Watch me build an online business (part four of …?)
This is part four (of five/six?) of in-depth look at the process I’m going through to create a new business. Did you miss part one, part two, or part three?
Everything Changes
If you’ve ever built a business you know that almost nothing goes as planned. This was supposed to be the final blog post, but there will be at least one or two more posts after this one.
Originally I thought our project roadmap was going to line up perfectly with a four-part email/blog series. I’d send the first two emails (over two weeks) and by that point we’d have a working product that people would be beta testing. The beta testers would use the initial version of CreateYourOnlineCourse.com (CYOC) for a week and give us feedback. Then we would launch publicly and everything would be awesome!
Yeah, not so much.
Two weeks into these emails, we actually didn’t even have a fully-functioning version 1.0 product that we could use. That had nothing to do with the technical expertise of my co-founder Gerlando, it had to do with wanting to build a quality product that doesn’t settle for “good enough.”
Our initial launch roadmap has gone in the crapper and we’re adjusting and adapting. I was a little bummed by this, but then I realized all the deadlines I had set were completely self-imposed.
That’s the beauty of creating your own business, you can shift and move timelines around with almost no negative repercussions (you just have to wait a little longer to bring in revenue).
After this email goes out, we’re hoping to let 10 beta testers in to try CYOC this week. We know our course building platform is far from perfect, but we at least feel comfortable with the current version of the product. My hope is that over the next two weeks, we’ll get feedback from these beta testers and be able to apply it to make CYOC better and ready for more people to try it out (still not launching 100% publicly).
So with that, let’s talk about some other stuff, like slow growth and money!
Growing Slowly is Okay
If you know anything about me, you know I hate doing things slowly. When I get an idea, I want it done as quickly as possible. Sometimes that means cutting corners, sometimes that means ignoring sage advice, and sometimes that means launching a project way before it’s ready. These are not good things.
With CYOC, I’m happy with slow. Seems weird right? I know. Here’s why…
Gerlando and I could bust our butts to get a decent version of CYOC ready for public use. I could tell people how awesome CYOC is with some long sales page (thanks Conrad) and we could get 25-50 people to signup as paying users.
But what if they discover an issue we hadn’t thought of? What if we overlooked a critical feature? What if our server goes down?
We wouldn’t be angering just a few friends (beta testers), we’d anger 25-50 paying customers. These customers wouldn’t have a great first impression and would either want a refund or never tell anyone about CYOC.
I’ve mentioned it before, but I’ve learned a lot about starting a business from the book The Lean Startup (aff link). It’s a fantastic resource for understanding what it takes to create, build, and launch a business in a digital era.
I don’t want 25-50 unhappy users who want refunds. I want 10 people to tell me all the things we’re doing wrong, we’ll fix them, and then we’ll slowly let customers come on board and continue to get feedback and make CYOC better.
There might never be a big launch for CYOC and I’m totally fine with that. I’m less concerned with making a short-term monetary gain, and more interested in creating a great product that our small group of paying customers will help us market.
Pricing Against the Competition
We’ve come to realize there are a bunch of online course building platforms out there. There isn’t a standard way any of them price their products, but they do all include some variation of the following:
Monthly Fee
Transaction Fee (small % for each user that buys a course)
User Fee (very similar to transaction fee but just priced per user)
Course Fee (priced per how many courses you build)
Support Fee (ugh, ludicrous)
Custom Domain Fee
Those six options may not seem like a lot, but you’d be surprised at how quickly all that stuff adds up and how difficult it can be to understand. To prove my point, here’s a screenshot of a friend’s account in another course building platform
WHAT!?
Not only am I utterly confused by that “bill” but it also makes me realize how much simpler I want our pricing to be. Much, much simpler.
To make the most informed decision on how we should price CYOC, I took an example scenario and applied it to five other pricing models from our competition.
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Example Scenario (for one month): Customer creates 1 Course, priced at $400, with 20 Paying Users, Custom Domain, and 3% for Stripe* Payments
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What that customer would pay, based on our competitors’ pricing:
Competitor # 1 = $909 per month ($29 monthly fee, 8% transaction fees, 3% stripe fees, unlimited users and courses). $7,091 profit per month.
