E-learning is a fast-growing industry. It is now estimated that by 2030 the global e-learning market size will reach $840.11 billion. Now is the right time for knowledge entrepreneurs to choose the most profitable e-learning business model.
You can teach almost anything online, from foreign languages to graphic design, fitness, or cooking courses. Are you good at something and genuinely passionate about helping others learn more? So why not maximize your earnings while doing so?
First, you need to choose your e-learning business model. There are three main choices, which we will explore in-depth. Then, we’ll see how a learning management system (LMS)’s e-commerce feature can support your e-learning business.
What is an e-learning business model?
An e-learning business model is the method through which you sell courses online. It is the framework you’ll rely on to create and promote online courses as well as generate revenue. You’re probably already familiar with the e-learning business models we will soon discuss, such as the subscription business model, in which people pay a monthly or yearly fee to access educational content.
But that’s not all! There are two more e-learning business models that you should know about – the night-school model and the combined model. Let’s see what each means and what it can do for you.
What types of e-learning business models are there?
There are three types of business models for online courses. Each one can help you implement a successful online business. Knowing the differences between them will help you build a profitable and scalable business.
The night school model
This is one of the oldest models, first used for in-person courses and inspired by night classes for people who couldn’t attend during the day. These allowed working students to get their degrees or upgrade their skills. Community colleges offer these types of courses.
However, things changed over the past two decades due to technological advancements. This teaching model was adapted to the online environment. Learners who seek to upskill themselves or get an online degree can benefit from the night school model.
The online night school model is ideal for the same category of individuals – people who can only learn during their spare time. They can access courses anytime, from anywhere, as long as they have an internet connection.
As a course creator, there are several circumstances in which you might want to consider the night school model:
- You’ve just started: you want to test the market, and you’re not a hundred percent sure who your target audience is yet. This model is flexible and allows you to easily track your progress by using e-commerce features and asking for learner feedback;
- You don’t have a lot of time: most online instructors start their e-learning entrepreneurship journey as a part-time gig. Having another job means less time spent on creating and marketing courses. The night model might suit you in this case as it allows you to create the online courses and simply charge each time you sell an online course. You don’t have to invest more time and effort in supporting learners or upgrading the course content;
- You want a passive income source: the night business model is the best option if you’re looking for a way to generate revenue from your courses with minimum intervention. Whether you use engaging video courses or rely on written presentations, you only spend time creating the course once.
The night school model’s advantages are:
- High profitability: you can charge as much as you want for a course and have a passive income source;
- Lower costs: you can control how much you spend, especially if you focus on a written format combined with limited photo and video content. However, note that video content is the most engaging and isn’t cheap to make;
- Suited for a large audience: you can target a wide audience. For example, through cooking classes, you could sell content for any cuisine type or skill level. With foreign language courses, you can target learners from beginner to advanced levels.
The academy model
The academy model is a subscription-based model that allows knowledge entrepreneurs to offer a more comprehensive educational experience. At its core, it functions as an online academy through which you don’t just sell online courses but also interact with learners and provide more support.
Usually, this business model involves a variety of learning resources in different formats. Learners can browse through your course catalog and pick the more suitable ones. Besides self-paced online courses and other digital learning products, this model often involves group or one-on-one sessions where learners can talk to the instructor directly, attend webinars, coaching and mentorship programs or participate in Q&A sessions. The academy model offers a more personalized learning experience.
The academy model’s advantages are:
- A relatively stable source of revenue: You can configure different subscription types (e.g., monthly, yearly, etc.), which makes it easier to anticipate future income based on the number of subscribers;
- Higher learner engagement: Selling courses is one thing, but engaging with learners is a different way of doing business, one that boosts profitability in the long run;
- Customer retention and increased customer lifetime value: learners who already enjoyed your courses are more likely to purchase a new one in the future. Returning customers are the most valuable ones;
- Increased scalability and profitability: an online academy is a more complex e-learning business. Therefore, it can be more lucrative. You can offer lots of types of learning content and develop your business in several directions. For example, you can collaborate with other course creators and sell e-books;
- Ideal for niche experts: this business model allows you to offer a wide array of learning materials and go as in-depth as you want to. Thus, you can target more ambitious learners committed to taking different learning opportunities. It is the best e-learning model for niche experts.
The combined model
This business model combines the academy and the night school models. As such, it offers two options. People can pay a subscription to access your content. Alternatively, they can buy just one course.
The combined model may be the best option if you’re new to the e-learning industry. It will allow you to experiment and decide which one of the two other models is best for you.
Usually, course creators who use this model rely mostly on the academy framework and simply add the one-time payment option to attract learners to sample their work. Then, if learners are satisfied and want more, you can also sell them the subscription option.
