Over the past two months, I have received numerous questions from readers, including those on social media, about generating revenue to offset system costs.
Way too many people overcharge, then gripe about low usage (your content can play a role here), ignoring the yearly fee to break even.
Looking to increase your budget?
Focus on generating revenue.
Want to drive more purchases?
Generate revenue.
I surmise you hear it all the time, that training/learning is a cost-buster. Where are the returns? When I hear that, then I hear people in L&D, Training, and other departments who oversee learning or training, say ROI – and point to productivity – and a hocus pocus of data to reinforce that.
When budget cuts are announced, frustration often follows.
The key principle should always be to focus on the impact of learning.
Is it possible to turn employee training into a revenue generator?
Yes. The question is whether you want to charge your employees – not a big fan of that – but I worked at a company that charged every department in the company, a F250, as an LOB (Line of Business).
While this approach was not well-received, it is not uncommon.
The only way to generate revenue on the L&D side without coming off as though you robbed grandma for a box of cookies is to establish a certification program where the certificate benefits your employee in some way.
There, you could generate revenue and show real numbers. To do it is another blog post.
The Customer Training Side
I have previously discussed successful revenue-generating strategies that remain effective today.
At every company (start-up to large entity, including global association) I generated high profit whether from starting a program to changing red to black – when it came to customer training (nowadays referred to as CT or CT/PE – partner enablement; members – association, certification, and even the internal (employees free), external ($$$$).
For example, I transformed training from a cost center to a profit center for a non-profit organization.
The key takeaway is that this is achievable.
AI can help identify potential strategies, though it may not account for all variables.
A straightforward approach is to determine your break-even point and identify how to cover external costs, such as web conferencing or marketing tools.
When you can show the higher-ups in a dashboard that you made X dollars – i.e., you are a profit center, a company would have to be incompetent to crush your budget.
I worked at places where it was a battle to get funding. However, once I showed the money, I got more money, budget approvals, and the fast track to general approval.
The Basics
Today, there are systems – focused on customer training/partner enablement and even the association space, that include a marketing component – which you will need – we are not talking about integration with your marketing offering, we are referring to an actual marketing solution – at no or low cost to you.
Some systems offer built-in webinar and web conferencing capabilities, while most provide integration options.
The fact that so many systems are going to be built into an AI content creator (at no add-on fee) means you get a bonus.
This is why I always tell people if the system includes it, take it – because who knows – you are not forced to use it, but six months, you may go – “Yowsa, I need to create a lot of content – and have to now purchase an external authoring/content creator. Webinars can be highly profitable.
After the live session, you can add recordings to your content library and offer them for free or at various price points.er.
For this example, I will use Zoom.
For technical training, limit online sessions to 20 participants and on-site sessions to 10 or fewer.
For non-technical sessions, you can accommodate larger audiences.
However, to maintain interactivity and provide value, consider how you will address questions.
Recorded sessions can later be offered as part of a subscription or content package.
Let us review a typical session to illustrate how you can achieve profitability in under three months, cover your web conferencing costs, and generate profit thereafter.
This example involves a live webinar that is recorded and can be offered either for free or for a fee.
In this scenario, you will charge for webinar attendance.
The Rules of Success on whatever topic
a. For sessions longer than one hour, pause at the 45-minute mark for a 15-minute break. This applies to both online and on-site training. Avoid running sessions for 90 minutes without a break.
b. Schedule multiple sessions on the same topic, either over several days or multiple times per day. Depending on your web conferencing tool, you may be able to run concurrent sessions. For this example, sessions are scheduled throughout the month.
Why?
Not everyone will be able to attend. While recording and viewing later is popular, some people want to see it live to ask their questions and hear the retorts. Stay with the topic here. You can always have other sessions on other topics.
My playbook
Given an expected attrition rate of 10 to 20 percent, I recommend capping each session at 40 participants when scheduling multiple sessions throughout the month.
Offer sessions on various topics, potentially running the same topic multiple times per week or at different times in a single day. Each session contributes to overall profitability.
You can run this as a standalone, but I am seeing this sign-up and waitlist via my learning system, with the integration already in place.
Using Zoom as an example:
a. The monthly cost for Zoom Events, which allows hosting multiple simultaneous live sessions with up to 100 attendees, is $124.17.
b. Schedule four recurring sessions per month.
The cost remains $124.17 per month, as it is a flat rate.
What should you charge?
