this case you’ll receive 50%.
Udemy Ad sales
Udemy regularly runs campaigns in Facebook and advertises elsewhere (the campaigns usually center around a discount). If one of your courses is sold through an ad campaign, you receive 25% of the ad sales.
An affiliate sale
Udemy’s affiliate program is run by Linkshare and there are many affiliates that will promote your course. If an affiliate makes a sale, they get 50% and you get 25%.
OK, so that’s the commission structure. Back to the pricing:
Don’t discount the Udemy discounts!
I wrote an article to show how my revenue from Udemy had been decreasing since the change. And I got a really interesting response in an email:
and I put that on Facebook and got this interesting feedback:
If this small straw poll is anything to go by, Udemy are in trouble.
Customers didn’t mind stocking up on courses at cheap prices – even when they had no time to view them – but now the prices have gone up, they don’t want to add to their list of things to do. And who can blame them?
OK, so that’s existing customers. New customers to Udemy don’t know what happened in the past. Maybe Udemy can train these new recruits to spend more money. We shall see.
But I, for one, am pleased I’ve diversified my income streams.
You can do it
You can sell courses and increase your following on Udemy. Let’s hope they can offer more income to new instructors soon.