The combined model’s advantages are:
- The highest level of flexibility: this model allows you to make the best of both worlds and experiment with the night school and academy models. In many cases, offering a subscription plan and one-time-fee courses simultaneously has the best ROI;
- The largest audience: by combining the night school and the academy business models, you target both learners who look for subscriptions and those who are only willing to pay once for a course;
- The possibility to constantly upgrade and scale: the combined model allows you to grow your business by constantly adding new materials. You can offer online courses, webinars, e-books, other types of digital downloads, or live sessions on a one-time fee basis.
How to choose the best e-learning business model
Start by defining your buyer persona and you will find the best format for your online courses. Besides demographics and interest-related factors, their income level will also influence your final decision.
For example, if you target college students, they might not have the financial resources to invest in a long-term subscription plan. They might be looking for a relevant course that tackles a specific need, has a limited duration, and requires a one-time payment or a monthly subscription plan that they can cancel anytime.
Your audience’s commitment is also important. Some course creators aim to keep their learners hooked in the long term, but others focus on concise courses that learners can complete in a few days or weeks. Your commitment is also important. Do you have the time to offer direct support? Will you personally review their assessments or offer one-on-one coaching sessions? If yes, you will probably want to use the academy or combined model.
Before you choose an e-learning business model for your courses, also make sure you understand your competitors and your competitive advantages. Carry out a competitive analysis for your e-learning business to pinpoint your strengths and weaknesses. Based on this analysis, you’ll find it easier to choose the best model.
How an LMS supports any type of e-learning business model
An LMS is a platform where knowledge entrepreneurs can create, market, sell courses, and interact with learners. These are the main LMS features that can benefit course creators. We’ve chosen the features based on the three e-learning business models, but most of them can be used interchangeably.
Features for the night school model
The night school model is supported by the following LMS features:
- One-time payment options: when a new learner wants to access your course, they can buy it from your website. Once the purchase is registered, the person has access to that particular online course. Learners are automatically enrolled and they’re on their own;
- Bundles and digital media: LMSs allow you to sell different course bundles, which are just a combination of two or more online courses. Additionally, add a few digital media items such as e-books or worksheets to the bundle to make it more attractive. Site visitors can browse through your catalog and pick the courses, digital media, or bundles that interest them;
- Coupons and bulk discounts: these LMS features allow you to engage your audience through different discounts. Coupons are easy to add and configure. You’re free to change the discount amount and personalize it based on the type of learner you’re targeting. You can also add a bulk discount to a user’s entire shopping cart based on how many items they purchase or their value.
- Certificates and quizzes: learners might want to evaluate their newly acquired skills. You can use awesome quizzes for online courses that automatically enable them to test their knowledge. To make the experience more fun, add gamification elements, such as points and badges. In the end, you can also award them course certificates which learners can receive automatically.
Features for the academy model
The academy model is supported by these LMS features:
- Subscriptions: there are many benefits to creating a membership website for your e-learning business. You can allow learners to choose from different subscription plans and price each one according to its features. You can even have a free subscription plan that counts as a trial version of your membership website;
- Various payment options: users who buy subscriptions might look for payment flexibility. LMSs support this need by allowing you to add different payment options from the platform’s payment gateways (PayPal, Stripe, PayU, etc.);
- Automation: to keep your learners in the loop, you don’t have to communicate with them individually. An LMS allows you to set up automatic notifications. Thus, you can send messages to promote the latest additions to your catalog or your offers. Automation is also key to evaluating your learners’ progress and rewarding them for completing modules through gamification, so essentially the platform gives them that feedback that they need without your direct intervention;
- Communication tools: remember that this model is a bit more hands-on so chat, groups and forums are a great way to interact with your learners directly and offer your encouragement, tips and other services such as remote coaching.
Features for the combined model:
The combined e-learning business model benefits from all the e-commerce and automation features an LMS can offer.
- Both one-time payments and subscriptions: you can blend the two payment models if you opt for the combined framework and allow customers to choose;
- Complex bundles: you can sell bundles of courses and bundles that also include digital media. Having a variety of offers supports your upselling efforts;
- Learning analytics: are essential for any online business. LMS analytics allow you to figure out how successful and profitable your business is and make data-driven decisions. Also, LMSs offer a variety of website revenue reports. The data is displayed in a user-friendly format (graphs, tables, charts), and you get to customize the reports;
- Marketing features: LMSs have a robust set of marketing tools that allow you to promote your online business. For example, you can create affiliate programs and reward influencers or learners with a commission every time they bring in a new customer.
Choose the best e-learning business model for you
Choosing the best e-learning business model requires time and research. It’s important to know that there are three main models (academic, night school, and combined) that work in different situations and have various advantages. No matter which one you choose, an LMS will support you through e-commerce tools that allow you to sell one learning product at a time, create bundles or subscription plans, offer discounts, and so much more.