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How Does Coursera Work: The Story Behind an EdTech Platform Leading the World with MOOCs

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5047 Views | 6 min | Published On: July 23, 2022 Last Updated: July 27, 2023
How Does Coursera Work

The online education industry has experienced significant growth over the last decade. A few years ago, who would have thought that we would be studying online from the comfort of our homes? It was a strange thought!

But, welcome to the new normal, it is now a reality.

The size of the Online Education Market was valued at $254.80 billion in 2021 and it is now expected to reach $605.40 billion by 2027. That means there is no sign of stopping when it comes to the growth of this industry in the years to come.

Coursera Revenue Model

While online education platforms have been in talks for more than a decade now, all of them have seen considerable growth during the pandemic. Udemy, Khan Academy, Coursera, and many such apps are now household names as these platforms let people get access to education anytime and anywhere.

The app Coursera was founded early in this decade and today it stands at $5 billion in terms of market valuation. But, how did it reach that pinnacle of success and made its mark in the highly competitive online education industry?

In this blog, we are going to find an answer to the same question by studying the Coursera Business Model. So, let’s get started.

Coursera Stats and Facts: Funding and Major Milestones

  • Founders: Andrew Ng & Daphne Koller
  • Founded in: 2012
  • Headquarters: California, USA
  • Business model type: Hybrid
  • Company type: Public
  • Company valuation (estimated): $5 billion
  • Area served: Worldwide

Coursera’s Inspiring Success Story: Learning Without Limits

The app Coursera was launched by two Stanford University professors Daphne Koller and Andrew Ng. Both of them were good friends who shared a passion for technology and computer education. Early in 2012, they thought about starting an online education platform to follow their passion and the rest is history.

Inspired by Udacity, they created their platform and made their self-taught course “Machine Learning” available on it for the masses to access and learn the technology. Their platform and course became a hit overnight with students from around the world registering for the same. More than 104,000 students signed up for it within a few days.

With this insane craze and $16 million in funding from New Enterprise Associates and Kleiner Perkins, the founders had all the validation they required to scale their newly-built application. They quit their jobs at Stanford and invested their blood and sweat in building Coursera.

They always followed the passion to make the world’s best education available to people around the globe – no matter to which community they belong. They partnered with world-class universities in the world like Princeton, Stanford, Michigan, and other renowned names like the University of Pennsylvania.

However, by 2016, both of its founders moved to their new venture and new leaders came in to scale the platform. In 2017, Jeff Maggioncalda started leading the company and it has never seen a hard day since then. In the years after 2017, Coursera continued to add more courses, students, and revenue streams to scale the application and business operations.

Then, the world experienced a pandemic, and online education being an industry that benefited from the pandemic, accelerated its growth during that time. Coursera’s user base grew by more than 70% in the year 2020 alone. The firm also experienced a spike in revenue and therefore planned to go public to capitalize on the favorable and profitable market conditions.

In 2021, the company IPO’d in the US stock market. At present, it counts 3,800+ courses and 50+ million registered students on its platform, which is still growing with all leaps and bounds.

How Does Coursera Work: Coursera Business Model Canvas

Coursera provides Massive Open Online Courses (MOOCs) to the masses through its amazing website and mobile applications. You can find courses related to software engineering, finance, data science, and other subjects on its platform.

The platform charges students for getting enrolled in courses and completing the same to get the degree online from the comfort of their homes. However, it provides some free courses as well. Let’s understand how it works in detail by having a look at Coursera Business Model:

1) The platform features MOOCs from many prestigious universities like Duke, Stanford, and many other educational institutes online. Even tech giants like Google and IBM are introducing their courses on this platform. On completing the courses, the platform also provides degrees and certificates to the students.

2) The app targets two different Customer Segments; people wishing to learn and acquire skills/degrees online and educational institutes who wish to provide their offerings to a greater audience. Both segments can access the platform free of charge.

3) The Value Proposition of this platform is that it provides invaluable study material online at little to no cost. It allows people of all types to access high-level education programs, which may otherwise be inaccessible or unaffordable for some people. On the other hand, educational institutions get a chance to react to a greater number of audiences globally through this platform.

4) There are thousands of educational and vocational courses available on the Coursera platform but they do not design these courses. It is just a platform for universities across the world to provide their learning programs to a wider set of audiences. These institutions design the courses and the app’s Key Activity is just to maintain a good relationship with these educational bodies.

