24 AUG 2023

How we plan to make money with Kedyou, and why ed-tech pricing is broken

Elton Rodrigues 9 min read

how will kedyou make money

❓ How does Kedyou make money?

At this stage, Kedyou does not make any money, and is self-funded. However, we’re planning to add paid features. In this post I’ll outline our approach to deciding what to charge for, and the features we have in mind. First, I’d like to talk about the current model of education software-as-a-service products in the space, and some of the issues that come with it

If you’re just interested in the features we have in mind, go to the end of this post

💸 The prevailing pricing model in education

Right now, education software pricing follows an enterprise Software as a Service (SaaS) model. This is similar to how big companies sell their software to other big companies, where they charge a fee for using their products

When this pricing approach is applied to consumers like you and me, it either stays as pure enterprise SaaS (you can’t use our product unless you pay) or it turns into a freemium model (free to use with features behind a premium subscription). In theory, freemium is a great concept. It means most customers can enjoy a good amount of value without paying, while those who use the service more and are willing to pay can access extra features by paying a premium

Unfortunately, the freemium model can also be used in a negative and unfair manner. When done in this way, it tends to follow a trend: A company creates software and markets it as “free to use.” But the catch is that all the useful features you actually need for a good experience are locked behind a payment barrier. The free version is only designed to get you invested in using it. As you continue using it, you start facing problems because you can’t access specific features you need to accomplish your goals. These features are often dangled in front of you in eye-catching colors to make you notice them. The end goal is to frustrate you until you give in and pay

If the company can manage to do all of this while spending less money than they make from you, they can make a profit and expand their business

Once you decide to pay, their focus shifts to creating things that keep you using their software and make it harder for you to leave. However, this doesn’t always mean they’re improving the software for you. Instead, they’re creating things to make you rely on the paid features, increasing the effective cost for you to stop paying

👿 Malicious freemium isn’t new

A similar trend to the one above infected another industry that means a lot to me - gaming. When I was growing up, games were a one off purchase, and the challenges, progressions, and rewards were all part of the game experience. Games were built for enjoyment, and players would recommend good games to their friends

However, things changed when mobile phone games and Facebook games like Farmville came along. Game developers realized they could make more money by tempting players with a desired outcome and frustrating them enough during the process that they would pay to get past the obstacles. Around the same time, games like League of Legends showed free-to-play models with microtransactions were wildly profitable. This is when bigger game companies like Activision Blizzard and EA started combining these ideas

This was the beginning of the malicious freemium game model, where the goals of positive user experience and profit were no longer aligned. Instead, making a profit came from frustrating users and trapping them into paying. In turn this led to design changes that were not focused on giving players a positive experience. In the 2000s, executives at these companies boasted about how they could give players a free or cheap experience to draw them into a game, and then present them with a challenge that required payment once they were already invested. Invested players were less price sensitive, and more willing to pay. While this approach was profitable, it was predatory, and the gaming experience declied. Games that followed this mantra lost the value they once had in the eyes of players. People aren’t foolish – the excessive focus on highjacking a fun experience to force payment made them feel exploited

This approach does work, but it creates a sense of antagonism among end users. They feel like they’re being forced into a corner, and they lose their sense of control. Over time, they start pushing back and looking for alternatives

Unfortunately, malicuous freemium has arrived in educational software too. Software that claims to enhance education often ends up benefiting those who already have the means to access education. Instead of truly benefitting education, it acts as middleman taking a portion of the pie, and driving up prices in the process

🌳 Building a positive experience - a better way

On the topic of gaming, BattleBit, a new online first-person shooter with comically bad graphics and similar playstyle to Battlefield goes against the pricing trend mentioned above. BattleBit was developed by a team of only three people who dedicated six years to testing and refining the game with a small group of players. The developers paid close attention to the feedback from the community and instead of trying to excessively monetize the game, they put a strong focus on creating a positive player experience

BattleBit was released in 2023 as a one-time purchase, priced at around $20. The focus on positive user experience without overmonetization got a lot of attention, and several well-known gaming content creators promoted the game for free. This resulted in a large waitlist and an incredibly successful launch. In just the first two weeks after release, BattleBit racked up 1.8 million sales - a massive win for the small team. It has also put larger game studios on notice, especially considering the recent lukewarm receptions of big-budget games with similar gameplay

The success of BattleBit demonstrates a simple but powerful concept: prioritizing a great user experience, avoiding overmonetizing, and making your community feel valued rather than exploited leads to them appreicating your product, talking about it positively, and willingly supporting it financially. Most importantly, it helps you build a product that serves it’s end purpose: improving the lives of your community

📈 Applying ethical freemium to Kedyou

Kedyou’s primary purpose is to improve education globally, which doesn’t align with the traditional enterprise SaaS model. We’ve already committed to building until a student in sub-saharan Africa, or the Indian subcontinent can get a tutoring lesson from a tutor in the US, or Europe, or Japan, and still have it feel like it was just as good as in person. We’re confident that if we can build technology that can do this, the money will come

🧠 Deciding what to try and monetize

As described earlier, a freemium model can be a implemented well. When it comes to charging for features on Kedyou, we ask ourselves three things. First, is it for individuals or organizations? Second, is the feature inside the workspace or outside the workspace? And third, does it help people earn more money or learn better?