Competitor #2 = $689 per month ($129 monthly fee, 4% transaction fees, 3% stripe fees, one course, 50 users maximum). $7,311 profit per month.
Competitor #3 = $539 per month ($299 monthly fee, no transaction fees, 3% stripe fees, unlimited users and courses). $7,461 profit per month.
Competitor #4 = $339 per month ($99 monthly fee, no transaction fees, 3% stripe fees, 200 users, 1 course). $7,661 profit per month.
CYOC = $499 per month ($179 monthly fee**, 1% transaction fees, 3% stripe fees, unlimited users, unlimited courses). $7,501 profit per month.
*Stripe is a simple and awesome payment processor (think: taking credit cards online)
**We’re going to offer two tiers of pricing, which I’ll get to in a moment.
As you can see CYOC is the second least expensive option of the four competitors that easily share their pricing (you’d be shocked at how hard it is to find pricing from some companies). I will say that I spent 30 days using the cheapest option (Company #4) and the user experience was not great. They did offer solid customer support, but building a course (the core objective) was difficult and not simple at all. My grama could not have done it!
We did come up with different pricing ideas for CYOC before looking at our competition, but we’re still up in the air with our exact pricing tiers.
Our Tiered Pricing (as of now…)
With CYOC, we plan on offering two levels of pricing. Those levels reflect the two types of users we are targeting for our platform.
Pricing Option #1: $49 monthly fee, 5% transactions fees, 3% Stripe fees, unlimited courses, unlimited users, custom domain setup, and support.
The user that best fits this pricing option is someone who will probably not be signing up very many students each month and may have months when they don’t add new users. They’re probably someone like me who has a course they want to sell, but isn’t going to have hundreds of signups per month (more like 5-10 per month).
If we look at an example of 10 users buying a $400 course per month, here’s what a user could expect: $4,000 (revenue) – $369 (CYOC Stripe fees) = $3,631 (profit!)
If this user doesn’t have any new users the following month, they’d only pay $49.
Price Option #2: $179 monthly fee, 1% transactions fees, 3% Stripe fees, unlimited courses, unlimited users, custom domain setup, and support.
The user that best fits this pricing option is someone who will be launching more than one course a year and will likely sign up 25-50 (or more) users each month.
If we look at an example of 50 users buying a $400 course per month, here’s what a user could expect: $20,000 (revenue) – $979 (CYOC Stripe fees) = $19,021 (profit!)
I wrote “as of now…” in the title of this section because we’re still thinking about our pricing tiers. We want to keep it affordable, but we also want to run a profitable business that takes the guess work out of this stuff for our users.
Just like the roadmap for these emails changed, I wouldn’t be surprised if we switch up our current pricing model to best serve our potential customers. I’ll (obviously) keep you posted.
Current Struggle: SSL Certificates
One thing I wanted to mention before I wrap up this email is SSL Certificates. Right now, this is an issue we haven’t figured out.
If you don’t know what an SSL Certificate does, it’s what makes a site secure for payment processing. Anytime you see https://, that website uses an SSL Certificate.
SSL Certs (remember certs?) aren’t expensive, but we also want to handle this process for our users. Right now, if a user creates a course and doesn’t use a custom domain, we can do the SSL work for them with zero effort on their end (yay!). However, if someone does want custom domain for their course, which I know I do, it’s a messy process.
I don’t want a user to have to set up their own SSL Cert, even if that just means confirming something via email. I’d like to handle the process entirely without a user even knowing it happened.
I don’t have a big “ah ha, we figured it out” end to this section, I just wanted to share that this is our next big hurdle. And if anyone reading this has an idea of how we could handle all the SSL Cert setup for a custom domain, with no effort to our users, I’m all ears!
To be continued next week…
Next week I’m hoping to have some feedback to share from our first beta testers, thoughts on revenue projections, an update on the CYOC editor itself, and whatever else lands in our laps.
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