Q: We are seeking some standard formulas for pricing online courses. We are being asked to provide online fire science training and need assistance with what the markup should be.
A: LERN has developed a financial format based on the best practices of LERN member organizations. This format is based on the notion of program self-sufficiency. Essentially, we recommend that online courses meet the same criteria as face-to-face courses in terms of their financial performance. That means that you should aim to create an operating margin of around 50%. To determine your goal, consider your promotion costs. These should be around 10% of your total course income and not more than 15%. Your production costs, i.e., instructor compensation and any other costs associated with offering the course should be between 35% and 40% of your total income. These two costs should not exceed 50% of income. That means 50% of income remains to cover your general and administrative costs and to contribute to any surplus you may have targeted.