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Today, data is becoming a valuable resource that enables institutions, educators, and developers to design focused learning experiences. Although everything in the educational technology industry has always been built around data, there are now new ways to use it as a source of income. For EdTech companies, turning data into a revenue stream is not merely a choice; it can serve as a viable method for sustainable growth and revenue diversification. As older revenue models lose relevance, more schools and businesses turn to analytics to open up fresh avenues for growth.
Did you know?
- According to a survey by Educause, 77% of higher education institutions reported using data analytics for data-driven decision-making related to student success and retention.
- Around 61% of educators use analytics tools to assess student engagement and performance, indicating a growing reliance on data for improving educational outcomes.
- By 2025, we can expect 70% of EdTech companies will incorporate AI for data analysis to enhance learning experiences and operational efficiencies.
What is the current EdTech revenue ecosystem?
The education sector is full of potential, attracting many ambitious entrepreneurs eager to make an impact. However, those entering this field face distinct challenges and opportunities as they work to build successful ventures.
Among these challenges, monetisation and securing startup funding is not a linear or predictable process. Obtaining funding from appropriate sources is as critical as any other aspect of establishing a successful startup.
Monetising your EdTech application
Edtech startups, like all startups, can fail if they adopt the wrong business model. Just as building high-quality solutions requires extensive research, selecting a suitable business model is equally important.
A business model includes several components, such as value propositions, customer segments, and distribution channels, with monetisation strategy being a key element. Whether you’re considering a free trial engaging students, parents, teachers, or administrators to use your product, choosing the right monetisation strategy is the first step for effective planning and growth.
Here are several monetisation models commonly used in the EdTech market
- Top-down model: In this approach, EdTech founders engage with key decision-makers like administrators or government officials to sell their solutions to schools and organisations. This method can lead to large-scale contracts and a broad customer base but requires a strong product and persuasive pitch. Schoolzilla, which operates in 140 schools across the US, is a successful example of this model.
- Bottom-up model: This model involves introducing solutions to schools where teachers and students can use them. Often, schools get the technology for free, which can lead to recommendations for parents to purchase premium versions for home use. Scholastic uses this approach by offering free school content and charging for additional home-use material. However, this model can be costly and may result in delayed conversions.
Duolingo, for example, generates 12.1% of its revenue from ads while providing free access to content.
- Marketplace (MOOCs): Among other effective strategies is creating a platform where users can buy and sell courses. Platforms like Udemy and Coursera host user-generated content and charge commissions on sales. While this model is scalable, maintaining content quality tends to be complicated.
Startups can combine this with the freemium model, offering some features for free and others via subscription. MasterClass and BibliU are examples of platforms using this model.
Why generating new revenue streams is important?
Every business has its main goal: to boost profits. To achieve this, a company must improve its current model and seek new revenue sources to expand and elevate overall sales. By diversifying revenue streams, your company can reach a wider audience, attracting new customers while encouraging existing ones to use your services.
By integrating data analytics into operations and marketing, EdTech companies now improve educational experiences while ensuring financial stability. This data-driven strategy benefits both learners and providers.
How to make data a central asset for revenue generation?
Data insights play an important role in shaping the future of education technology. Let’s explore some ways to make the best use of your data.
Understand the types of data you're working with
Data in EdTech can be categorised into three main types: user data, behavioural data, and academic performance data.
- User data includes demographics, profiles, and account-related information.
- Behavioural data involves how students interact with content—how often they log in, the duration of sessions, and engagement levels.
- Academic performance data offers insights into students’ grades, progress, and assessment scores.
Each of these data types serves a different purpose in the student learning experience. Recognising the unique qualities of these data sets is the first step toward structuring a revenue model around them. However, don’t forget to contemplate privacy, ensuring data usage aligns with ethical standards and regulatory compliance.
Offer data-driven insights as a subscription service
For EdTech providers, the data gathered from students’ learning activities is invaluable to educators and institutions that seek to optimise their teaching methods and curriculum development. You can transform this data into valuable insights and offer it as a subscription service.
How it works
EdTech platforms can package these insights into reports or dashboards that provide detailed analyses of student engagement, performance trends, and course effectiveness. Subscriptions can be priced based on the depth and frequency of the reports. This allows schools and universities to access a continual flow of data-driven feedback without managing the analytics themselves.
This model benefits both parties: institutions receive meaningful data to refine their strategies, and EdTech providers generate recurring revenue through a subscription model that grows with their user base.
Partner with research institutions for data analysis
Academic institutions and research centres often require vast datasets to support educational studies and policymaking. EdTech companies can collaborate with these institutions by providing access to anonymised datasets. However, partnerships must be approached with clear ethical boundaries, maintaining the integrity and privacy of users.
How it works
Research institutions can license access to specific datasets for a fee, allowing them to draw insights into educational methodologies, learning challenges, and student behaviour. For EdTech providers, these collaborations present a dual opportunity: they contribute to meaningful research in education while also generating an income stream from data-sharing agreements.
Develop personalised learning tools with subscription add-ons
As personalisation gains traction in EdTech, many institutions are willing to invest in tools that adapt learning experiences to individual needs. By using data, EdTech platforms can develop adaptive learning solutions that adjust content, difficulty levels, and feedback according to each learner’s progress and preferences.
