Financial Breakdown of $16k in Video Course Sales

2024-01-31 The author profile picture Peter Ullrich

Hey everyone,

In 2023, I sold my first video course on another video course platform. I sold around $16.6k in total and got paid $13.8k in profits, 83% of the total. I wondered where the other 17% went, so I whipped up Excel and started number-crunching. I thought it might be interesting to share the financial breakdown of $16k in video course sales with you.

On many video course platforms, it is difficult to see what profit you made from a sale because of hidden or undocumented fees. That’s part of the reason why I started Indie Courses. You should have full transparency into which fees you’re paying and why. Go to the Pricing page if you want to learn more. Let’s begin!

The Big Picture

Here are is the financial breakdown of my sales from a high level:

Sales Total:      $16,632
Platform Fees:    $2,055     12.4% (of total)
PayPal Fees:      $245        1.5%
* Stripe Fees:    $547        3.3%
Affiliate Fees:   $27         0.2%
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Profit:           $13,757    82.7%
Costs:            $2,875     17.3%

* When I downloaded the sales report from the platform, the Stripe fees were empty. I reached out to their support but haven’t heard back yet. I estimated the Stripe fees with a flat 2.9% + 30ct per sale. I will update this article once I receive the correct numbers.

Let’s go through this one-by-one. I made a total of $16,632 from 216 sales in 2023. From that, I first paid platform fees of $2,055. Interestingly, the platform fee “should” be 10%, but effectively, it’s 12.4%. This indicates that the platform calculates its transaction fee over the total (course price + taxes) and not the subtotal (course price), which is a common method to silently increase the fee. Check the Pricing page for more information on this practice and why Indie Courses doesn’t use it.

Next, I paid either the PayPal or Stripe fees for processing the payments. Around 1/4 of my sales went through PayPal and 3/4 went through Stripe. As far as I know, all video course platforms charge the Stripe fees on top of their own fee. It’s something they don’t mention often though. Lastly, I paid commissions to the affiliates, but not that many sales came through that network, so the fees are rather low.

If I deduct the costs from the total, I see that I’ve made $13,757 in profits. I cross-referenced this with my bank statements and it checks out. That gives me a margin per sale of 83% and a cost percentage of 17%. So, from a $100 sale, I keep $83 and pay $17 in fees.

My Labor Costs

Creating a video course isn’t free. It costs time. So, did my hard work pay off? Let’s find out:

I didn’t track individual hours, but these are some pretty accurate estimates:

Writing the code for the Demo project:  2 days
Recording the Course:                   6 days
Editing & Publishing:                   2 days
Marketing and Support over 8 Months:    5 days
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Total:                                  15 days * 8h = 120h

With an estimated 120 hours of work for creating and maintaining the video course and a profit of $13,757, my hourly wage was ~$115. Not bad!

Two things should be noted though:

First, the course is still online and keeps on selling. So, my profit still increases whereas my hours worked increase very slowly. I spend less than 30 minutes every week on support and marketing, most weeks I don’t do anything but see the money come in.

Second, my course is 6.5 hours long which puts it at the rather longer end. The median video course on Udemy is only 2.3 hours. That’s exactly the length that I’m aiming for with my next video course. Creating a shorter video course takes less time to record and edit, which decreases my hours worked. If the next video course is just as successful as my first one, I should have an hourly wage of $150 to $200.

PayPal vs Stripe Payments

Buyers could pay for the course with either a credit card (Stripe) or through PayPal. Here is how many Stripe and PayPal sales I’ve made:

Stripe:   158    73%
PayPal:   58     27%
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Total:    216   100%

I would have expected a lower share of PayPal payments, but 1/4th of sales is significant. I wonder how many people would also have paid through Stripe (i.e. Credit Card), because PayPal is not known for its low fees and Stripe is almost always cheaper.

Here are the PayPal fees:

PayPal Fees Total:   $246
PayPal Sales Total:  $4,753
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Avg. PayPal Fee:     5.2%

Now, this finding surprised me. I had expected a PayPal fee much higher than 5.2%. I still know the days when you could easily pay 10%+ on a PayPal transaction. But 5.2% puts it closer to Stripe’s fees of 3.3%.