5) Coursera doesn’t depend on any physical resource. The only Key Resources of the platform are its personnel, its robust platform, and its partnership with world-class educational institutes.

6) Similarly, Coursera’s Key Partners are also top-level schools and universities. It has more than 141 such partners across 28 nations around the globe. It also partnered with some tech giants like Google and well-known financial firms recently to provide classes and improve the quality of material available on the platform. All in all, the app’s main focus is on providing more value to consumers.

At the heart of Coursera’s business model lies a passion for reaching and catering to the needs of learners and people who want to excel in their careers and reach their educational goals in life. It enables learners to find and engage with job-relevant, inflexible, and high-quality learning at affordable prices and sometimes free of cost.

Here is Coursera’s Business Model in a nutshell:

  • Providing free branded content for learners to access and improve their skills
  • This free content attracts individuals at low CAC (Customer Acquisition Cost)
  • Some of these learners pay for degrees and certificates, which results in revenue for partners
  • This revenue motivates authors and creators to build more content.

So, the Coursera Business Model is a full cycle but you can learn several business strategies from this highly profitable model. Let’s now check out the ways using which the app monetizes all its offerings to survive while providing quality to the customers.

Also Read: How To Develop An App Like Coursera | App Development Guide

Coursera Revenue Model: How Does the App Make Money?

The app Coursera uses not one but many ways to make money. Let’s put the spotlight on all of them:

Coursera Plus: It is a monthly subscription service that the business launched in 2020. Once users buy this subscription, they get access to over 3000 courses, specializations, projects, and certifications. It fee is $49 per month or $399 per year.

Coursera Degree Programs: The app also lets students earn degrees from prestigious universities around the globe. They can study and complete assignments online to earn credentials. It provides many Master’s and Bachelor’s degrees through its partnership with universities and colleges around the globe. The fee of these programs varies between $8,000 – $25,000.

Coursera for Business: This revenue stream of Coursera targets corporate clients and businesses. It promises to train employees of big companies for skills they lack or want to build. According to reports, many fortune 500 companies are using Coursera for Business to keep their resources updated and skilled.

MasterTrack Certificates: These courses cost between $2000-$5000 and are usually portions of Master’s degree programs. This program allows students to acquire knowledge and certificates from prestigious universities online at a fraction of the cost.

Coursera for Government: Even some global government organizations like AIFC Bureau and UNDP are using Coursera to train their employees.

3 Lessons You Should Learn from Coursera Success

There are several things that entrepreneurs should learn from Coursera’s success story. Let’s look at the most important lessons below:

1. You don’t always need a unique idea to build an app

At the time when Coursera was launched, there were several online education apps already popular in the market. In fact, the idea behind Coursera was inspired by Udacity, founded by two Stanford professors Sebastian Thurn and Peter Norvig. They both were colleagues of Coursera’s app founders. While the first-course Udacity offered was about Artificial Intelligence (AI), the Coursera first course was based on Machine Learning (ML). Both apps have their own space and prominence in the market today.

2. A blend of strong business models helps you scale

The app Coursera uses not one but multiple revenue streams to stay profitable. For example, it follows a business-to-business revenue model, marketplace business model, SAAS business model, and also freemium business model through its myriad of offerings. This strategy teaches new entrepreneurs to go out of the box and do everything they can to add value and stay profitable.

3. It is not always necessary to stick to the plan

The app Coursera was initially built with a Utopian vision in mind. That means they did not plan to earn any revenue from the app at the time of launch. But, the team managed to monetize its services later on once it got enough traction from people around the world. And after monetization, the app’s original idea was eliminated from its business plan, which was based on open access to education for everyone and building strong communities through MOOCs.

Also Read: A Quick Guide to Develop a Coding Learning App Like WhiteHat Jr

Wrapping Up

So, that was an inspiring success story of the app Coursera. It is basically a platform that started on the concept of providing Massive Open Online Courses, however, in recent years, the company moved its focus towards profitability and also started offering premium short-course credentials. If you also have any such brilliant idea in mind to build a startup online, reach out to expert developers at Apptunix. We can help you turn your vision into reality.

Build an Online Education App Like Coursera

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