Installments 101: Should you offer payment plans for online courses?

What are payment plans for online courses?

A payment plan lets your students pay for your course in smaller installments instead of a single upfront payment. For example, instead of paying $600 all at once, they might pay $200 per month for three months.

Why do students like payment plans?

• Affordability - Breaking up the cost makes higher-priced courses easier to budget for, which is especially helpful when students are paying out of pocket rather than from a company budget.
• Flexibility - With online courses with payment plans, students can start learning without needing to save up for a big payment. This can be a big draw for learners who are eager to get started but can’t afford the full price upfront.
• Reduced risk - Smaller payments feel less risky than a large lump sum. Even students who have the ability to pay in full might prefer to spread out the cost to reduce their financial exposure.

Common payment plan options:

• Split payments - Split the total price into equal installments over a set number of months, usually with a small fee for the convenience.
• Deposit + installments - Students pay a portion upfront to secure their spot, then pay the rest in installments over time.
• Results-based plans - For example, where students pay half upfront and the rest after they’ve achieved a certain outcome.

When payment plans might not be the best option

While payment plans for online courses can increase accessibility and therefore conversions, they’re not always the best choice for all target audiences. Here are some scenarios where you might want to skip offering payment plans:

Courses with a lower price point

For courses that are already affordable, adding a payment plan might not be worth the extra complexity. If your course is priced at $50, for example, a payment plan isn’t likely to make a big difference in accessibility.

Higher risk of non-payment or cancellations

Some students may default on payments, which can create challenges for you as the course creator. If you know your audience is likely to have financial objections to buying (for example if they’re teenagers or in a particularly low-income bracket), you might want to avoid offering online courses with payment plans.

When simplicity matters more than flexibility

Offering a single payment option can be easier to market and manage. If you’re particularly time-strapped and don’t want to deal with the added complexity of chasing payments or managing multiple payment schedules, a single payment might be the way to go.

How to set up payment plans for your course

If you decide to offer payment plans for online courses, here’s how you can set them up:

Step #1: Decide on the installments

Choose how many installments you want to offer and how much each one will be. Common options include monthly payments or breaking the total into 2-4 parts, but you can offer more installments if needed for higher prices. Here are some examples:

• If your course costs $600…
  Option A - 1 payment of $600
  Option B - 3 monthly payments of $200 each
• If your course costs $997…
  Option A - 1 payment of $997
  Option B - 10 monthly payments of $99 each
• If your course costs $2,000…
  Option A - 1 payment of $2,000
  Option C - 4 quarterly payments of $500 each

Remember 💡

Your goal is to reduce the installment price to a level that fits within their budget, without dragging out the payment period for so long that it risks non-payment.

Step #2: Add a small fee to offset your own risk

To cover the risk of non-payment on payment plans for online courses, you might want to add a small fee to the total price. After all, you’re essentially loaning your course to your students until they’ve paid in full—and it’s normal to charge interest on loans.

A good rule of thumb is to apply an extra 5% interest for each monthly installment. This way, if a student defaults on their payments and you can’t recover the full amount, you’re not left out of pocket if you look at the bigger picture of all your payment plan students.

Ultimately, the fee you charge should be enough to cover your risk without making the payment plan unaffordable for your students.

Step #3: Set up the payment plan

Most course platforms will have a built-in feature for online courses with payment plans. If you’re using a platform like Teachable, Thinkific, Podia, or Kajabi, you can usually set up a payment plan option wherever you created your full price option.

Step #4: Add it to your sales page

Make sure your payment plan is clearly visible on your sales page. You might want to include a comparison table showing the full price vs. the payment plan price right next to each other, so students can see the difference.

Step #5: Make sure the terms are clear

Clarity is key when it comes to payment plans. Make sure your students know exactly what they’re signing up for, including how many installments they’ll pay, how much each one will be, and when they’ll be charged.

You might also want to explain what happens if they miss a payment. Is there a grace period? Will they lose access? Will they face legal action?

Step #6: Include it in your marketing

Once your payment plan is set up, make sure you’re promoting it in your marketing materials. Wherever you talk about the price of your course, make sure you mention that payment plans are available.

How to handle missed payments

Even with the best intentions, some students might miss a payment on payment plans for online courses. Here’s how you can handle it:

Use built-in platform reminders

Many course platforms will automatically send reminders to students who miss a payment for online courses with payment plans and to you as the course creator. This can help you stay on top of things without needing to manually chase payments.

Remove access after a grace period

If a student misses a payment, make sure they lose access to the course after a certain grace period. This can be a powerful motivator for them to catch up on their payments or, at the very least, to prevent them from accessing your content when they’re not paying for it.

Contact them manually if needed

If a student misses a payment and you haven’t heard from them, it might be worth reaching out manually to see what’s going on. They might have forgotten to update their payment details, or they might be facing financial difficulties that you can help with.

Remember 💡

Handling missed payments is part of the process when offering payment plans for online courses. Make sure you have a system in place to deal with them, and don’t be afraid to reach out to students who haven’t paid.

Key takeaways

Here's what you need to remember about offering payment plans for your online course:

• Payment plans make your course more accessible - By breaking up the cost, you can make your course more affordable for students who can't pay a lump sum upfront.
• Payment plans can increase conversions - Offering payment plans can make your course more appealing to students who are on the fence about buying. Overall, sales often go up.
• Payment plans aren't right for every course - For lower-cost courses or those with a high risk of non-payment, payment plans might not be the best option. You'll need to assess your own risk.
• Setting up payment plans is straightforward - Decide on the installments, add a small fee, create it in your course platform, add it to your sales page, make sure the terms are clear, include it in your marketing, chase missed payments, and monitor performance.
• Handling missed payments is part of the process - Most platforms will have built-in reminders, make sure they lose access if they don't pay after a grace period, and contact them manually if needed.
• Communication is key - Make sure your students know exactly what they're signing up for, including how many installments they'll pay, how much each one will be, and when they'll be charged.

Offering payment plans can be a great way to make your course more accessible and increase conversions. Just make sure you're clear about the terms and have a system in place to handle missed payments.

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