Purchasing Power Parity (PPP)

The platform allowed me to enable Purchasing Power Parity (PPP). In short, this decreases the price for buyers from countries with lower purchasing power. For example, a buyer from India would only pay 40% of the total price.

To be honest, when I enabled PPP, I had my reservations. I didn’t want to make my video course “cheaper” and was afraid of losing out on potential profit. But after a few sales, I realized that I didn’t simply give my existing customers a cheaper price, but that I had won new customers who couldn’t afford to pay the full price. So, instead of decreasing the profit from my existing market, I extended the market and had more profit, not less.

Let’s look at the PPP sales in detail. This is how many PPP vs Non-PPP sales I’ve made:

PPP Sales:      81       38%
Non-PPP Sales:  135      62%
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All Sales:      216     100%

Around 40% of my sales came through PPP sales. That’s not bad!

One caveat though: I couldn’t find a list of PPP levels per country, but PPP discounts were applied in some high-income countries that I didn’t expect. Countries like Germany, France, and Austria all had a 20% discount on the total price, whereas the UK, Australia, and the US didn’t. As a German, I know that we don’t earn the same as Americans or the Swiss, but we’re not much worse off either. So, seeing a $20 discount on a $100 course felt weird.

My learning from this is: If you enable PPP, set the course price to ~120% of your desired price. That way, people in high-income countries like Germany will pay the “normal” price (80% of 120% ~ 100%), some super-high-income countries like the US will pay more, and lower-income countries will still pay less.

PPP Sales Prices

Next, let’s look at the revenue coming from PPP vs Non-PPP sales:

PPP Sales Total       $4,841       29%
Non-PPP Sales Total   $11,790      71%
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Total of all Sales    $16,632     100%

Although 38% of all sales were PPP sales, they generated only 29% of the revenue. That’s unsurprising given that PPP sales had a lower price than Non-PPP sales.

In fact, the PPP average price per sale was almost 30% lower than the Non-PPP average price:

Full Price (€100)             $108
Avp. Price of PPP Sales:      $60     55%
Avg. Price of Non-PPP Sales:  $87     81%
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PPP Price Drop:               29%

If you wondered “Why is the average of Non-PPP sales lower than the full course price?” the answer is: Coupons.

Coupons

I ran a promotion on Black Friday 2023 with a coupon for 50% off. That generated 39 sales with a total of $2,130 which is 12.8% of my total revenue in 2023. I generated 1/8th of my annual revenue in just 20 days!

Some people dislike promotions because “Why would I give away my product for less?” but they miss the point. You don’t give away your product for less. You acquire new customers by giving them a lower price. Customers you wouldn’t have had without the discount. Also, your promotion generates attention which leads to new customers. No discounts means less attention, which means fewer sales overall.

It becomes clear if you imagine a small bubble (your customers) in a much bigger bubble (the market). If you acquire customers, your small bubble expands. Without discounts, your bubble expands slower. But if you add discounts, you can make the bubble expand faster! Discounts lead to more customers which means more profit. Sorry to burst your bubble.

Affiliates

One last topic: Affiliates.

I didn’t promote my video course through an affiliate network myself, but the course platform had an automatic one built-in. Unfortunately, that led to very few sales:

Affiliate Sales:         5
Affiliate Sales Total:   $272
Affiliate Commissions:   $27
Avg. Commission:         10%

Again, 5 sales are better than 0, but nothing to write home about. The affiliate sales made up 2.3% of all sales and only 1.6% of the total revenue.

I heard that a proper affiliate program can lead to a significant revenue increase though. So, for my next video course, I will experiment with some external affiliate networks that have higher commissions (usually 30-40%) and therefore more motivated affiliates.

Conclusion

And that’s it! If you enjoyed this article, consider subscribing to the newsletter below. If you have a video course to sell, consider signing up to Indie Courses (the website you’re on 😬). Otherwise, feel free to give me your opinion about this article over on Twitter. Until next time!

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