The Emerging Revenue Models In Edtech

Led by technology and an ever-growing demand for better learning modules, edtech companies are setting new equations by empowering the Indian education ecosystem with their awe-inspiring learning products and solutions. Whether it is smart classes, live online tuitions, doubt clarification sessions, exam preparation support, or competitive exams classes, they all are a part of the digital learning revolution that is engulfing the entire country and is now spreading even to the tier 1 and tier 2 cities.

At the consumption end, the majority is of students and working professionals. Backed by digital learning solutions, students across the K-12 segment are finding it easy and engaging to study their subjects from their homes. Working professionals, like programmers and digital marketing experts, too are finding online courses an easy and effective fit in their busy lives to upskill themselves.

With over 1.5 million schools, over 260 million students enrolled and 751 universities and 35K colleges, India is certainly a massive playground for the edtech players. However, the edtech is still in a nascent stage in India and is seeing no shortage of challenges. Despite all the advancements made by the edtech companies in the recent years, the financial picture of the edtech sector is largely gloomy.

The Conventional Revenue Models Adopted By Most Edtech Companies In India

Of late, a number of startups have sprung into the game, each trying to provide solutions to the challenges that students, parents, and schools face. And though each platform has distinct offerings, having a business model is something they are missing out on. The business model is not something totally focused on the B2B, B2B2C or B2C based revenue streams, or customer acquisitions, but defines a business and keeps it on track.

So, it is kind of a big picture that every business, especially an edtech startup, must work on having, and keep on developing. Freemium Upgrades is one of the classical revenue model preferred by a lot of edtech companies. Under this revenue model, students are encouraged to start their learning journeys with a few free samples (video lessons, classes, etc.), and then are charged for the complete course. Many edtech platforms leverage the Freemium model for getting their customers hooked onto their content and generate revenue streams later on.

Course Subscription is another revenue model adopted by a large number of education companies in India. In this business model, students are required to pay per course subscribed. These kinds of revenue models are also leveraged when the users are mostly working professionals and would like to make a one-time transaction for courses that can help them make progress in their careers.

Another revenue model present in the edtech sector is Pay Per Session Module, wherein platforms charge their students on the basis of duration of their content usage/number of modules accessed. Content sharing and advertising commission are also among the ways leveraged by edtech companies to generate their revenues and stay afloat amidst the growing competition.

The Possibilities-Packed Revenue Models In The Edtech Sector

The success-based revenue model is what many entrepreneurs are contemplating about. In this model, the revenue of a learning platform is directly linked with the success of its customers which makes perfect sense. The higher the success of the student, the higher will be the revenues for the platform.

Even when you look around, you will see the highest profitable educational institutions are the ones that ensure 100% high-quality placements for their students. Income sharing agreements are also finding their ways into the edtech sector. Under this kind of revenue-generating model, an educational entity gets into an agreement with its students to train them or skill them and in return gets a pre-defined amount post the completion of the program or once the student gets placed and starts earning.

At the end of the day, edtech companies also have to realize that they have to have a clear and robust revenue models else, sooner or later, they will perish. Without having a clear business or revenue model, no matter how great one’s vision is, the business of any nature and size will fail. The need of the hour, thus, is to innovate more, educate more, and keep building more sustainable revenue channels.