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Is it worth creating an online course or not? How much money can you make selling online courses? Factoring in the development costs, is it really profitable?
The short answer is, “Yes, it can be quite profitable!” The long answer requires more in-depth analysis.
Creating and selling profitable online courses that will generate a passive stream of income sounds like a dream. But how much does it cost to create one? And how can you allocate your budget smart so you don’t overspend on things that don’t matter?
This article will help you estimate the cost of the course development process, taking into account all the possible expenses, broken down into three main categories:
Ready to dive in? Let’s go!
Category 1: Course Creation Costs
There are many factors to consider when creating an online course. The costs that are associated with course creation strictly speaking (i.e., the tools and manpower to develop the content for the course) depend on:
Course Materials
When choosing what type of content and course materials to use in your course, you have to think about the following:
Answering these questions should help you determine what’s the best type of content to build for an online course that is not only engaging for your learners but also effective in terms of helping them reach their learning goals.
At this point, we should note that online courses fall into different levels depending on their interactivity and complexity. The higher the level of interactivity and complexity (in terms of content creation) is, the more expensive a course tends to be.
Now let’s see how the different levels of interactivity work as described by Christopher Papas at eLearning Industry.com:
Level 1 – No interaction: Passive eLearning interactivity
A course that uses PowerPoint presentations, simple video, audio, graphics, and quizzes of True-False or multiple-choice test questions. It focuses on delivering information in a classic text-and-image design that makes no use of interactive elements like discussions or games.
Level 2 – Limited participation: Limited eLearning interactivity
A course that makes use of animations, audio narration, basic drag-and-drop functions, and more interactive media. It blends theory and practice in an attempt to instill motivation.
Level 3 – Moderate interaction: Moderate eLearning interactivity
A course that includes various video types, different forms of audio, simulations, complex drag-and-drop functions, and detailed branched scenarios that provide a more personalized learning experience. It is less theory-focused and more practical.
Level 4 – Full immersion: Full eLearning interactivity
A course that encourages learners to interact fully and give feedback. It makes use of serious games, avatars, simulated job performance exercises, customized audio and video, stories, and scenarios. It includes high-end interactive elements that are complex, more expensive, and need more time to develop.
When planning your course, choose your materials wisely so that they respond well to your learners’ needs and abilities.
Also, decide how interactive you want it to be. Some platforms, including LearnWorlds, come with interactive features like interactive eΒooks or interactive videos, assignments, polls, etc., that can help you create highly interactive courses without spending a lot in developing and editing.
Content Creation
The cost of creating content for your course is time-relevant, which means you have to think about how many hours you or the freelancer professional will need to work on it.
According to Salary.com, as of August 2023, the average hourly rate for an instructional designer in the US is $38.
For a Subject Matter Expert (SME), this depends on the topic, but an average hourly pay rate is $44, as listed on Salary.com, so we are using it as an indication for either hiring internally or a freelancer.
The same website sets the average hourly rate of a graphic designer at $33.
Costs may vary a lot depending on quality, experience, and country of the professional you will hire.
Additional costs might come up if you need to hire professionals to shoot and edit your videos, with the hourly rate of a video camera operator estimated at $21 and the hourly rate of a video editor at $29. The hours they’ll need to shoot and edit totally depend on the length of the course and the videos, but it’s obvious that higher video quality adds up to the costs quickly.
For more affordable prices, check out freelancers on marketplaces like Upwork and Fiverr. In these marketplaces, you can hire freelancers from all over the world – many of whom are talented new professionals who offer competitive pricing to attract clientele and build their portfolios.
Another way to cut down on cost is to create the course yourself and hire an instructional designer to review and edit your work and course content. If you’re knowledgeable about the subject (which is most often the case), you won’t need an SME either.
💁 LearnWorlds’ AI assistant minimizes the time and human power you need to develop content. With over 200+ prebuilt prompts, our AI assistant can:
Therefore, LearnWorlds practically eliminates the need to hire external experts! Imagine all the money you can save if you have your very own machine-powered Instructional Designer and Subject Matter Expert.
On top of that, our interactive video editor can transform your videos into engaging interactive activities with popup quizzes, CTAs and clickable buttons, images, and more!
Essential Equipment
A laptop and an internet connection are necessary to create and sell online courses. Assuming that you have these covered, the next step is to search for multimedia software to proceed with the content development. If you are creating videos, screencasts, webinars, or podcasts, you will need the following:
Video camera: In most cases, the camera of your laptop, computer, or even your smartphone will do just fine. Other than that, you can invest in a Logitech C310 (the most value-for-money solution) starting at $37.