I go blue ocean here – which is a lower price point, build mass, compete and win -your competitors and plenty of others tend to charge high.
If I am doing recurring, even with 100 attendees, and I charge $24.75 (I am jumping into some neuromarketing here on the pricing, but you can just go 25 flat if you choose).
Assume 40 participants attend each session.
At a price point of $49.75 with 40 attendees, revenue per session is $1,990, with a cost of $124.17.
If you charge $19.99 and have 25 attendees, the revenue per session is $499.75, with a net profit of approximately $375.58 after costs.
For example, charging $24.75 with 40 attendees across four sessions per month, over 12 months, yields the following results:
My Revenue – $11,880 (USD)
My Cost – $1,490.04
My Net – $10,389.96
While you may choose to charge more, even modest attendance and pricing can generate profit.
If the webinar is tied to a certification program, you can go higher, of course.
Offering more topics and options each month can further increase net profit.
The Content
This is an area where you can consider higher pricing.
Again, what is your break-even point? This is the cost to you, the minimum amount you need to break even. A lot of people overcharge here, which impacts. With certification, you can go higher. Need CEU or CPD? You can increase.
Unless your vendor invoices monthly, you are typically paying for all end users upfront, regardless of actual usage.
If it is monthly, there are vendors that charge a fair price point – not something like $150 per user garbage.
For example, if the vendor charges $2 per user and you have 300 users in March, with 100 purchasing a $19.95 course each, what is the resulting revenue?
Revenue would be $1,995, with a cost of $200, resulting in a total profit of $1,795.
In most cases, you pay upfront for ‘monthly active users,’ and vendors typically provide unlimited usage for 12 months.
No refunds.
Thus, you bought the system for 35,000 – based on 500 users (your initial projection of usage) – you can go up and the vendor bills you – and you pay at the end of the year, or quarterly – but higher numbers, you would assume would mean lower price per user – sadly, not all vendors see it in this fashion.
Anyway, 500 are in the system, and each course is $29.95 (the cost factor has to consider current economic conditions, your audience’s location, and what the market will bear, without price gouging).
Remember, you want repeat customers, so if Fred buys one course, he may say three months later, buy two more, and so forth.
IF you have multi-tenancy, then more folks buy, and you offset the cost by charging for content (if applicable).
In my scenario, I am going to say that, over the course of a year, each end user buys 3 courses at $29.95 each.
Your break-even point for the entire year, based on 500 end users and the total cost of your system, is $70.
Many focus on monthly costs, but it is important to consider the total annual expenditure as outlined in upfront contracts.
Therefore, in my scenario,
Each user purchases three courses per year at $29.95 each.
Total sales per user amount to $89.85.
For 500 users, total sales would be $44,925.
With an annual fee of $35,000 and revenue of $44,925, you achieve a profit.
Alternatively, if you charge $39.95 per course and offer CEU courses at $79.95 to 150 participants, the revenue increases.
In my scenario, of the 500 people, 200 buy a CEU course (just one), but also purchase two other courses.
The other 300, purchase three courses, none CEU.
Once more, your cost is 35K, $70 per user, per year. Unlimited usage, etc.
Total sales per user for three courses over the year:
$119.85
Total annual profit with 300 users:
$35,955
Additionally, 200 of the 500 users purchase a CEU course at $79.95.
$15,990
Total sales are approximately $51,000, with annual costs of $35,000.
The remaining amount is profit.
If you have 2,000 users, and the vendor charges you 85K
The cost per user per year is 42.25
In this scenario, you may choose to charge $45 per course, exceeding the annual per-user cost.
This results in total sales of $270,000.
Your total cost is $85,000.
Profit is $185,000.
But what if we charge $29.95 per course and realize that 2,000 people will buy 3 courses per year?
Total sales: $179,520.
Total cost: $85,000.
Profit: $94,520.
Perhaps you choose a subscription bundle or a package of webinars, content, and whatever else.
With 2,000 users, your total cost remains $85,000.
Bottom Line
To make money in customer training/partner enablement/B2B/associations (that charge for content), you need to understand the break-even over the course of the year, and not the per month, if you pay upfront.
Next, you need to market to your end users – to build mass.
This is not, we build you will come here (for the record, with internal users, and free, you still need to use a marketing campaign approach).
Can you generate a million a year with the right pricing strategy and user base without charging exorbitant fees?
Yes.
Can you achieve profitability with your system, given annual costs and the user base?
Yes.
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