Why 87% of Online Course Creators Earn Less Than $1,000 in Year One (And How to Join the 13%)
Most online course creators fail because they build backward - creating content first, then hunting for buyers. The 13% who earn $10,000+ in year one validate demand through pre-sales, build distribution channels before launching,...
This can happen to anyone- three months of work for $347 in 90 days!
This is a very common scenario that plays out thousands of times a year. A lot of first time course creators do not make any money from their online courses. On average 87% of first time course creators make less than $1,000 in their first year. There is a lot of online content today. In the US alone, the average person consumes 7 hours and 4 minutes of digital media every day. That includes 4 hours and 37 minutes on their mobile devices. Of course, not all of that is online courses. Most of it is social media, videos, apps, etc. The point is that there is a lot of digital media out there today. To reach your audience and get them to take action and buy your online courses is very challenging.
Many people quit their full-time jobs to create a course. And six months later they’re back teaching in a classroom. Not because their course was mediocre. But because they didn’t realize that there is what it takes to become one of the 13%.
The Validation Gap Nobody Warns You About
The typical creator builds a course backwards. They create the content first, then try to find people to buy it. The 13% of creators who earn $10,000+ in their first year of first launch do the exact opposite. They validate demand for a course before they put in the time to create any of the lessons.
The way to validate is to get money from people first. Gina Horkey sold her first Virtual Assistant online course to 23 people for $197 each pre-sold before she even made the course. In 60 days she had made $4,137 from her first online course for teaching Virtual Assistant skills. 21 of her 23 students were extremely satisfied with the course and even though Gina had given them a full refund if they were not satisfied the 21 students had stuck with the course. That $4,137 from selling his first online course validated Gina’s idea of a Virtual Assistant online course for her to put the time and effort into building a successful online course.
Here’s what validation looks like in practice:
Create a landing page describing your course outcome (not features) Set a pre-sale price at 40-50% off your planned full price Send 500 targeted visitors to your sales page via paid ads, email lists or community posts. If less than 2% convert then you have to work on your positioning or your targeting of an audience. If 2-5% convert then you have validated demand worth building for. If fewer than 2% convert, your positioning or audience targeting needs work If 2-5% convert, you have viable demand worth building for
The vast majority of education platforms make their money off of instructors, regardless of whether or not they make a single sale from their courses. In other words, if you build a course on Thinkific, Kajabi, or Teachable for example, you are expected to pay a monthly fee to host said course. In doing so, said platforms profit off of you regardless of whether or not you actually earn a single dollar in sales from your online offering. With this in mind, it is safe to say that these companies will not only refuse to disclose that validation matters more than the quality of your online offering, but actually incentivize you to throw money at a hosting platform in the hopes of getting it right.
The Pricing Psychology That Kills Sales
Underpricing your course could be the fastest way to demonstrate that you believe your course has low value. That is, if you price a course at $29 then most people are going to assume that your course contains about $29 worth of value in it (not that it is a $29 value to them). So, for example, they will probably think it is a bunch of information that you put together in the form of a course that you can learn elsewhere for free on YouTube.
Lower pricing typically brings in more bargain shoppers. Cheaper lesson seekers. These people tend to rarely finish the courses. They don’t typically become a valuable resource to promote the work of the instructor. This is from 20 years of years of work, building, and testing. The lowest priced lesson I ever offered, and that was only briefly, turned out to be the least valuable as well.
A $997 program will position your course to look at to bring about transformational change. The $47 lesson will be offered up to those looking for information about a particular subject — information that they can get for free from videos on YouTube.
I learned this the hard way with a colleague who launched a graphic design course priced at $39. She managed to sell 140 copies to bring in a total of $5,460 but her completion rate was a mere 12%. To top it off, there were no testimonials for the course. When she launched the next cohort of the course, it tanked because she had no social proof to back up her marketing claims.
My friend’s experience with her course priced at $39 is a perfect contrast. She sold 140 copies earning $5,460 but the completion rate was a mere 12% and she didn’t get any testimonials from her students. I am not sure what she did with that information but I am guessing she didn’t do much with it because she ran the same course a couple of months later with no different results.
The Distribution Delusion Platform Companies Sell
Most platform sites promise you that listing your course makes it discoverable to the right students. This is simply not true. As an example, there are over 213,000 courses listed on Udemy, and most of them never get any traction or sales. With Coursera, there are 7,000+ courses from universities around the world. Your single photography basics course is never going to get organic traffic in a list that large.
