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Education business models

Page history last edited by Brian D Butler 8 years, 2 months ago

We educate 54 million children in this country - develop a solution that will work for more than 500 at a time and you have something. Remember that in most communities the school system is the first or second largest employer. We spend $550 billion a year on education in the US - second only to the military.


Every time an idea runs into problems addressing scale or market needs people start talking about the home school market followed by the private school market. My BS meter goes off whenever I see this in a business plan (or comment thread).

These are sizable markets - but each is only about 10% of the whole in students and considerably less than that in dollars. From a distribution standpoint they are also the most diffuse - making it extremely expensive to reach them for very small sales. The web is definitely helping here but at the end of the day if you are only going after these segments you are not hacking education - you are chipping away at the fringes.


read this: http://www.unionsquareventures.com/2009/05/hacking_education.html


Table of Contents:




Education - Cluster (near Washington DC)

Note: makes sense that cluster is near DC because of influence of politics on education


"highly competitive market for education companies, several of which — Blackboard, Rosetta Stone and The Washington Post Co.’s Kaplan — are located in the Washington region.



Map of Future forces affecting Education:




Education business models


We often forget that Education itself is not only a service, but it is a businss as well. Its a big business. From private schools for our children, to univerities for our MBAs, to lifelong continuing education through our employeers, we will all come in contact with the business of education many times in our life times. I suggest that instead of passivley walking through the experience, that we should stop and think about the business that lies behind the service that they are providing.


Go ahead and take a guess about how much revenue your school is pulling in just from your class (or your kids class, depending upon which stage of life you are in). Thats the easy part. To take it a step farther is to guess about the underlying costs that also come with managing the program....rent, electricty, salaries, and so on. Throw out your wildest guess, and let other people help you narrow your focus. With everyones input, Im sure we can get a pretty good feeling for what our administrators are making.


Im going to sort this area based both on location of the school, and on the level of eductation. If anyone sees any better way to organize this material, please feel free to make the necessary adjustments.





Montessori School Toddler Class:

$8700 per year per child + $850 processing / reservation fee = $9,550 / year

6 kids *2 = 12 per class = $114,600 per class room x 2 classrooms of kids = $229,200 revenue for toddlers. then, they also have preK classes (yr 3-5), K, 1st, 2nd, 3rd grades. All sharing same facility, with same admin, same playground area (divided by age). Estimated annual reveune = $1 million / 12 months = $83,333 revenue per month. Its a large property in middle of Miami, so estimated cost of land + bldgs = $20,000 per month if they rent, or $10,000 if they own (for this model, i will assume that they own the property). Assume 12 employees @ $40,000 per year average = $480,000 per year = $40,000 per month in salaries. Gross profit margin = 80,000 - 40,000 - 10,000 = $30,000 per month. Then subtract insurance, taxes, and other expenses. They must be making at least $15,000 profit per month


MBA (Masters in Businss Administration)


Business education: The rising cost of MBAs

MBAs have been getting steadily more expensive, and even with more modest rises this year, there is little chance of below-inflation increases any time soon. Is the qualification worth the money? More from the Economist.com »


GMBA for Latin American Managers - long distance education, executive MBA conducted with satellite link, and local facilitators.


  • Revenue = 168 students * $40,000 per student (2 year program) = $6.72 million in revenue
  • Costs = ??



Community Colleges (USA)


Based on information from the American  Association of Community Colleges (AACC), the first community college opened in 1901 (Joliet Junior College in Illinois). Now there are 1,195 community colleges in the U.S


"community colleges educate about half of the nation's undergraduates; some 12 million people take credit and non-credit courses at community colleges annually. Four in ten of these students work full-time while going to school, and six in ten attend school part-time.


International Education:  "Only 5 community colleges achieved a score ≥ 0.90 (or what can be commonly viewed to as an “A” on internationalizing business education). These are: Houston Community College Northeast (Texas), Lone Star College CyFair (Texas), Passaic County Community College (New Jersey), Saddleback College (California), and Southside Virginia Community College (Virginia).


Read more from MSU report here:  http://global.broad.msu.edu/ibc/publications/research/pdfs/IBEX.pdf





Education Industry


Education: Education is an elemental factor in a nation’s progress. It allows for more educated labor forces and consumers that attract and create higher paying industries. A private education system will probably improve the overall quality of schools, as schools compete for students (customers). However, there will be many left out who cannot afford to attend private school. Therefore, it is necessary for government to provide education in order for it to be accessible to everyone. This is a normative economic decision (one based on value judgments) that is typically determined at the ballot box. Currently, we have an educational system offering both public and private educations. We believe that the government should intervene to allow greater opportunities for underprivileged students who demonstrate great potential but are not challenged or motivated by poor performing schools. Allocation by political decision







Education startups in the UK:


Sums Online - Proving a range of flash based maths activities to a school and home audience - becoming the leader in classroom based PDA maths - marketplace: schools

WildKnowledge - Providing Windows Mobile based survey software for use inside and outside the classroom on PDAs - marketplace: schools

Notely.net - A range of tools for students to plan and manage their studies - marketplace: university students

