Derek Sivers, the creator of CD Baby, writes in his book Anything You Want that your success is directly related to the amount of people that you help. I believe in this idea, and I feel that guiding your efforts with the aim to help first and foremost will result in a successful business.

After all, what businesses really do is solve problems.

There is a time and place to provide training and information for free. However, for the sake of your own sustainability and also the dedication of the student, you need to charge a fee for your tutelage. As a creative person I still suffer from the feeling of guilt whenever I charge for things. I wonder if this is a byproduct of the student mentality or simply being surrounded by low income colleagues for the better part of my life. Whatever the case, you need to charge for your service. Otherwise, you are not running a business.

There are several ways to generate revenue from online education, and they all have unique qualities. Some are more labor intensive, some are passive and some require ongoing attention. Any way you look at it, there is some serious work and dedication ahead, but the rewards are many.

Time For Money

This is the most common type of income that we are used to as creatives. One hour of teaching for one fee. This kind of teaching is intimate and often quite rewarding. In terms of a business model, it is redundant and wasteful.

If you are having a party and you want to notify all twenty guests that you will start one hour later, do you call them all personally, email individually, or email the group all at once?

All at once.

The personal call really is the most direct and intimate way of communicating but it is likely that your conversation will get tangential and involve other topics. It also takes a massive amount of time. The individual emails are a little pointless when you have the ability to bulk mail, save for the fact that you can personalize the interactions. And, finally, the option most of us would choose these days imparts the information succinctly to all of the group and takes far less time on your end.

This analogy is a little obvious, but there is a strong resemblance here to in-person lessons, Skype lessons, and video courses. Skype lessons are convenient and they are quite personal, but they will still be trading time for money with no element of leverage involved in the process.

I strongly believe that pre-recorded video courses can impart the same knowledge and the follow up interaction can be achieved through a group forum (which is also a leveraged format).

Time for money is the most obvious and familiar choice for us, but there is no ability to scale and no use of leveraged material.

Time For Money (groups)

One option to leverage the time for money model is to teach in groups. These days there are several software options that allow you to teach group video lessons. This brings the benefits of personal attention and includes leverage. But it is still time for money…

Passive Income

Passive income has become somewhat of a holy grail idea among online entrepreneurs. The idea is essentially that you put in some work, create something once, and it delivers ongoing revenue with little to no maintenance.

Examples of this type of income include:

• Website advertising (google ads)
• Affiliate marketing (advertising others’ products on your site and getting a commission)
• Single product sales

There are more examples. However, I don’t want to inundate you with options, and to be honest, we are only interested in one type of item here, single product sales.

The first two options (ads and affiliates) are tempting because they appear to require little work at the outset as you are not required to create anything of value. The problem with this is that you will need to build large amounts of traffic (difficult) and an audience that is inclined to support you through affiliate purchases… a lot of them. Add to this the fact that you are an intermediary in this process and don’t have any say in ongoing changes in products or policies. So, if you haven’t guessed already, I would not suggest going down this path. You are not actually building something of value, and it is not particularly lucrative.

Single product sales involve the creation of an item that is valuable and the sale of that item to a customer. A clear example for everyone might be a music album. This is something you have created, original content, and it is valuable to your audience. They purchase it once and after the sale has processed, you have little obligation to do any further work. Occassionally with single product sales, you might have to process refunds or respond to feedback/questions, but in general these items require little maintenance after you have created the item and set up an automated sales process.

If we apply this idea to online education, we could have products such as:

• Digital Guides (Ebooks, workbooks, method books, tutorials)
• Self guided courses (a course with no teacher interaction and a one time payment)
• Hardcopy Original Creations (artwork, audio recordings, creative writing that require postage)
• Digital Download Original Creations (artwork, audio recordings, creative writing that can be instantly downloaded)

The great benefit I see in these types of products is that they are small to moderate in size, require a short to medium amount of time to create (perhaps a single course might be the longest) and can be re-purposed further down the track.

If you are just starting out with online teaching, a small project will allow you to test what resonates with your audience, test what they are willing to pay, and then when you have learned from their response, you can re-calibrate your approach. It might be the case that you already have something in your body of work that could be made into a single product item. Often it just takes a little imagination to adapt it to the online format.

Furthermore, the creation of this item can be leveraged further down the track. For instance, if you created a beginner’s guide you can then include that as part of a beginner package or a general membership once you have built up the foundations for your business. Don’t forget that you could also chop up this product and repurpose the materials at a later date if it didn’t work out the first time.

The passive nature of these items is also attractive. When I first started building my online guitar school, I created a scale book. This was the first item I ever had for sale and it has been selling ever since. It doesn’t bring in a lot of money each month but it brings in regular income and served as an indicator several years ago that I had an audience.