Success means building distribution before you launch. There are many platforms to choose from: Teachable, Thinkific and Kajabi. They all enable you to host your course, yet they all also profit whether or not your course ever sells. Thus, they have every interest in encouraging you to continue paying monthly while you work away to validate your ideas. And, by the way, whether or so they tell you, building it and they will come is the way to do it. So, do not be relying on the algorithm of a marketplace for your distribution.
One great example of this is the course “Power-Up Podcasting” by Pat Flynn. Pat built his list of 12,000+ podcasters before even putting out content for his Smart Passive Income blog and podcast. Then, he launched the course at $297 per student, earning an impressive $89,000 in the first week. As you can see, the quality of the course mattered little; it was the distribution to his list that made all the difference.
Your distribution options break down like this:
Email list (minimum 1,000 engaged subscribers) YouTube Channel. AYouTube channel with a minimum of 5,000 subscribers, and a view percentage of 10% and up. Podcast (minimum 500 downloads per episode) LinkedIn following (minimum 3,000 connections in your niche) Instagram/TikTok (minimum 10,000 followers with 3%+ engagement)
Minimums for a valid distribution channel are listed below. A Creator needs to hit the minimums to be able to Launch his/her course successfully. Building distribution for a Creator takes 6-18 months of consistent content. Building distribution for a Creator is work that will not stop for quite some time, which is why 87% of online Creators earn under $1,000 annually from their courses.
We have become accustomed to the platform economy and its ability to deliver instant reach to our content. In order to prove this point consider the launch of Apple’s Vision Pro which hit the shelves in February 2024 for the price of $3,499. Analysts forecast the first year sales to reach 400,000 to 500,000 units, despite Apple investing a fortune in marketing the product. The point is that even Apple cannot generate instant mass adoption for a product in a new category. So, if you are launching a course in a crowded market place you need distribution infrastructure in place first.
What Actually Works: The Four-Month Blueprint
However, the 13% of creators who earn more than $10,000 in the first year of selling online courses to students follow a very different set of best practices for how to create, launch and price an online course. When I am wrong about this, it is usually the same way. I have tried to flag that below.
Create distribution (Month 1-2): Pick one channel and create a large amount of high quality content for it. Publish 3-4 pieces of content per week and create an email list of 500 or more subscribers to that list. Don’t create any content about your course yet. Instead focus on helping to solve problems for people within the topic that your course is about to cover. Use ConvertKit (or Beehiiv) to create and manage your email list. ConvertKit and Beehiiv have free plans for small email lists.
Month 3: Get feedback from your newly created followers. Ask your followers the biggest problems they face when it comes to the topic at hand and offer to pay them $10 in Amazon.com gift cards to take the survey via Typeform or Google Forms (50+ responses required). You’ll find a clear pattern in how they word their problems which will outline exactly what you need to create in order to meet their needs, as well as how you should go about positioning it for them.
Month 4: Create a pre-sale landing page on a platform like Carrd or Leadpages, price your course and promote it to your list. It will likely be priced between $297-$997 depending on the amount of transformation that students can expect to receive from taking your course. Send 3 emails, spaced out over the course of 2 weeks. The first email can describe the problem that your course is trying to solve, the second can outline the solution that your course provides, and in the third email, promote your course to your list as a pre-sale. If you should get 10 sales from a list of 500 subscribers. If not, then there is something wrong with how you are positioning your course to sell. Refund everyone who has pre-purchased your course and rework your course’s marketing to better meet the needs of potential students.
Create your course content. Record it within 2-3 weeks. Deliver to the students you pre-sold to. Collect testimonials. Launch your course to your entire list at full price with the social proof of the testimonials of the first group of students.
The order in which one creates distribution, validates that distribution and then creates the content that will be distributed through that medium is what sets the 13% apart from the 87% in terms of earning money from online courses.
When all is said and done, the online course industry will continue to tout the dream of passive income to the general public. The platforms will continue to earn money whether you do or not. But those who do earn $10,000+ in their first year follow a certain blueprint. They start by building a distribution channel, then they validate that what they’re creating for the course has value to potential students through pre-sales, and then they price for deep commitment. It’s never about relying on the algorithms of the distribution platforms for you to get your message out.
What to do with the next 90 days to join the 13% or the 87% of creators earning under $1,000 per year from their online courses? Start to build distribution channels for your future courses.
Sources and References
Smart Passive Income – eMarketer: US Time Spent with Media 2024 Smart Passive Income, Pat Flynn Income Reports (2019-2023) – Documented course launch revenue and methodology Course Platform Benchmark Report, Teachable and Thinkific aggregate data (2023) Smart Passive Income, Pat Flynn Income Reports (2019-2023) – Documented course launch revenue and methodology
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