School Of Everything - A connecting tool to directly link people who want to study with teachers of that subject - marketplace: individual learners and teachers.

uHavePassed - Online quizzes that can be taken off line focused on Handy Education(convenience) - marketplace: (currently) students for UK driving test

Learnitlists - Widget based vocabulary training, making personalised learning ubiquitous across many websites - marketplace: language learners

Fonefonics - Complete multi-media language courses delivered via mobile phone, focusing on teaching English to those without computer access - marketplace: employment agencies, language learners

• Many other language based sites offering elearning







College Textbooks:  innovative business models:




Textbooks have long made up an all-too-significant proportion of college students' annual costs, currently approaching an average of USD 1,000 per year in the US, according to Make Textbooks Affordable. General outcry has ensued, but a new experiment from publisher Flat World Knowledge just may provide a new—and ad-free—solution.


Beginning this month and continuing through the Fall 2008 semester, Flat World Knowledge is conducting a beta test in which it is offering four different textbooks online for free to hundreds of students at 15 colleges and universities across the United States. The texts are from the areas of business and economics, and will replace traditional textbooks in a single class or class section at each participating institution. Not only will students have free online access to the expert-written, peer-reviewed and professionally edited texts, but the texts will be open as well through a Creative Commons licensing scheme, giving faculty the ability to customize them as they wish for their classes.


Unlike other free text ventures out there—such as US-based Freeload Press and Danish Ventus Publishing, both of which have been covered by our sister site trendwatching.com—Flat World's business model doesn't depend on advertising. Instead, it offers affordable supplementary materials to students beyond the free online book, including printed, on demand textbooks for around USD 30; audio books for around USD 25; and downloadable and printable files by the chapter. Also available are low-priced study aids like podcast study guides, digital flash cards, interactive practice quizzes and more.


Eric Frank, Flat World's cofounder and chief marketing officer, explains: “The time has come for open textbooks. This new model of textbook publishing will result in increased choices and dramatically lower costs for students. It can enhance learning by giving instructors more control over content, and by leveraging the power of social learning networks around content. Between the oligopolistic practices of the big publishers on one end of the spectrum—and piracy on the other—lies a better solution: open textbooks." Flat World plans to collect feedback over the course of this semester-long test, and then commercially launch its concept worldwide in time for the Spring 2009 school period. The launch will feature an expanded product roster of eight textbooks, all focused initially on business and economics subjects. A total of 15 textbooks are currently under contract and in Flat World's pipeline.


Free and open software is already gaining ground in the world of technology, and now we have the possibility of a similar pattern in textbook publishing. There's no doubt cash-strapped college students love free love, as has already been shown with photocopies, notepaper and notebooks. Will this one take hold? You can bet there are countless students hoping so. One to watch! (Related: Textbook rental for college students.)


Website: www.flatworldknowledge.com

Contact: eric@flatworldknowledge.com





Wikipedia on Private Schools:

The Private Schools Private schools, or independent schools, are schools not administered by local, state, or national government, which retain the right to select their student body and are funded in whole or in part by charging their students tuition rather than with public (state) funds. In the United Kingdom and some other Commonwealth countries the use of the term is generally restricted to primary and secondary educational levels: it is almost never used of universities or other tertiary institutions.


Private education in North America covers the whole gamut of educational activity. Private schools range from pre-school to tertiary level institutions. Annual tuitions at K-12 schools range from nothing at tuition-free schools to more than $40,000 at several boarding schools.


The secondary level includes schools offering grades 7 through 12 and grade 13. This category includes preparatory schools or "prep schools", boarding schools and day schools. Tuition at private secondary schools varies from school to school and depends on many factors, including the location of the school, the willingness of parents to pay, peer tuitions, and the endowment. High tuition, schools claim, is used to pay higher salaries for the best teachers, and also used to provide enriched learning environments including a low student to teacher ratio, small class sizes and services such as libraries, science laboratories, and computers. Some private schools are boarding schools. Some military schools are privately owned or operated as well.


Trade or vocational schools are also usually private schools where students can learn skills in a trade which they intend to make their future occupation. Trade schools exist in a variety of occupations from cosmetology schools to schools for the performing arts.


Religiously affiliated or denominational schools form a distinct category of private schools. Some such schools teach religious lessons together with the usual academic subjects, to instill their particular faith's beliefs and traditions in the students who attend. Others use the denomination as more of a general label to describe on what the founders based their belief, while still maintaining a fine distinction between academics and religion. They include parochial schools, a term which is often used to denote Catholic Christian schoolsdubious — see talk page. Other religious groups represented in the K-12 private education sector include Protestants, Muslims, Jews and the Orthodox Christian sects such as the Russian, Greek and Byzantine.


Many educational alternatives, such as independent schools, are also privately financed. Private schools often avoid some state regulations.


Special assistance schools aim to improve the lives of their students by providing services tailored to very specific needs of individual students. Such schools include tutoring schools and schools to assist the learning of handicapped children.


Finally, although private education can be helpful and even necessary in some cases, as they are often costly they also carry with them many of the pitfalls of privatization, which is sometimes thought to widen the gap between rich and poor, creating an advantage for the former and thereby disadvantaging the disadvantaged even further




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