Business Models Education Entrepreneurs are Exploring

Business Models Education Entrepreneurs are Exploring

For some strange reasons education is not considered entrepreneurial by nature, but in fact it is a humongous industry scaling between other sectors of business.

Given a little less importance than deserved, just like education the business model in education on which it is being operated plays a significant role in the success stories of an education enterprise.     

As said by Mr. Ravi Shankar Prasad, IT Minister “Healthcare, Education and agriculture are three priority areas in terms of technology, where the government can provide long term benefits to people of India.”

For edupreneurs who are constantly working to mark a place in the industry, the business model turns out to be the backbone irrespective whether you are approaching for your next round of funds or some potential clientele.

In an institutional scale a business model describes the way an organization defines itself. It is not only an earning model: describing the earnings versus the costs, determining the net income of the organization. The business model also contains collaborations, essential activities and processes and core competencies. By defining the organization in this way shows clearly what the organization sees as its raison d’être, its competitive position in regard to other institutions and organizations.

A canvas of business model in education is painted by various colors such as key activities, value proposition, customers’ relationships, customers, revenue, channels, key resources, cost, key partners and more. Indeed, “There is no substitute for a great product.” But without the right business model in education “the great product” may end up losing its worth.

Following are some business models that you would like to explore depending upon the nature of your product being offered.

Check’em out below:

  1. Freemium:

This education business plan requires the company to offer a “Freemium” model for teachers, students and parents is the best way to maximize sales. Under this scheme, you have to provide your customer with amazing few free features of your product and premium version of your product is paid with even better features that make them shed a little weight from their pocket. The content must be of upmost quality with better material being provided for money.    

  1. Institutional

This is the more traditional business model in education. The selling to schools is done through district leaders. The sales strategy is generally referred as “top-down,” meaning a district makes a purchase for all the schools under its administration. The main advantage of an institutional business model is that districts are positioned to sign large contracts. This is the best approach for edtech companies that need to integrate into school- or district-wide data systems, or whose users are going to be school administrators.

  1. Sponsored

A less common, but quite interesting business model in education is one where neither schools nor parents pay. Instead corporate or foundation sponsors pay for product placement, usually as part of a corporate social responsibility (CSR) initiative. The advantage of this model is that the sponsor will care mostly about usage, which is likely to be quite high if you’re offering a quality, free product to schools.

  1. Consumer

The consumer approach is an emerging business model that allows schools to use a product for free, and then charges families if they want to continue usage at home. This model is suited to companies with products that kids can use on their own. Schools, in this case, essentially become lead generation for consumer adoption.

With this model, it is important to create a “product loop” between school and home, where teachers use the product with kids in school and then also recommend to parents that students continue using the product at home. The advantage of this model is that schools love free (quality) products, which can drive user adoption, and parents tend to listen to teachers’ recommendations for what tools to use at home. The adoption is highly seen in the edtech tools for the toddlers or the kindergarten level.

  1. Growth with Aim to Monetize

This is one of the most common model being used by the edtech startup. Free services are being offered to sustain the user base with aim to monetize in the future. One big drawback of this model is meeting the high expectations they set for the VCs when it comes to monetization of the same. n edtech K-12, this very selective league includes a small number of companies  

  1. Boots on the Ground

This model is highly expensive and slow but does bring some real results. Companies like MasteryConnect and BrightBytes have been able to mark a place with working on the same model.

The strategy is to pitch district administrators with a top-down sales approach that involves large ranks of salespeople with their “boots on the ground.” Sales cycles in K-12 are infamously bureaucratic, which makes it frustrating for startups that need to move fast and show continuous progress and significant growth on a monthly or quarterly basis. Even if a product does manage to catch the eye of the right person in the district administration, approval processes in these organizations are cumbersome.

Startups with this approach can succeed, but sales and marketing expenses will drive up the price of the product.

Money is like gasoline during a road trip. You don’t want to run out of gas on your trip, but you’re not doing a tour of gas stations.” - Tim O’Reilly

Vision is great, but don’t forget the numbers, especially in the edtech space.” - Sunitha Viswanathan, Unitus Seed Fund

Though both the quotes are in paradox but so is life. The road isn’t the same on all lengths.

Also Read:

[Whitepaper] The B2B and B2C Battle in EdTech Globally

What Education Entrepreneurs Miss When Selling to Schools

Because education entrepreneurs have no rule book get creative, imaginative and get out with something different… a business model of your own. 

Share your thoughts in the comment section below.


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About the Author
Author: Priyanka Gupta
Priyanka is a blogger by profession and has an increasing interest to write about the edtech space. While writing she keeps in mind the educators to come up with right resources and ideas which might be relevant for them in relation to effective use of technology in their profession and institutions/classrooms.
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