Udemy Business Model: How Does Udemy Work & Make Money?
Connecting knowledge to the different corners of the globe
and with the people, organizations, and businesses.”
The market of the e-learning industry is going to reach $250B in the period 2021-2027 with a CAGR of 21%. There are many platforms in the market existing, but Udemy is on the top for insight and depth of knowledge to the people.
Yes, Udemy is for everyone, including students, professionals, and those who generally are not able to pursue their studies in the long run due to time constraints, location, or financial conditions.
The Udemy revenue model is very successful where everyone gets the benefit. All you have to do is to log in to your interface and choose your course, that’s it, here you go. You can start learning your skill from where you are.
But what makes it so successful? What’s the reason behind it? What are its business strategies and working process to generate revenues and revive identity?
In this blog, we are going to exclusively focus on the Udemy business model that helps you to create your own e-learning app.
So let’s get started.
What is Udemy?
Established in the year 2010, today Udemy has a pool of 50M students enrolled with 155k courses with the evaluation of $4B.
Udemy is known as one of the leading online learning platforms, specially designed for students and professionals. Udemy is available in 65+ local languages making it a learning companion for everyone.
Udemy has a very simple wireframe, where one can learn from the various courses and can become an instructor at the same time.
Such a huge constructive approach makes Udemy the global name amongst the eye of the investors. According to the recent survey by Google Trends, this platform has faced a humongous growth of 60% in the pandemic time itself.
The obvious question raised is how does Udemy Work? We are now moving to get more insight into it.
What is the Udemy Business Model?
Udemy has adopted a smart model to plan the business strategy and helps the businesses to gain high-end product satisfaction and revenue in such a competitive landscape.
Udemy is the platform to transform the lives of individuals by sharing knowledge. It has different modules for the different zones of individuals, like students, professionals, businesses, etc.
The business model for Udemy is mainly divided into 2 models for i.e B2C and B2B.
- Udemy courses for Everyone (B2C): in this model, the consumers can explore the courses and gain the knowledge for their personal growth.
- Udemy courses for Business (B2B): in this model, the consumer is the professional experts who want to master their skills to add on business outcomes into the industry.
How does Udemy e-learning mode help the consumers?
In the market, there are already a large number of online consumer-based platforms that are there to give quick and accurate knowledge to people. But how does Udemy win the race and hold a unique position in the market? Here is the recipe, we are pondering;
- You can test drive the course before even registration. This is such a unique feature.
- Its courses come up with plenty of features including unique video lectures, quizzes, audio lectures, certification, subtitles, taking notes, and many more.
- Udemy has a money-back warranty within 30 days in exceptional cases if you are not happy with the course.
- It is one of the only platforms that has come up with an open framework for the easy marketplace of the course (create; market; sell).
- Udemy has researched many resources and then makes a solid effort to create more interactive ways for the students to get engaged.
Udemy USP: What makes Udemy better than other e-Learning Portals?
Udemy adopted a very unique two-value consumer proposition model. It is divided into 2 categories.
- One is for the students who want to learn the courses to improve their skills.
- Another one is for the professionals who want to learn the skill quickly. Here udemy gives quick access to the pool of courses specially designed for such professionals to polish their relevant skills.
Both of the categories are targeted in different ways.
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1. For Students & Intermediate Learners
- The first one is purely consumer-based. Here the general customers are the primary sources.
- Pushed them to the platform by marketing activities and promotional events or ads.
- For the demonstration, there should be free demos of the courses which make them understand the summary of the course and get the clinch idea about the whole module.
- Once they found it interesting then they have to be triggered to the premium courses.
Working Procedure For the Learners: Students or Intermediate Learners
The market of online learning is already booming. Although udemy holds its unique outreach especially amongst the students and the potential learners.
The courses Udemy has composed are large in numbers to transfer essential knowledge to everyone. Domains include IT, business, finance, designing, music, development, marketing, hacking, advanced technologies, and many more.
You just need to register into the interface or log in, choose the course, and bingo! You get entered inside the interactive and immense pool of knowledge.
In short: Finding the course-> enroll into the modules-> pay for the course
2. For Instructors
- Udemy invited and offered excellent trainers on their platform.
- They are the trainers who can create their online courses.
- Amongst the list of plenty of courses, the expert can prepare the course relevant to their domain or as per the needs of the students.
- They can get reviews and ratings for the already available courses.
- Courses are accessed by the huge audience present in the world.
- Free designs and customizations are plugins for content creation. Instructors can use these tools to make their courses more attractive.
- A large technical support team is available for them to guide in case of any urgency.
Working Procedure For the Instructor
As an instructor, you always want to prepare for any course without any kind of disturbance. So here udemy plays a decent role.
Udemy helps their instructors right from scratch to the end.
For the trainers, the designing and creating toolkit is there. They can prepare the course and add videos, graphs, slides, and content to it.
In short: Prepare the course planning-> attached the video-> upgrade your course; add bio, description, any attachments required, etc-> publish the course for review
3. For Business Professionals
- Large organizations are the focused consumers.
