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.
Excellent Rob.
Udemy’s excessive discounting has trained me into spending money on courses. The first to succeed after nearly a decade of internet self learning!
Come to think of it, David, same here! 🙂
As a student of Udemy for a few years now I honestly have to say that without all of the discounts I just wouldn’t be able to afford to take some of my ‘wish list’ classes!
For me the discounting also does something else: it prompts me to TRY a class or something totally new to me, because it IS more affordable.; otherwise I probably would never spend the money on the new subject… that’s helpful to me! It’s helpful to the folks selling their classes because that might have been a missed sale completely!
Hey Amy, thanks for the comment. It’s great to get the student perspective on this. And you’re right on the button with the instructor perspective as well.
Great post again Rob. It inspired me to a do a promo email in the morning and hopefully increase my Udemy October income.
That’s cool, Dennis, I make about $1500/month on the promo emails on Udemy.
After reading your post, I have decided to join Udemy.
Any tips to make more sales? I am planning to sell courses on Book marketing and upsell customers who buy my books. I am also planning to create an Youtube channel to redirect traffic to udemy courses.
How effective is their organic sale structure? Is it similar to amazon?
Hey Harsh, great idea for you to start video. I will write a blog post about all the questions you asked. It’s very similar to Amazon. It takes a while to get going. You need to make lots and lots of video and create free courses on Udemy at first. This will lay down a good foundation. Similar to Amazon their organic sales structure is great if you first sell a lot of courses with your own audience. So, if you have a list, that will be very useful. Yes, you can cross sell from Kindle books and YouTube videos. Any more questions, drop me an email.
Hey Rob! Great article, and very timely indeed! I just launched my new CRO course on Udemy tonight, and already have 4 sales, which is great. However, I was disappointed to see they are all ‘affiliate’ sales, so I only get 25% of each. Why do you think its so many so soon? Would love to hear your thoughts.
Thanks,
Rich
I don’t know, to be honest, Rich. It’s better to try to increase your sales and student numbers generally rather than worrying about individual sales. However, it’s a little weird so you could write to instructorsupport @ udemy.com
Great post, thank you Rob.
What do you think about this?
1 – Create a course with a random high price.
2 – Offer it for free the first month using coupon code. (That will increase the numbers of students and reviews).
3 – With a good amount of students + reviews. The course “reputation” will be improved.
4 – The course will be able to sell more (organic Udemy sales) thanks to the popularity (which was obtained when it was free).
Do you think this strategy can work?
That’s exactly what many people do, Will 🙂
Glad I just saw this in my Twitter stream. Rob, you really helped me see the light with this. The discounts did turn me off at first but then I thought, “A lot of these people would have never found my course without the Udemy promotion” so that’s money I wouldn’t have had anyway. Takes a moment to wrap your brain around it but I get it now. Great post and thanks for your insights.
Abso-bloomin’-lutely, Lisa! It took me a long time to wrap my head around it too. But as long as the students are engaging and benefitting from your course the money will come. They will be exposed to your brand and are more likely to buy from you in future. 🙂 (Can’t wait to hear about your Udemy success!!!
Hi Rob Cubbon,
I am thinking about joining udemy, but I am concerned about the revenue one can generate?
I am aware of the fees 97%, 50% and 25% but this states NET of sales.
When it states Net of sales what does that mean in terms of Udemy.
Let say I sell a course for $10.
Is there sales tax? Say 20%? Is there a processing fee?
How much can I make based on these 3 payment methods?
So say $10, how much do per unit after all the costs?
Can you help me with this one?
Also, how do they pay? BACS?
And how often are the payment runs?
by PayPal. The pay monthly usually within 4o days of the end of the month they are paying. So I will receive my November payment on Jan 8th 2015.
The processing fee is 3%, Nathan (which is why you get 97%). This doesn’t affect the 25% and 50% and you have to pay your own tax.
Great article!
My thoughts (and consequent change of opinion) mirror what many have said here. I will mention one point though, and that’s my concern about the people who see my course without being on Udemy’s email list, and so lose out on the price reduction sales funnel. I’m looking at my analytics thinking opportunity lost! The RRP of my product is pretty high, I never expect to get a purchase at that price, but how many potential customers at the 75% off mark am I losing to an RRP that scares them off for good? Bit of a rhetorical question so I’m just venting really, heh.
Hi David, I’m glad you liked the article. Don’t worry about the high ticket / RRP price. It’s what everyone does. I’ve experimented with other prices and many others have so this is what obviously works.
Sometimes people pay it, see that they can get it for cheap, ask for a refund and buy it through a special offer – everyone’s happy … so far!
Thanks for the great article Rob!
Pleasure, Mike 🙂
Great post – I realize I’m late to the party here, but I was wondering on a few things. This is my first course on Udemy. Within two weeks I gained 600 students on a free coupon. I’ve only sold a handful to actually paying students however. My course is currently offered at $30. I’ve been trying to promote coupons through Facebook, Groups, LinkedIn, and forums, but I really havent seen a jump in sales. Going back to your post, am I pricing too low because of Udemy’s constant promotions and special offers? Would it be better to raise to $99 or something like that to make it seem like a better deal? I dont have an existing email base so I’m kind of just relying on Udemy and my blog posts.
I would appreciate your insight!
Thanks,
Jordan
I’ve certainly never seen any success posting coupons in social media, Jordan. Yes, if the course is over 2 hours it’s worth putting the price up. Start collecting emails as soon as possible! Thank you for the comment.
Great post! I’m getting ready to do my first course on Udemy. Does Udemy charge sales tax? When you say you’re expected to pay the tax, does that include sales tax? I see some states are now requiring sales tax on online courses.
Udemy handles the tax at their end, Catherine. You have to handle your own business and personal tax. I hope this helps. Let me know if you have any m ore questions.