Online Educational Business Model – How Does It Work?

Most educational institutes use various business models. These may include business models that ensure profitability, or some may use a model based on quality. However, some online platforms offer education to users around the globe. They don’t use the same business model as those that emphasize face-to-face learning.

What is the Online Educational business model?

The online educational business model, as the name suggests, is for businesses that convey education through the internet. While these companies or platforms have existed for a long time, they have only recently entered the public view. Most of these platforms have a wide variety of courses from which users can choose.

The online educational business model allows companies to profit from offering courses to users. The business model can take various forms. For example, some online educational platforms base their business model on the Customer-to-Customer (C2C) approach. In this model, the online platform allows teachers and students to connect while the company is the intermediary.

In some online educational platforms, the business model is similar to a Business-to-Consumer (B2C) approach. Here, the company may create and provide courses to users. Similarly, there are also other varieties of the online education business model. Which one a platform uses depends on its requirements.

How does the Online Educational business model work?

The online educational business model works like other C2C businesses. In this model, a company offers users a platform to interact with each other. The company plays the role of an intermediary, offering features to facilitate online education. These platforms allow two types of users to join and interact with each other.

The first type of user, the primary source of revenue for companies, is the students. These are users looking for resources to educate online. The students in this business model are the consumers of the platform or company. In the absence of this user group, the online educational business model will fail.

The next type of user is the teachers. However, as mentioned, having this user group is optional for some online educational platforms. It is primarily because these platforms may produce their own content without relying on teachers. The teachers are the platform’s customers who create and put their content on it to view.

The source of revenue in the online educational business model comes from the students. The platform allows teachers to post their content on the website, which students can purchase. In exchange, it pays the teachers for every student they get and keeps a commission of their sale proceeds. However, some platforms may also provide education free of charge.

What are the advantages and disadvantages of the Online Educational business model?

There are various advantages and disadvantages of the online educational business model. Some of these are below.


The most critical advantage of the online education business model is that it allows for a new range of platforms to work. In the past, education and learning were possible only through visiting schools, colleges, and universities. However, due to the online educational platforms, more people can get access to resources.

The online educational business model also eliminates any geographical limitations that students may have. Therefore, compared to traditional learning businesses, the online model allows platforms to attract more users. They also abolish other traditional restrictions, such as restraints related to study materials, timing differences, pacing issues, etc.

The online educational business model also provides users with a more inexpensive alternative to education. The traditional methods of acquiring knowledge are costly, and some students may not afford it. However, with the online educational model, it becomes much cheaper.


The online educational business model is challenging to start. For new platforms, it isn’t easy to attract teachers to offer their courses. Similarly, due to the lack of content, businesses can’t get new students. Other factors also influence the difficulty of getting started on this business model. These may include supervision, management, moderation, training, etc.

New businesses that want to enter the market with the online educational business model also have to deal with more barriers to entry. These barriers come as a result of how difficult it is to set up a platform. Furthermore, there are well-established names in the market that make it difficult for newcomers to make a name.


Udemy, Udacity, Skillshare, MasterClass, etc., are some top names that use the educational business model. Some other platforms that use the model are edX, Khan Academy, Coursera, Codecademy, etc. However, these platforms don’t ordinarily charge their users and offer free online education.


The online educational business model comes as a result of technological developments, especially the internet. In this model, online platforms offer courses that users can study. Similarly, it allows the platform to attract various teachers who offer their courses, either for free or for sale.