- To earn the valuable acquisition, Udemy has proposed a dedicated sales force with the structured plan of a large library of courses.
- Professionals can access the courses 24*7, which makes it easy to upskill themselves.
- You can track your progress in your profile section.
- Access from the pool of more than a thousand courses in 10+ languages.
Udemy Business Strategy
According to Crunchbase, the profile of Udemy has a turnover of more than $400 M in 2020. With the help of AngelList, Udemy has raised a value proposition of $1M in less than a month. Creates more than 2k+ courses and attracts 1K instructors.
Udemy separated itself from the rest of the competitive race by adopting a very unique approach. Similar leading e-learning businesses follow the traditional way, where only their connected instructor or institution develops the modules of different courses.
While Udemy adds a very different shell here. Udemy has no institution itself. Similar to ride-sharing giants Uber and Ola, Udemy offers different zones of individual instructors to come along and teach on this platform.
Here the instructor or the tutor is not bound to connect with the institution. But that does not affect the quality of modules. Each trainer is well qualified and sound enough on their respective subjects.
The model is designed as per;
- To focus on students; who can learn the skills
- The instructor; who shares the knowledge
For B2C, Udemy sets up their online modules and sells them to generate revenue.
While for the B2B, Udemy develops short videos with subtitles and advertises them on multicast channels to attract & engage them. The whole strategy is compact.
1. Two-sided Revenue Modeling
Udemy has approached a two-sided revenue-generating model beneficial for both the instructors and consumers.
Consumer-Facing: In this strategy, Udmey has come up with timely scheduled promotional events to market its courses to the consumer. It can be done on a weekly, monthly, or yearly basis.
In the initial, udemy offered free courses and trial courses to the students or the consumers. Once they find it useful, they continue to use the course. For that, they have to pay for that course.
This is the best model to gauge the potential customers and convert them in the long run.
For Businesses: While in the ERP business this model works as the SaaS model, to help the professionals to polish their skills.
The business has a team size of 5-20 employees, they can purchase the module accordingly.
Udemy has prepared a few short and crisp demo courses to showcase the employees of the business. Once they get to understand and know that they will gain the relevant knowledge with it, they will continue to use the services and pay for the modules.
Team plan for the small and medium-sized businesses. Enterprise plan for the large-sized business with the add-on to track the progress of the learning of employees.
Udemy has composed the courses into the segment of 360 degrees.
31% for business and soft skills, 34% for technology, and the rest 35% for personal enrichment.
Udemy has offered more than 180k+ courses in 75 languages, 75k+ non English courses.
2. Udemy Customer Composition
Customer composition is a very important parameter to garner the brand image instead of only focusing on the revenue and profits.
Monthly average buyers during the pandemic year, have to impact great improvement in the sales of the courses with 1.4M consumers. However, at the beginning of the year 2021, the market has slowed down and the figures fall to 1.36M.
In June 2021, Udemy had a total of 8,669 business customers via direct sales, which shows great turnover. Udemy ARR helped to gain $190M from the business students.
Udemy gives equal time to both platforms; consumer-based and enterprise business. Both are important for accomplishing different purposes. Let’s dig it more.
Consumer Based Model Approach:
- Increase the Sales Acquisition: Consumers are the long-term partners to drive the sales by themselves. Although in the advertising, and trial courses the company may suffer some losses in the long run it would balance and turn into profit.
- Improve the Brand Value: Consumers are learners who want to garner their skills. They help for the mouth publicity. So keeping consumers engaged and developing consumer-focused courses are must-haves for rebuilding the brand value.
- Follows the Bottom-Up Approach: Udemy has proposed a bottom-up approach to counter a large customer base at the early stage. Turn them into potential customers. Gains the profit and hence, the risk is limited.
Business ERP Model Approach:
- Quick Revenue Growth: Businesses and companies have quite a decent budget for upgrading their employees with the latest trends and technologies. Hence it is beneficial for Udemy to grab the larger team sizes of the companies for quick up-gradation of their skills. This helps Udemy to quickly drive its revenues.
- Stable Revenue Stream: enterprise customer model, gives the ability to sustain their employees in the continuous expenditure, which helps to drive the continuous revenue stream. This is the quick process to upgrade the company valuation in a short time.
- Self-Serving Funnel: under this approach, Udemy has scheduled salesperson techies to find and connect with those profiles who may convert into enterprise accounts. This funnel is automatically driven and ensures the collective growth of the brand.
How does Udemy Make Money?
Udemy makes its money by adopting a few revenue models. It is based on the marketplace business model of popular e-commerce websites like Amazon and eBay.
It has constructively developed its model. That helps to earn a large sum of money. Here are they:
1. Subscription Revenue Model
Udemy has launched Udemy Pro, offering a wide range of consumer-oriented courses to engage its users.
Once the user is interested in continuing the course, the app prompts them to charge a monthly fee of $20 to give them access to premium content. This is how the subscription-based revenue model works.
2. Revenue Sharing Model
The revenue-sharing model helps the service providers and stakeholders to distribute their amount of money as a share. This model is distributed into three parts;
Paid Acquisition: Google ads are the best way to gain traffic to the platform. However, the whole part of the price is not transacted to Udemy. Google shares the cost in the ratio of 3:1.
