Edtech Business Models: How Edtech Companies Can Build Sustainable Business Models
The COVID-19 pandemic accelerated a trend that was already happening in education – the move to online learning. As schools and universities shut their doors, they had to scramble to take courses virtually. What they found is that remote education works better than they imagined. Students and teachers adapted quickly. Digital communication and collaboration tools made it fairly seamless.
Now, the question is how do we build on this momentum?
The edtech companies leading this revolution need thoughtful business models that drive innovation while being sustainable.
There are opportunities to make education more accessible, effective, and affordable through smart integration of technology. But it can’t be done through naive idealism or strictly for profit motives – it needs a balanced approach.
In this post, I’ll share some ideas on how edtech companies can thread that needle toward models that work for all stakeholders – students, educators, parents, communities, and the companies themselves.
Types of Edtech Business Models
Here is an overview of some of the main types of business models in the edtech industry:
- Subscription Models
This model involves charging a recurring monthly or annual subscription fee to access an education platform or software. Common pricing tiers based on features are used.
Examples: Coursera, Udemy, EdX, Treehouse, Brainly
- Freemium Models
Offer a free basic product to get wide distribution, while also providing “premium” paid offerings with additional features, perks or levels of access.
Examples: Duolingo, Quizlet, Kahoot
- Advertising Model
Offer free access to educational apps, tools or content that is supported by advertisements placed within the platform. Video ads and sponsored content help monetize at scale.
Examples: YouTube Edu, Spotify podcasts
- Business to Business (B2B)
Charge other educational institutions licensing fees for proprietary tech and content. This can include tools for schools as well as corporate training.
Examples: BYJU’s WhiteHat Jr, Emeritus
- Business to Government (B2G)
Get large government contracts to provide customized educational solutions countrywide. India’s massive sector serves as a model.
Examples: Byju’s partnerships with Indian state governments
- Publisher Model
Sell proprietary books, instructional materials, assessments etc. Can be done direct to consumer or by selling through distribution channels.
Examples: Pearson, McGraw Hill, Cengage
The most sustainable models have diversified income streams across these monetization methods. They balance profit goals with purpose-driven positives for all stakeholders.
Meeting the Learning Needs of All Students
The potential of online education is huge. Tech-enabled teaching allows for more personalized and self-paced learning. Students can access courses anywhere with an internet connection. Small group and 1-on-1 instruction is feasible regardless of location. Adaptive learning software provides customized material based on real-time assessment of strengths and weaknesses.
The key is developing models that bring the power of edtech to students of all backgrounds. That means finding ways to make it affordable and accessible without diluting quality. Some ideas that show promise:
- Premium Freemium Models
Offer a free basic product to get wide distribution and also have “pro” paid offerings with additional features. Duolingo exemplifies this in language learning. Their core app is free and quite robust. But they generate revenue through premium add-ons.
- Sponsorship and Scholarship Programs
Secure funding from philanthropic partners, impact investors, or crowdsourced micro-donations to sponsor free or discounted access for disadvantaged students. Nonprofits like Khan Academy use this model.
- B2G Business Models
Sell to governments so they can provide online education platforms country-wide. Byju’s landed huge contracts from states in India that enable them to offer their service for only $10/year.
Monetizing Expertise from Educators
Creating valuable edtech products requires deep expertise from experienced educators. Teachers and academics invest their careers in developing effective instructional methods. They create high quality educational resources.
Edtech business models need to appropriately reward them for those contributions. Teachers shouldn’t be sidelined as tools get all the glory. Here are some win-win ideas:
- Revenue Sharing on Educational Content
If teachers contribute instructional content that drives product value, they should get a cut of the returns. For example, online course marketplaces can share 20-50% of enrollment fees.
- Co-Develop Curriculum and Tools
Actively involve master teachers in building the educational software, assessments, and content. Give them part ownership stake through stock or options to incentivize the partnership.
- Hire Top Talent as Salaried Employees
Bring aboard the best educators as content developers or instructional leads. Compensate them handsomely for their expertise with competitive salaries and benefits.
Data-Driven Insights Without Sacrificing Privacy
Edtech tools that leverage data analytics and AI can provide powerful insights to improve student learning outcomes. However, protecting student privacy should be paramount.
Poor stewardship of personal data can violate trust. But if done responsibly, it can drive real gains without compromising confidentiality. Some constructive approaches include:
- Aggregate and Anonymize the Data
By reporting analytics in aggregate and scrubbing it of personally identifiable information, you can still spot useful trends and patterns.
- Transparent Policies and Permission Processes
Clearly communicate how data is collected and used. Provide students and families control over what gets shared through flexible permissions.
- Student Data Stays with the Student
Systems like the Open Learning Record store secure records under student ownership. They can then manage and share their learning records however they choose.
Making Online Education a Force for Good
If balanced properly, edtech business models can empower students, reward great teachers, and bring transformative learning solutions to communities everywhere.
But if done thoughtlessly, we risk pricing out disadvantaged populations, exploiting educators, and violating privacy – deepening divides.
By grounding models in ethical priorities like inclusion, transparency, and empowerment, edtech can elevate education across the board. The companies that pull this off will also position themselves for sustainable success.
When values align, everyone wins – students thrive, teachers gain autonomy, and businesses prosper. Here’s to the edtech innovations that move us collectively towards that positive future.