Video editing software: There are free tools for this job, but if you want to have access to more advanced features like special effects, speaker speed control, or add sprites, it’s worth investing in a paid solution. Some nice options include Climpchamp and OpenShot; both are free to use while offering advanced editing options.
Read our comprehensive list of video training software divided by category to find the best software for your needs.
Screen recording software: If you want to make screencasts to walk your learners through a process with video and audio, you’ll need a screen recording tool. Top free options include Screencast-o-matic and PowerPoint.
Presentation software: Presentations have gotten a bad reputation, but they can be very beneficial as they help visualize and explain complex information. It’s up to you to make them engaging by adding some humor and your passion. Some great free options here are Google Sides and Canva.
Microphone: It’s very easy to overlook investing in a good microphone. But make no mistake – people will not sit through a video with poor audio quality. Lavalier is an excellent budget-friendly microphone starting at $19.99, but if you’re aiming for higher quality, try the Blue Yeti at around $70.
Lighting: A necessary tool to shoot your videos, a lighting kit can make all the difference when it comes to video quality, as poorly lit video (either overexposed or dim) is distracting and unpleasant to watch.
Check out our article on choosing the best lighting setup for more details on how to get this complex task right and for tool recommendations.
Stock images/music: Another investment you’ll make (although there are free options, too) is for royalty-free music and stock images to enrich your video and text content. Most websites offer either free or low-cost options, either per piece or on a subscription basis.
Some popular websites for we suggest for free stock images include Unsplash, Pexels, and Pixabay. For royalty-free music, Digccmixter is a decent free option, while sites like Audio Jungle and Premium Beat will give you a greater variety and better quality.
We have also created a list of eLearning tools that can help you choose and compare equipment that is more suitable for you. It tells you how much each one costs so that you can easily compare prices head-on.
On the list, you can find many different options, whether you are working on a small or big budget.
Category 2: Operational Costs
Business costs are easy to overlook, but that doesn’t mean they should. Quite the opposite; you should be on the lookout for less obvious or hidden costs – for example, those found in your website hosting and customer/student support services.
Online businesses are never complete without a website – and the more professional your website looks, the better it is for your business. A good idea would be to search for domain name availability and find the best domain name for your website.
Hosting Costs
Self-hosting: If you go with self-hosting, the costs of registering a domain name for your business range from $10 per year up to $100, a thousand, or a million, depending on the type of domain name you choose. An old domain name is fine, like good old wine, but it’s usually expensive, and there is always the option of registering a new one.
💁 Need help? Check out this list of domain name hosts to choose the most suitable for you.
Online Course Platform
The online course platform or Learning Management System (LMS) that you choose has a huge role to play in your course development, so make sure you pick one that meets your most essential needs in terms of features.
Many course platforms make it easy to start an online school, set it up, and build your landing pages and content. However, if you are not comfortable with even simple technical stuff and want to hire someone to prepare your school/academy, this will come at an extra cost.
When choosing your LMS, check how much it charges for the subscription. Cloud-hosted platforms come with a monthly/yearly payment.
If you already have a WordPress site for your company, you can choose from plenty of WordPress plugins like Sensei, Lifter LMS, WP Courseware, and LearnDash. When using those, you will also have to keep in mind that apart from the fixed starting price, there are additional hosting, server, and maintenance costs.
A much more budget-friendly solution is to choose an elearning platform that can connect with your WordPress site.
💁 With LearnWorlds, for example, you can connect your school on a subdomain and then use the WordPress SSO plugin for a seamless transition.
With LearnWorlds, you have three pricing options:
These levels come with different features in each level, and you can have everything you need to start an online school with 299$ per year using the starter plan.
We do suggest LearnWorlds as an all-in-one solution – start your 30–day free trial now!
Online Course Marketplace
Option number three is selling your course in a marketplace like Udemy, Skillshare, etc. The process here is pretty straightforward – you simply upload the course, and potential learners can find it listed among (sometimes hundreds of) other courses.
This option means you can forget about marketing costs, but it comes with the major downside that these marketplaces receive the lion’s share of your profit; plus, you’ll be listed among competitive offerings.
Additional Costs
Other business costs include legal, accounting, or hiring costs.
Depending on the country or any other local laws you might need to follow, you might have a company (or freelancer) registration fee. Registration, tax, and accounting might add up to your costs. If you are just starting out, you might be able to charge as a freelancer but be sure to check on local legal requirements and consult a lawyer and/or accounting.
Also, are you planning to hire a co-instructor or an assistant to help deliver your webinars and live classes? If yes, you should consider this as an additional cost and adjust your business financial plan accordingly.
Category 3: Marketing Costs
Like it or not, you can’t ignore marketing. Investing in SEO, paid ads, and social media marketing is essential to advertise and bring revenue to your business.