So, if you are starting out, I would highly recommend creating a single product (or a few) at the outset. It keeps you agile, let’s you learn from experience, and can provide a low maintenance form of passive income for years to come.

Active Courses

An active course involves you as a teacher for a finite amount of time and can be repeated as many times as you like. This is essentially the same as a course at a university that runs each semester. What is leveraged in this process is the course curriculum and materials. It also can have a flexible time frame and start dates, which is convenient if you have a calendar that has select openings to run a course.

Your course can mix leveraged components (videos, quizzes, worksheets, downloads) with your time and attention. Perhaps you will have a weekly group meeting or consult the students one on one.

In an educational sense, this can be a very powerful model as the teacher is present for the duration and there is a clear timeline to keep students motivated and on track.

The time commitment during the course can be heavy, and it is wise to set expectations with office hours or dedicated Q&A sessions with group calls. It also can require a large amount of pre-sale before the course launches. Finally, on the student end, having course dates that are set in stone might reduce sign ups as the course cannot be completed on their schedule.

Recurring Income (subscriptions)

Passive income and recurring income are usually the two most attractive options for online business. One requires little maintenance (passive) and the other brings in a constant stream of revenue (recurring). Recurring income is a strong model that can have dramatic results. You have probably noticed many companies and software providers changing to this model over the last decade (Adobe, Sibelius etc.). These are companies that once offered a single product for a fee and now have changed over to a monthly or annual subscription.

You need to be careful, however, to delineate between the services you normally pay for on a recurring basis and what you are going to offer. The companies I mentioned above are providing a Saas (software as a service) which usually involves your relying on that subscription to use a piece of software. What you are going to provide isn’t like this. What you are offering is something that needs to serve the audience in an ongoing way with additions, interaction and updates on a regular basis. This is a big commitment, and if you don’t commit, your customers will cancel.

It is important to make a decision then, whether you want to offer single product sales that give you the freedom to pause your work when you want or establish a regular line of work to serve your audience and warrant a recurring payment. The subscription model, if done properly, can has the benefits of sustained and reliable income as well as a larger revenue per customer over time.

Examples Of Recurring Payments (subscriptions)

The most obvious recurring payment is the membership model, but I feel this requires its own discussion so I will give two smaller examples before we get to the membership model.

Communities

Being in contact with a group of like minded people can be a powerful learning environment. As a leader of an online community, you could offer education through forum or Facebook group questions, run live group seminars, organize challenges etc.

Being a part of this community can therefore become a valuable feature and warrant a recurring subscription. As you can imagine, it would have to offer something unique and distinctly valuable to separate it from other free online social groups in order to attract subscribers. Furthermore, you would need to sustain this group over time so it will be an ongoing investment of time and effort.

Personally I feel that a community can be a valuable asset as part of a larger membership, but it can stand on its own if done well.

Newsletters

There are examples of newsletters out there (prep dish for example) that provide valuable content every week that can sustain a subscription base. The equation here is quite simple. What you include in this regular newsletter has to be so valuable that people are excited and willing to pay for it on an ongoing basis.

Memberships and Schools

A membership site or an online school represents a multifaceted resource that can include features such as:

• video courses
• group coaching
• digital downloads
• forums
• newsletters
• podcasts
• member discounts
• multiple teachers

It really represents an amalgamation of everything we have discussed up till now and it can be a wonderfully effective learning environment. The membership model requires a huge investment in time and can have a steep learning curve. While it is true that you can start with very little to begin with and grow from a few seed products, make no mistake that if you want your membership to become valuable and successful over time, you should be prepared to make it a full time occupation.

As I run two online schools, I can tell you that the amount of work is massive, but the reward is even greater. I have created my own little island of like minded people who are dedicated and passionate. Furthermore, the community starts to develop friendships and loyalty just like the schools we were used to in our youth. The difference here is that we are all taking part in this community by choice and starting from a place of passion rather than mandatory placement.

If you are starting out, it is my personal opinion that should you want to aim for an online school or the membership model, start out with smaller projects first and lead up to a membership over time.

Conclusion

There are many ways to generate revenue from online education, and we have gone through some of the most common but by no means have we exhaustively examined all the options. I hope this discussion will spark some ideas and give you a general outline of where you should start or where you might want to end up.

As a musician, one of my least favorite aspects of learning repertoire was the fact that after hundreds of hours practicing one single piece, I could still lose a large chunk of my work if I took a break from that piece for a couple of weeks. The way I remedied this in music was to make recordings. It was a way for me to capture my efforts and allow me to enjoy those efforts years later.

I feel the same way about building online education materials. No matter how hard the work might be, I am happy knowing that I am building my castle brick by brick, that I am helping people in the process, and generating revenue to sustain my work in the process.