Profitability of on-line courses and long term implications.
One of the primary discussions we've been having internally is whether offering on line courses will ultimately hurt our industry. The assumption is that on-line classes will be offered cheaper than our current course offerings. Some of our competitors are offing some of their courses for free. We are worried that our industry will get into the same trap that print media has gotten into that once you start giving it away, it is much harder to start charging-and unlike print media, selling ads mixed into your course-ware seems like a bad idea. Does anybody have any thoughts on the subject?
This course make a good point. If you have a successful program offering a few on-line classes my actually increase your on campus enrollment. If it is a quality program people will pay for it. Don't feel pressure to offer your content for free just because other vendors are doing that.
Online courses should be used to augment your course offering in the local market. Online courses create a longer reach to students that you would normally be unable to serve.
There is no reason that you have to charge less for an on-line based curriculum. In fact you may even be able to charge more and may even need to charge more to maintain profit margins, or at least meet your operational costs. This is where your market research comes in to play. You need to first start with focus groups to gather your data and then you will be able to make more sound decisions on what you may be able to charge. This will also help you to determine how you should develop your programs in order to make sure you have a sound offering with competitive advantages that will set your program apart which builds value. Supply and Demand will always flush out any potential issues you have with setting price. The biggest driving factor then is obviously what product are you trying to deliver to the market? If the product is such that people are not willing to pay for it all; then the obvious question is why would you spend the time and money on developing and then launching something that people hold no real value for? As to the other institutions you do not know the long term plan. This could be a form of bait and switch tactics. They begin their initial offering to get them into the on-line market and then part of their long term game plan would be to start charging incrementally over time, once they have established their curriculum, faculty, and technological infrastructure to support the program.
While the cost to deliver online courses may be lower than classroom delivery methods, the total cost must be considered, including student services, course development, outsourced services, and marketing cost. If the savings are reinvested in improving the quality of the institution, the reputation will grow, and the value of the diploma will increase for all the graduates.
Mark,
Have you considered developing a business plan to address the cost implications for the areas you identified? A well thought out business plan, which should be preceded by an online delivery strategy, can identify and analyzes the implications for both short and long term development and assess the impact on your on-ground offerings in each of the areas you identified.
Dr. Robert Roehrich
