What incumbents charge
Depending on your niche, you can earn revenue in one of two ways:
- Monthly fee (think SaaS)
- Take rate, AKA revenue share (percentage of each sale)
We’re going to stick with #2, take rate. Here’s what the incumbents charge:
A bootstrapper can confidently charge anywhere from 5-30%. The major input to this calculation will be: Who is bringing the students?
Udemy and Preply can charge so much because they drive students.
Teachable, on the other hand, only provides the platform. Instructors have to bring students themselves.
And Outschool is somewhere in the middle. They drive initial demand then rely on instructors to keep classes on-platform.
For our idea, we will stick to a 15% take rate. Let’s say the average class costs $15/week or $60/mo per student. You’d make $9/mo/student.
Now let’s say instructors can each bring an average of 20 students to the platform. Your revenue would be:
- 1 instructor = 20 students = $180/mo and $2,160/year
- 50 instructors = 1,000 students = $9,000/mo and $108,000/year
- 100 instructors = 2,000 students = $18,000/mo and $216,000/year
- 300 instructors = 6,000 students = $54,000/mo and $648,000/year
Plus there’s a straightforward way to double revenue. Increase your take rate to 30% or more by finding ways to drive students.
I think it’s very realistic to hit $100k/year in revenue in the first year. Once you have momentum teachers will likely refer each other, accelerating growth.
And that first $100K will likely be the hardest. Growth from there should come more quickly, and you could hit $1 million/year in revenue within year 2.