To keep our focus on providing an enjoyable experience in our workspaces, generally speaking, we’re planning to charge for features that are outside the workspace, allow organizational control and scale, and amplify people’s incomes

We’re not 100% set on any of the following, but in no particular order here are some initial ideas

⌚ Subscription

We’re still working on ideas for subscription features, so watch this space

Supporter’s badge

Our first subscription feature will be a supporter’s badge. We’re relying on the goodwill of our community, hoping they’ll appreciate that we’re offering a valuable and positive experience for free, while shouldering the costs ourselves, and avoiding manipulative payment tactics common in similar software

Workspace size/limitations

Kedyou’s workspaces are designed for small groups, and consequently come with built-in limitations, similar to the top speed of a car. For example, we don’t recommend having more than 5 people in a Kedyou video call. Accomodating larger groups in a video call within the workspaces, would require the development of additional services

Larger seminars that involve one person speaking to many listeners are typically conducted by organizations that charge for these services. So, we expect these organizations to have the ability to pay for such features

As a general rule, if we’re looking to go beyond or work around Kedyou’s built-in limitations, as long as it doesn’t disrupt the primary workspace experience, it’ll probably be a paid feature

Storage space

As people upload images and files to Kedyou’s drive, and our drive becomes more useful for sharing documents, we will need to consider charging above a free allowance. Because every other platform charges, we need to avoid the risk of being the only free drive and becoming overloaded

Fortunately, educational files and documents aren’t typically very large. Storage space will be included as part of each subscription tier or possibly available as a separate option for those who require more storage only

Recording and transcription

Recording and transcription helps you create reusable content, but not having this feature won’t affect your experience within the workspace. Typically, when recording a session or using a computer to transcribe it, it’s often associated with a paid lesson between a tutor and a student. In this scenario, the tutor would have the means to pay for a subscription

The value add of creating resuable content along with the convenience of the feature when bundled with other benefits hopefully makes it worthwhile for tutors to subscribe

👨‍🏫 Tutor student grouping, matching and payment handling

Tutor-student matching is difficult. Students find it difficult to find a tutor that gets along with them on more than an academic level. Additionally tutors often struggling to find other students to form groups with current students for discounted tutoring. As we grow into an online tutoring platform, we may be able to help tutors and students find a better fit, potentially expanding tutoring opportunities and facilitating group sessions

From my own experience as a tutor dealing with payments can be a hassle. Sometimes parents pay in small amounts or wanted to delay payments. We plan to make things more streamlined by integrating scheduling and payment features directly into Kedyou. This way, the process of finding students, scheduling sessions, and receiving payments will be seamless. While some companies take 25-35% of the earnings for this service, we’re planning to charge a service fee of 10%

If Kedyou can help tutors find more students, raise their hourly rate, provide more teaching in less time, and have an overall better experience, we can significantly boost their earnings, and justify a service fee

✅ Enhanced tutor profiles, ID verification, tutor advertising

As part of a subscription tier we want to give tutors the chance to use their Kedyou profiles to promote their tutoring services. We’re thinking of creating a space where their profile becomes a trusted source for showcasing their achievements, verified testimonials, snippets of lessons, and other highlights like sample notes. This way, tutors can upgrade their profiles beyond basic information, use them effectively to attract more students, and increase their income. We’re also planning on adding ID verification, which can be important, especially when reaching out to a younger audience

In the future tutors may also have the option to advertise their tutoring services directly to students as a separate feature. We understand that advertising services, especially to a younger audience, requires careful consideration. Kedyou will not have general advertisements of products and services, as this detracts away from education and does not serve our community’s best interests

We’re thinking of a student-led matching system where a student needing help with a subject could click “find me a tutor,” and Kedyou would present them with a list of potential tutors. The first one or two could be paid advertisements, clearly labeled as such. The advertising concept is the least thought out of our plans and might be abandoned if we can’t ensure ethical and transparent implementation that aligns with our community’s best interests

🚨 Organizational control

Kedyou’s educational workspaces offer features that are valuable for educational institutions like tutoring companies and schools, allowing them to extend their support and education remotely to students. Organizations often need specific features and controls such as integrating databases, dedicated organization accounts, and administrative management. This enhanced feature set, granting organizations control over their accounts and additional user management, will be available through an annual license. Considering organizations often work with larger groups, licensed organization accounts will include certain subscription features bundled together as a package

🥳 Building communities

There’s a lot of value to be unlocked by allowing educators and students to build communities. Similar communities already exist offline – when someone needs information, they usually ask a friend, who then asks others. While we don’t have specific plans yet, we’re confident there’s something in this space. Someday, educational communities might offer substantial benefits to students, providing broader access to education at a much lower cost, distributed across the entire community. Even though we don’t have clear details at the moment, this area has been completely overlooked by others in the space

Will I need to pay to use Kedyou in the future?

Absolutely not. You will always be able enjoy Kedyou’s workspaces fully, without any limitations or charges – and this will always be the case. If the features mentioned above interest you, we hope our subscription offers you enough value that the cost seems miniscule. If you have ideas for additional features you’d be would be willing to pay for that we haven’t considered, please get in touch. We’d be excited to hear from you.

image of Elton Rodrigues

About Elton Rodrigues

Elton is the CEO of Kedyou, and a private tutor with 8+ years of experience. During that time he has started and helped manage multiple private educational initiatives

He also has an undergraduate Physics degree, and is a registered Medical Practitioner in Australia

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