Just like we did with learning effectiveness in a previous post, we wanted to discuss what commercial viability means in LangTech, and why we consider it the second key element of success.
To recap, we believe a LangTech endeavour should optimise for these 4 qualities:
Learning Effectiveness:
Commercial Viability:
- Profitable
- Scalable
This article focuses on the first component of commercial viability: profitability.
We will discuss scalability in the next post.
Have you considered the commercial dimensions when creating your online product, service or feature?
We previously discussed how common it is for product managers, who don’t have a background in education, to optimise for profitability or scalability while overlooking a product’s learning effectiveness. It is also very common for teacherpreneurs to get excited about the “perfect” way to learn a language but overlook the commercial drivers of LangTech.
Many online school owners want to design the best-in-class language course and for many, it is simply creating a cohesive curriculum, employing the best teachers in the world or providing a highly personal learning journey. On paper it sounds straightforward but, in reality, this is surprisingly hard to do profitably and at scale.
It costs time and money to create a curriculum (for either live online classes or a self-paced course). It’s easy to hire teachers but can be challenging to attract the best teachers at a cost that ensures the business remains viable (and to keep those teachers, as turnover is extremely costly for any business), and making a language course “personal” is resource-intensive or difficult. If you are creating a Machine-Powered Instruction (MPI) based product, you need to add the cost of hiring and retaining tech talent to all of the above.
In essence, creating an effective LangTech product is just half the battle, and you cannot afford to ignore whether it’s commercially viable or not.
Making Your LangTech Product Profitable
There is no need to complicate things too much: profits reward an online school owner for taking the risk and making investments in a particular activity. It is easy to calculate: Total Revenue - Total Expenses = Profit.
However, language business leaders often make the mistake of either overestimating the revenues they will make or underestimating or overlooking expenses they will incur.
Below you will find a few recommendations to optimise your LangTech product for profitability, based on common mistakes that we have seen over the years:
1. Human-Powered Instruction (HPI) Based Products
a. Online teachers cost more than just their hourly rate. Make sure you consider all associated costs: recruitment, training, administration, customer support (your teachers are your internal customers and you need to give them the same level of support you give your external customers), professional development, etc.
b. Teacher churn costs a lot more than investing in steps to minimise it. This is not just about monetary incentives - find out what makes your teachers happy and what will make them choose staying with you versus moving on to another provider.
c. HPI involves a low upfront investment (the cost of hiring and training teachers + the cost of technology used to connect teachers with learners), but has a high marginal cost (the cost of the teacher’s time). This is something that you might want to consider if you are deciding between HPI, MPI, or a blended design.
d. Online teachers will expect to have a constant flow of students from your online school and a relatively stable amount of hours, or else they will move on to another provider. You might need to invest in technology such as a virtual classroom or at least an online interactive whiteboard. Make certain that you have factored the cost of achieving this (i.e. a healthy flow of new students and existing student retention) into the equation.
2. Machine-Powered Instruction (MPI) Based Products
a. While the marginal costs of delivering content and interacting with an online learner via an app are very low, don’t overlook or underestimate upfront costs: developers are notorious for underestimating the time (and money) it takes to create an app and edupreneurs so often over-engineer or think of new ideas which blow the budget.
b. Competition is fierce (think of Babbel, Duolingo, etc.) so consumer expectations of a mobile app are very high. Make sure you are considering not just development costs, but also marketing, the cost of student acquisition, product maintenance, further product innovation, and possibly further investments in infrastructure as the product scales.
c. Edupreneurs commonly underestimate how long it can take to create a cohesive, effective and competitive self-paced course. You will likely need to invest in hundreds or thousands of human-powered instructional design hours, not just upfront but on a regular basis (your customers will expect new content as their needs evolve).
d. Most costs are upfront, which makes it high-risk when an online language business owner often does not know whether they can attract enough students to their course in order to provide a return on investment.
In the next article, we’ll talk about the next key component to commercial viability in LangTech; scalability.
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