How it works
An effective way to implement this is through a subscription model where users or institutions pay an additional fee for access to personalised learning features. Data-driven tools such as adaptive quizzes, performance forecasts, and custom curriculum paths offer value to students and educators alike, supporting improved student outcomes and catering to diverse educational needs.
Provide benchmarking data to institutions and EdTech vendors
Educational institutions are keen on comparing their students’ performance with industry standards, often called benchmarking. EdTech companies that aggregate performance data across multiple schools or regions can offer anonymised benchmarking reports to help these institutions understand how they stack up against similar cohorts.
How it works
By providing schools with comparative data on student engagement and achievement levels, EdTech firms can enable better decision-making in curriculum planning and instructional methods. Benchmarking data services can be marketed as a premium feature for schools or districts that want to invest in quality improvement, allowing EdTech companies to charge for access to this resource.
Additionally, partnering with other EdTech vendors can create a new market for benchmarking data. Software companies that develop educational tools or platforms can use this data to refine their products and market strategies, creating another potential revenue stream for EdTech providers.
Use predictive analytics as a premium service
Predictive analytics tools have been increasingly adopted across industries, and EdTech is no exception. By analysing past data, EdTech providers can create models that help institutions foresee trends in student performance, dropout risk, or even course popularity. These models offer a proactive approach to managing education outcomes and can be highly attractive to institutions focused on long-term planning.
How it works
Predictive analytics services can be packaged as an added feature or premium service for schools and universities. This allows institutions to proactively allocate resources, adjust curriculum, and provide targeted support to at-risk students. The cost for these services can be justified by the potential savings and improvements they provide to educational institutions, creating a new income stream for the provider.
Offer data-backed consulting services
With vast amounts of data on student engagement, learning trends, and performance outcomes, EdTech companies have a wealth of insights that can guide educational institutions in strategic decision-making. Data-backed consulting services present an opportunity for EdTech providers to position themselves as thought leaders and provide tailored recommendations to clients.
How it works
By providing consulting services that analyse an institution’s specific data, EdTech providers can help schools and universities optimise their learning environments, retain students, and improve overall educational outcomes. Consulting services can be offered on a project basis or as ongoing support, depending on the client’s needs, and billed accordingly.
License data to content and resource providers
Content creators and educational publishers increasingly turn to data to tailor their offerings to learners’ evolving needs. EdTech providers can license anonymised data on student preferences, learning pathways, and engagement patterns to these third-party providers.
How it works
This licensing agreement would involve a recurring fee based on the volume and depth of data shared. Content providers benefit from more targeted insights, allowing them to produce materials that align with real-world learner trends. At the same time, EdTech firms create a passive revenue stream from their existing data.
Why do privacy, compliance, and trust matter?
Monetising data in EdTech brings up discussions around privacy, compliance, and ethical data usage. The General Data Protection Regulation (GDPR) in the EU and the Children’s Online Privacy Protection Act (COPPA) in the US, among other regulations, set strict standards for handling educational data. Compliance with these regulations and transparent communication about data usage are non-negotiable for building and maintaining user trust.
EdTech companies must prioritise anonymisation processes, ensuring that individual student data cannot be traced back to its source.
At Altamira, we can help you with data governance, conduct compliance audits, and identify clear user opt-in options to protect privacy and ensure ethical data usage.
What are the benefits for your business?
Data analytics plays a key role in transforming basic data into meaningful insights that open up various revenue opportunities.
Creating personalized learning experiences enhances teaching effectiveness and supports revenue generation. By examining learner data, EdTech companies can develop tailored content that boosts engagement and supports subscription models, where each customised lesson adds value.
Predictive analytics is another powerful tool that can identify students at risk of falling behind or dropping out. By intervening early, companies can improve student success and encourage ongoing enrolment. For example, a language learning app might provide additional support in grammar to a user flagged by predictive modelling as likely to discontinue their studies, thereby maintaining their subscription.
Incorporating elements of gamification can also drive revenue through small, frequent payments. By integrating microtransactions into engaging learning modules, companies can capitalise on the enjoyment of achievement. A coding app might offer advanced challenges for a fee, generating a consistent stream of minor revenue.
The demand for employee upskilling in the corporate sector creates further opportunities. EdTech platforms can collaborate with businesses to develop customised training programs, resulting in bulk licensing agreements. For example, a platform focused on data science could provide a series of courses tailored to the needs of a tech firm, securing a profitable contract.
Additionally, establishing a marketplace for educational content allows educators to sell their courses or resources, diversifying revenue streams. A teacher in Barcelona could reach students worldwide by offering a well-received mathematics course, with the platform collecting a percentage of each sale.
The final words
With careful planning and a focus on ethical data management, EdTech providers can create sustainable revenue streams through data. The monetisation options are diverse, from offering data-backed insights as a subscription service to developing predictive analytics and personalised learning tools. However, in all strategies, prioritising transparency and compliance is essential to uphold the trust that educators, institutions, and learners place in the EdTech industry.
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