The problem with free courses

Free courses seem appealing, but they often suffer from a lack of motivation and commitment. Without a stake, learners may struggle to stay engaged

By Putro Harnowo, Senior Content Manager, China Business Knowledge @ CUHK

In our pursuit of knowledge, abundant resources exist nowadays to learn new skills, many of which come at no cost. Companies, non-profits, and governments are eager to provide free classes for human capital development initiatives. Meanwhile, online course providers like Coursera, Udacity and edX offer a wide range of subjects just a few clicks away without charge.

Regardless of the goals to be achieved, these free training and courses have the potential to deliver major benefits. However, low completion rates and a general lack of commitment loom as challenges that need to be addressed. There is little to know about whether these free offers can engage learners effectively and promote lasting commitment.

Free products normally attract customers, yet our modern lifestyle tends to undervalue what comes without a price tag. Many studies have shown that free offers reduce repurchase intention as the product’s inherent value would be obscured. With that being said, free courses may fall victim to a lack of appreciation. So, how can we design a free course that sustains long-term learning motivation?

This is the puzzle that Catherine Yeung, Associate Professor of Marketing at the Chinese University of Hong Kong (CUHK) Business School, and Dr Lee Yih Hwai of NUS Business School, try to solve. In recent research titled Incentives for learning: How free offers help or hinder motivation, they investigated the impact of different types of incentives on learning motivation when it comes to free courses.

It turns out that shifting attention from zero-price to a value proposition can encourage a longer-term commitment. “One way for marketers to redirect consumers from focusing on the zero price to elaborating on learning benefits can be found in how the offers are implemented,” says Professor Yeung.

The key point is the monetary cost incurred in the early stages. Compared to granting a waiver upfront, the study found that offering a refund would lead to greater motivation. Refunds also increase engagement and the likelihood of revisiting the learning materials for a longer term. This effect can be attributed to a set of cognitive operations called mental accounting, which keeps track of expenses and monitors consumption.

“People account for time and thinking costs through mental accounting procedures, just as they do for money,” she adds. “People create mental accounts for time spent on a specific activity and track the accrual of benefits associated with the time spent.”

How mental accounting calculates

In daily life, people open a transaction-specific mental account when they incur a cost and the account remains at a negative balance until they receive compensation. Driven by the need to account for upfront spending, people will reflect more on the benefits compared to when no penny was spent. Following payment, mental accounting draws more attention to the inherent value of the learning activity, laying a foundation for greater persistence.

“The cognitive procedure associated with making a payment, in general, may be activated and therefore induce a tendency to think through how one can benefit from the incentivised activity and whether these benefits justify the cost,” says Professor Yeung.

“One way for marketers to redirect consumers from focusing on the zero price to elaborating on learning benefits can be found in how the offers are implemented.”

Professor Catherine Yeung

Taking mental accounting into account, she contrasted two arrangements commonly used when offering free courses: tuition waiver and tuition refund. Although both arrangements essentially mean free of charge, one key difference is the need to make an upfront payment.

“Tuition waivers provide no cost that needs to be mentally accounted for, making learners less likely to contemplate the learning benefits,” she adds. “While waivers may attract more initial sign-ups, refunds tend to drive stronger engagement over time by putting the learning benefits front of mind.”

Weighing between waiver and refund

To get to know more about the differences between waivers and refunds in affecting learning motivation, Professor Yeung and Dr Lee ran multiple experiments involving hundreds of undergraduate students in Hong Kong and Singapore.

In one of the experiments, students were informed about a scenario where the publisher of an award-winning book, The Element of Style, was selling content in small portions based on individual needs. The students in the waiver condition were told that the university would cover the fee, while those in the refund condition had to pay a fee at the beginning and get a refund later.

The results of all experiments showed that the students who received a refund deliberated more on the benefits of learning, expressed greater determination, and were more likely to return to the learning task in the future.

In another trial with adult UK residents, Professor Yeung assessed the moderating role of non-monetary cost in shaping attention. Specifically, she modified the amount of effort required to sign up for the free course, with some participants facing no effort and others facing elevated effort. The finding also supports the advantage of a fee refund in focusing learners’ attention.

“Even though the payment is eventually refunded, the act of paying directs the learner’s attention to the benefits they expect to receive from the learning activities,” she explains. “This stimulates more conscious consideration of how the learning activities will help them develop valuable knowledge and skills. It is often this type of thoughts that keep people engaged.”

Designing programmes for learning and development

As one of many psychological principles influencing motivation, companies can utilise mental accounting to enhance employee motivation and commitment to professional development activities. In this case, the training content and perceived long-term career benefits tend to be the biggest drivers.

“When learning activities require some upfront investment of time or effort, it gives people more skin in the game. However, mental accounting alone is unlikely to sustain motivation in the long run if employees cannot figure out the actual benefits from the learning activities,” says Professor Yeung.

Therefore, she highlights that the choice between refunds and waivers should depend on the organisation’s learning engagement goals. For training focused on short-term knowledge transfer or one-time participation, upfront waivers are often the better choice. With no initial cost barrier, waivers maximise the number of learners who will sign up and attend.

However, if the objective is to foster long-term skills development through ongoing learning, refunds are more effective. The upfront payment makes learners more aware of the personal and professional benefits they expect to gain. This benefit-focused mindset motivates them to stay engaged.

The mental accounting model can also be applied to encourage continued participation or purchase behaviour. If a business wants to encourage continued participation or purchase behaviour, Professor Yeung suggests the long-term rewards must be clear and enticing. Under this premise, businesses can design incentive programmes that require a small initial investment of effort, time or money to participate.

“According to mental accounting principles, this upfront payment is mentally coded as a loss that motivates the customer to seek gains from the programme to balance their mental account,” she explains. “It’s about striking a balance. The initial cost activates mental accounting, but it shouldn’t be so large that it deters people from getting started. The key is framing the programme as an investment that will pay off.”