Revenue Recognition for Online Courses (IFRS 15)
Selling online courses? Whether you run a self-paced platform or live cohort sessions, it's important to recognize revenue correctly. Under IFRS 15, revenue should be recorded not when payment is received, but when the service is actually delivered. Here’s how the standard applies to online course businesses. What Is IFRS 15? IFRS 15: Revenue from Contracts with Customers provides a 5-step model to determine when and how much revenue to recognize. It's designed to reflect the transfer of value to the customer — which is especially relevant in digital services like online learning. The 5-Step Model Applied to Online Courses 1. Identify the Contract A contract exists when a customer signs up or purchases a course — for example, via your website or platform. 2. Identify the Performance Obligations These are the promises you make. In online courses, this might include: Access to video lessons Downloadable materials Live webinars or Q&A sessions Community/forum access Each distinct service may be a separate performance obligation. 3. Determine the Transaction Price This is the total payment received (e.g., €100 for a course bundle). 4. Allocate the Price to Obligations If the course includes multiple components (e.g., €75 for recorded content, €25 for live sessions), you must allocate revenue to each based on relative value. 5. Recognize Revenue as Obligations Are Fulfilled Recorded/self-paced courses: Revenue is typically recognized over time as access is granted. Downloadable files: Recognized when delivered. Live sessions: Recognized when the session takes place. Example: Self-Paced + Live Course A customer pays €300 for: On-demand video lessons (60%) Two live Zoom Q&A calls (30%) A digital workbook (10%) Revenue recognition might look like: €180 recognized over the course duration (e.g., over 6 weeks) €90 recognized after each live call €30 recognized when the workbook is downloaded Key Considerations Subscriptions: Recognize revenue evenly over the subscription period. Refund Policies: Adjust revenue recognition for potential cancellations. Bundles: Break down each deliverable and apply the 5-step model. Final Thoughts IFRS 15 ensures your revenue reflects what you’ve delivered — not just what you’ve been paid. For online course businesses, this means careful planning and good accounting practices. If you're unsure how to apply these rules to your course model, consulting with an accountant or using smart accounting software can help keep you compliant.
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