As soon as students purchase the course, 25% of the money is transferred to the sources of the ads while Udemy has to earn the rest 75%. Again this 75% share is distributed to the instructor and Udemy with the 3:1 ratio.
As a source platform, Udemy has taken a small concession of 25% from every purchase and distributes the rest to the trainer.
Organic: Organically revenue-generating model, claims to be the best approach for the long term. However, it takes some time in the beginning.
In this, the student or the user directly comes to the platform. Once the user confirms the purchase of the course without any referral link, the price share is 1:1. That means 50% of the total price is distributed among Udemy and Instructor.
Promotion: When the student purchased the course using the referral link of the instructor, then 97% of the total sum is reverted to the account of the instructor, and Udemy takes the remaining 3%.
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3. B2B Model
Udemy has come up with some of the exclusive courses for professionals and their businesses. In this model, the employee takes the course and upskill themselves.
This model consists of short-term courses that are quick and fast to learn and gauge their skills.
Udemy offers different price segments for the business teams. As for the team size of 5 to 20 employees, Udemy deals the price offer to $360/year. While for the enterprise level, with a team size of 21, the price varies.
Why does Udemy have an Excellent Future in the Marketplace?
We directly come to the reasons. Let’s continue reading to find out the answer to why.
Udemy for Business: ERP Learning Solution
Udemy already fueled the marketplace of learning skills. Udemy businesses have helped to offer personalized and relevant on-demand learning to the businesses to achieve their business outcomes.
Employee development and investing to polish their workforce are the topmost priority for many of the leading businesses.
In the business concept, udemy marketplace has come up with a subscription model to curate top-class content developed by real experts. In addition, the content is very niche and covers key technical and business topics across the range of IT, management, marketing, designing, music, photography, and many more.
Along with that Udemy has offered customization tools for the content curation to help the top leaders to create the content, host, and distribute it.
According to Tibco, an enterprise data company; they choose Udemy for its well-equipped global instructors, quality of content, relevancy of course curation. Using the udemy Business plan, Tibco can allow 4k+ employees to access and garner real-world skills.
The price of the majority of the courses is cheap compared to the other leading platforms. But how? Because here courses are created by the individuals, not by the educational institutions or companies. But that doesn’t mean that the quality is compromised. No, not at all…
The courses are upgraded with the latest content.
How much Does it Cost to Build the Udemy Application?
Earlier in this blog, we have understood how Udemy has adopted the business topologies and revenue generation models. These models are its USP, under one umbrella all of the requisites have been furnished.
We must thank the Mobile app development team of Udemy for giving us such a modern and unique system without any failure.
Yet the implementation to create bulletproof applications like Udemy would be an irksome process for the businesses. And hence that affects the cost of the final app.
Now we are in the position to understand the factors that are going to affect the cost of Udemy and its final cost estimation.
The cost of an app like Udemy depends on various factors like;
- Tech Stack
- Cost per hour of experts
- Channels: mobile app for Android & iOS, and website
- Development: The development team plays a vital role in the implementation and final product. The app is rich in the latest technical features and the developers are well versed with their relevant skills, which creates the whole difference in the beauty of the product.
- Maintenance: After the completion of the app, the support and the maintenance team takes control. If in case any of the errors or failures have been raised just after the installation of the app or purchasing of the service, the maintenance team provides 24*7 support to its customers. This would charge the company a few amounts of the sum.
- Marketing: Every product needs a mouth to speak about it. As we can see today in the market plenty of similar services are existing inside the market. So to mark a higher reach and visibility amongst the consumers, marketing is very essential tactic every company needs to implement. Marketing can be done in various formats; in social media networking, via google ads, surveys, display marketing, and many more. This is the fastest way to reach niche consumers. However, this would add extra money to the price of the product.
- Charge Per Hour: The developers charge fair rates on an hourly basis. However, the cost of the app may differ as per the location of the developers.
- Channels: Usually Udemy has developed its application for multiple platforms including Android and iOS for the mobile and the website.
So depends on the size of the platforms and their complexity, the cost of the final app affects.
On combining every factor into the account the final cost to build the Udemy app with basic features is estimated to be $25k-$60k.
In advance with more complex features, the cost would rise to some amount and be estimated to be $1 lakh.
Udemy app business model collectively comes up with an important hybrid ideology for the industry, which is for both consumers and enterprises. The former is based on a transaction model while the latter is based on the subscription model.
Initially started as an e-learning platform, Udemy upgraded its platform regularly and puts world-class quality courses for university students and professionals. This successfully renders continuous gain in its revenue. Many of the courses are free or with some discounted price, which helps to rebrand the identity and gain a larger customerbase.
If you are a business pro, understanding the Udemy business model is very important for you.
This blog is the complete guide for the Udemy business model to understand the crucial working structure and key aspects before creating your own Udemy application.
Furthermore, if you want an advisor to enlighten you practically and develop your e-learning app, then you would connect with us anytime.