All types of marketing are important to promote your online school, but it’s entirely your choice to invest in them or not.
Advertising, Paid Ads, and Social Media Management (SMM)
Paid ads are a quick way to get traffic and your first visitors. You should be very careful when budgeting for advertising and include a limit in spending.
You can either do paid advertising and SEO yourself if you’re experienced or have some solid knowledge, or you can hire a professional. Agency or freelancer costs vary wildly on quality and budgets but can start as low as $100, plus your advertising budget.
💁LearnWorlds has built-in SEO settings to help you cover the basics if you can’t afford to hire an SEO expert right now.
To start getting course participants who would ultimately want to become your students, you also need to start building your audience, and there’s no better place than social media.
If you don’t have a big following on Facebook, which comes first in the list of the most popular social media channels on the web, consider investing in Facebook Ads to further promote your school.
Next, make sure to power up your YouTube, Instagram, LinkedIn, Twitter, and Pinterest profiles and set up your advertising campaigns for as little as $1 per day for impressions. To get more information on advertising costs, visit WebFx which lists all the details for each platform and explains how they work.
The Facebook Marketing expert Mari Smith also gives some solid advice on how to sell your courses on Facebook and Instagram. Plus, using ChatGPT, you can create engaging social media posts to catch your audience’s attention.
Last but not least, giving out useful information and advice through blogging can attract more people and encourage them to visit your school. Agencies or freelancers can also help here too, managing your social media and the paid promotions there.
💁 Creating a blog is entirely free and comes as an add-on with your LearnWorlds school (Pro Trainer and up).
Email Marketing
Once you start getting a bigger audience, you will need to build an email list to promote your courses.
Check our list with the best email marketing tools that will help you create. personalized email content and automate the process. And, get some ideas on powerful email sequences that will skyrocket engagement with your learners.
💁LearnWorlds integrates with 8 popular email marketing tools! Plus, our AI assistant can help you craft compelling and mistake-free email communications at your preferred tone of voice.
Affiliate Marketing
Affiliate marketing is another branch of marketing that is worth looking more into.
When you start getting affiliates, you have zero upfront costs, and you just pay them a commission once they have referred you to a paying customer – a student who has enrolled in your course.
Then, you have to consider the affiliate commissions. Each affiliate will get paid a share of the sale. While you don’t pay in front for affiliates the same way you do on ads, the total cost here can climb with partners eating up most of your earnings.
💁 With the LearnWorlds Affiliate Management tool, which is integrated into your school (available on Pro Trainer or higher plan), the process is simplified to its purest form: affiliate registration, commission settings, management, and reporting are all under one roof – your online school.
This tool can save you from $39 up to $499 per month on using third-party affiliate management systems!
Podcasting
Have you ever thought about creating podcasts?
Podcasts are an excellent marketing tool since they can easily generate public awareness of your online course business and expand your target audience. The best part is that they are easy to create and don’t cost as much as you think.
To start creating podcasts, you will need a computer, a microphone, headphones, and a podcast hosting platform. Currently, there are many options for podcast hosts, and their average prices range from $5 to $50.
For enhanced performance on podcasting, you can invest in the following equipment:
Either equipment you choose, you can find excellent options on podcast creation tools that best fit your needs and economic requirements.
Working on a Limited Budget? No problem.
When creating your first online course, it’s not worth investing in expensive equipment. There are many ways to cut down online course development expenses to the minimum and create low-cost elearning courses that still retain high quality.
Here’s how…
The main idea here is to simplify your course and use less complicated tech requirements and minimum outsourcing to reduce the costs of online course creation.
Ready to Build Your Own Course?
This article has hopefully helped you go through the different course development phases and provided you with a template on how to calculate the associated costs.
Remember that freelance services have more or less fixed prices and are easier to estimate but equipment costs entirely depend on your requirements. Luckily, there are free and high-quality options for almost every tool you’ll need.
Now, it’s your turn to decide whether you want to invest in and sell online courses.
With LearnWorlds, you can create and sell online courses fast and easy, at an affordable price forgetting all about instructional design and subject matter expert costs.
Bring in your expertise and we’ll take care of the rest – our AI will help you design your course outline and activities from scatch, and even create email communications for you. Plus, our built-in video and eBook editors will help you turn passive content into interactive activities with multimedia content.
Start with a 30-day trial and see where it takes you!
Further reading you might find interesting:
Androniki Koumadoraki
Androniki is a Content Writer at LearnWorlds sharing Instructional Design and marketing tips. With solid experience in B2B writing and technical translation, she is passionate about learning and spreading knowledge. She is also an aspiring yogi, a book nerd, and a talented transponster.
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