Which are the Types of Business Models for EdTech Apps?

When it comes to developing an edtech app, there exist layers of confusion:

  • What should the edtech app do?
  • How should the edtech app make money?
  • Who will be the target audience for the edtech app?
  • Freemium or sponsored?
  • Top-down or bottom-up?

It is natural to put on the over-analytical hat to ensure that all dimensions of the edtech app point towards profitability. To help you get in the right direction with your edtech app, we have compiled a list of the best business models for contemporary edtech apps.

This article will help you understand the exclusive details required for developing an edtech app from the ground up.

Types of Business Models for EdTech Apps

A business is not only an instrument to make more than you can spend. It is a channel to solve an existing problem with a creative solution. The successful edtech businesses have known and implemented their businesses on this fact.

Take, for instance, Udemy.

There was a massive opportunity for a portal with a professional yet affordable skill development program. So, the online course marketplace for eLearning caught the attention and is thriving like crazy. Considering this principle, let’s identify the crucial elements required for building an edtech business.

As per my research, an edtech business model should have the following:

  • Better Access
  • Measurable Outcomes
  • Personalized Content
  • Adaptive Delivery
  • Affordability
  • Better Efficiency

Taking the criteria as mentioned above, I’ve put the best business models with a vast prospective for profit:

Freemium Business Model

Incorporating a freemium business model means offering a basic version of the web app/mobile app for free to students, teachers, and parents and encourage these stakeholders to buy the premium version with attractive features.

The edtech app can be a dedicated online classroom platform that can replace video-conferencing apps. Teachers can schedule the classes and share the timelines with students. Students can log in to the portal and access the code to join the class at the scheduled time. The edtech app will also have multiple features for teachers to encourage a conducive learning environment with assignment creation and review, real-time sharing of feedback, and quiz creation.

You can either implement the freemium business model through limited features or limited time. Let’s show you an example of how you can launch an edtech app with limited features.

How to Make Money using the Freemium Business Model?

  1. Free Account: Students and teachers can start with a free version of the edtech app. The basic version should allow teachers and students to interact. You can set the limit based on the number of students per class while the teacher takes an online class. In addition to this, students should be able to chat with teachers separately and resolve their queries. Again, you can set a limit to free chats.
  2. Premium Plan: Students and teachers can switch to the premium versions with interesting features facilitating more ease and interactiveness. Teachers can accommodate more students in their classes by opting for the premium version. In addition to this, parents can have a one-on-one interaction with teachers to stay updated about their children’s progress.
  3. Education Institution-wide Plan: You can make money through a special plan for an educational institution. Under this plan, all the teachers, students, admin, and parents can enjoy special educational access with multiple features for collaboration.

If you want to launch an edtech app on a trial basis, you can offer all the features for free for a limited time.

On-demand Business Model for EdTech App

An on-demand business model is one of the surefire ways to run a profitable business. The success rate of the on-demand economy is high. You can develop a tutor-on-demand app, wherein tutors can list themselves on the portal. On the user end, students will be able to use different keywords from the search bar to find a good tutor, who can assist them with a topic.

Each of the tutors will have a different per-hour rate. Before confirmation, tutors will provide an estimation about the charge for the session. When the student confirms, the link will be generated for the session and shared with tutors and students.

How to Make Money Using the On-demand Tutor App?

  1. Commission Model: This is the most popular revenue model in the Uber-like apps. As per the revenue model, the payment made by the student is held by the admin. After the session, the admin charges a certain commission and then releases the payment. The ideal commission ratio is a 75-25 cut, wherein you receive one-fourth of the payment.
  2. Verification of Tutors: When tutors register themselves on the portal, they need to pay a service charge for using the in-built tools and functionalities. Upon making the payment, tutors can begin receiving the teaching requests from students.
  3. Cancellation Charges: When a student cancels the session, you can charge a certain amount as a cancellation charge. To have a tutor-centric approach, you can pass on the part of the cancellation charge to the tutor.
  4. Besides this, six more revenue streams are possible.

eLearning Marketplace

In order to understand the working of an eLearning marketplace, think of an eCommerce website/ application. Similar to an online store, the marketplace will have multiple recorded courses listed on the platform for students to explore and purchase.

An eLearning marketplace is nothing but an app like Udemy or Coursera. Tutors can use the learning management system and tutoring tools from the platform and create courses. Upon approval, the admin can list courses on the edtech app. Students will have different dashboards and search modules to look up for courses. They can read the description of courses and make payment to purchase them.

How to Make Money using the eLearning Marketplace?

  1. Commission Model: The tutor can earn 97% of the total price if the student has purchased the course due to his reputation or marketing. If the student gets onboard through the marketing program of the platform, you can own 50% of the earnings.
  2. Featured Courses: Using the model of featured course, tutors pay for better discoverability. You can list their courses in a special section for better sales opportunities.
  3. Subscription Model: When a tutor has listed multiple parts of the same topic, you can create a bundle of the courses and offer a subscription to students. Using the subscription model, students can avail of certain discounts on the courses.

SWOT Analysis of the EdTech Industry

In order to be a part of the edtech industry, it is a good practice to know it to the fullest and then plan your entry. The edtech industry is densely crowded, with multiple businesses and more startups joining the bandwagon. However, there are numerous unexplored corners in the industry, which makes space for new players.

Strength: Rather than launching a school or a university, you can simply reach out to a broad pool of students using the edtech app. The incorporation of new technologies enables better interactiveness, collaboration, and security.

Weakness: Low awareness about online learning in developing and underdeveloped countries.

Opportunities: Expansion and brand recognition are easy across boundaries. The digital business in the education sector runs at a relatively low cost than the traditional education system.

Threats: If the system is not developed with the standard security protocols, there are chances of malware attacks.
There are numerous COVID-19-induced opportunities to power up your edtech business. All you need to do is pick up a business model and chart out a plan to develop an edtech app.

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