On the very first episode of the new Web Courseworks podcast, Managing eLearning, Dr. Jon Aleckson & Matt Harpold introduce Dr. Michael Tatonetti, an expert in educational pricing and the founder of Pricing for Association. They dive deep into the challenges associations face to determine product pricing, as well as Michael’s personal experience working with associations during the pandemic.  

Dr. Tatonetti got started in the association space after many years of experience working in higher ED and K-12 education. As he developed his pricing acumen and became a certified pricing professional, he realized associations lack a necessary focus on pricing. This is where he found a unique opportunity to help associations determine how to price their products/services.

Associations, according to Dr. Tatonetti, often struggle with decisions on how to price their products. It happens for two reasons. First, there’s not a formula that can be rinsed and repeated. Associations make the mistake of looking at competitors and basing prices off them without knowing the real value of these organizations. Second, associations believe that since they’re a non-profit, they must serve the people and remain as cheap as possible.

Furthermore, pricing in general can be challenging, and Dr. Tatonetti goes on to explain some of the challenges that face associations. First, there’s a difference between something that’s brand new and something that’s being upgraded. Brand new products/services take longer to get used to, rather than an upgraded version that users had already gotten to know. When an association prices a product, they must factor in the cost of however many hours of training, as well as how much time users are spending on the new program. According to Tatonetti, it’s very important to price and communicate the value in a way that made sense to the associations. Otherwise, they might question why they are doing it in the first place.

Dr. Tatonetti then goes on to explain the importance of market research and testing, and how it must be one of the first things an association completes when determining product pricing. Mike uses a process called conjoined analysis, in which you experiment with slight variations in the price and see what people gravitate towards, as well as having conversations about why they picked what they picked. In the end, marketing and pricing go hand in hand, as well as communicating the value of the product.

Dr. Tatonetti says a common question he receives is when to engage with pricing. He says as early as possible.

“It’s better to determine the pricing before you fully build it out, while you’re still in the ideation stage and you’re still doing some market research. What you might do is create a product that you’ve put a lot of effort into and the willingness to pay is simply not there, and now you’re losing money.”

When asked what the most common mistake associations make is, Dr. Tatonetti says it’s when they shoot for a price number based on their gut, not based on any facts or data analysis (discussed above). Associations often have confidence in their decisions, but that doesn’t mean other people are going to pay for it or that it’s exactly what members need. It’s crucial to make sure pricing and value align, otherwise you’ll run into problems.

“I think the easiest example of that would be during the pandemic. You might know that your members need help with something in particular, but chances are what your members have needed for the last year is drastically different than what they needed the year prior. So being very in touch with what they need right now, and how do we best serve them and create products around that. It’s not just this seems like a great thing, but what are they willing to pay for and what problem are you genuinely solving.”

Moving on to virtual conferences, Dr. Tatonetti explained the major pricing dilemma that arouse during the pandemic. At first, many associations considered making it free, but on the other hand, most are set up that the majority of their revenue comes from registration, sponsorship, etc. A lot of people drastically discounted or did not charge, which, according to Dr. Tatonetti, was a huge mistake, because most people delivered the same value as the in-person iteration or really close to it.

When specifically asked about pricing sponsors, Dr. Tatonetti said the value of in-person and online remains relatively the same. It’s all within mindset.

“I think most exhibitors look at the value as being in the trade show hall and shaking hands and seeing people. But the reality is, if you think about it from an attendee perspective when we attend events, we dodge the trade show. If we’re being honest, you smile and you’re nice, but unless you are really shopping, you are there to be polite and that’s it. Sponsors can have a false sense of what success is”. Essentailly, he said it’s important to not lower the price of sponsors, because success is measured by conversations with people who are actually interested, not simply collecting contacts. These connections can sill be made on a virtual platform.

To conclude, Dr. Tatonetti explained one upside from living through the pandemic was that associations learned that they cannot give everything away for free. They now know the importance of finding out how much to charge for events, whether that be in-person, remote, or hybrid, and how to communicate any upticks in price, which can become somewhat problematic and confusing for members.

Want to hear what Dr. Tatonetti predicts about the future of pricing online education products? Listen to the full episode here!

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