How Coursera Makes Money

Coursera Inc. (COUR) is an online education provider that offers students access to massive open online courses (MOOCs), specializations, and even degrees. Founded in 2012 by Stanford computer science professors Andrew Ng and Daphne Koller, Coursera doesn’t create educational content. Rather, the company partners with universities and other organizations to provide them with an online platform that students pay to access.

Coursera first began working with a few schools (Stanford, Princeton, University of Michigan, and the University of Pennsylvania) to bring some of their popular courses online. Today, Coursera also partners with businesses, governments, and nonprofit organizations. As of May 2021, Coursera is partnered with more than 200 institutions around the world and offers over 3,000 courses, certificates, projects, and specialty fields to millions of learners.

The Business Model

MOOCs were first created by people with utopian visions for the internet. This means the idea for platforms like Coursera was likely conceived without a business plan in mind. Nonetheless, Coursera has managed to monetize its platform. It is worth noting, however, that monetization has lead to the effective elimination of the original MOOC idea, which is predicated on ideals like free and open access, as well as the building of online communities.

Coursera users must pay to engage with the material in a meaningful way and take courses for individualistic purposes. This has been a consistent trend among all major online education platforms.

Coursera has achieved a stable business model by offering products at a wide range of prices. These include over 3,000 courses that are free to audit, “Guided Projects” from $9.99, “Specializations” starting at $39, online degree programs starting at $9,000, and more.

Fundraising

As of 2020, Coursera raised over $464 million, after injecting over $130 million in a Series F round led by NEA. It's also worth noting that on April 25, 2019, Coursera secured a $103 million investment in a round led by SEEK Group, an online employment marketplace and a global leader in investing, scaling, and operating online employment and education businesses. Other Coursera investors include Kleiner Perkins, Learn Capital, SuRo Capital Corp., and G Squared.

On March 31, 2021, Coursera issued 15. 73 million shares at $33 per share in its IPO. The offering raised more than $520 million, pushing the company's valuation to $4.3 billion.

Signature Track

The lectures for the majority of the courses Coursera offers are free. However, students who wish to earn a certificate of completion can opt to pay a per-course fee to participate in the "Signature Track." This feature, which Coursera launched in January 2013 and that became a platform-wide norm in 2015, gives paying students access to graded assignments, homework, and examinations. If completed satisfactorily, Signature Track students earn a verified certificate at the end of the course, which is emblazoned with the name of the course and the university that provided its content.

Students can then show these certificates to employers to prove their professional qualifications and acquired skills. They cost between $30 and $100, depending on the course. Coursera also offers financial aid to students who can demonstrate need, although the requirements for such aid have become increasingly stringent as the company has grown.

These certificates, which afford the platform legitimacy in the eyes of employers, have become the backbone of Coursera's business. Coursera's other business sectors, like "Specializations" and degree programs, also use certificates.

The Signature Track was Coursera’s first successful attempt to monetize its platform. Just over a year after launching the Signature Track, Coursera had generated more than $4 million in cumulative revenues from it.

Specializations

A year after it launched the Signature Track, Coursera launched “Specializations.” This feature is essentially a bundle of different courses designed to help students deepen their expertise in a certain area; to specialize, if you will. Students pay monthly subscription fees of between $39 and $89, depending on the specialization, for access to graded assignments and the eventual certificate. As of 2020, Coursera offered 385 specializations globally.

Coursera for Business

In 2016, Coursera launched Coursera for Business. Through this feature, Coursera began partnering with businesses that need an online platform to train their employees. At least 50 businesses offer courses through Coursera and over 2,300 businesses use the service. Pharmaceutical company Novartis offers all of its 108,000 employees in its global workforce the Coursera learning platform.

Generally, this service costs businesses $400 per employee per year. Due to its high price and growing customer base, especially among massive organizations, Coursera for Business has quickly become a key piece of Coursera's monetization strategy.

Degree Students

Finally, Coursera offers students the possibility to earn fully accredited degrees on its platform. Coursera offers 20-degree programs from top universities, including popular programs like MBAs, machine learning programs, and computer science programs. In its 2021 first quarter summary, Coursera announced that its degree programs had 13,493 students enrolled and generated $12.0 million in revenue.

Future Plans

Backing up High Growth with High Revenue

Coursera will have to continue demonstrating high revenue growth. New features and a quickly growing user base is one thing, but the ability to monetize these things effectively is another.

Approximately 40% of paying students finish the courses they enroll in. Coursera needs to find ways to boost this number because more completed courses mean more additional courses purchased. According to Dil Sidhu, the company’s Chief Content Officer, Coursera is planning on employing more data analytics tools to study why students don’t complete courses and adding behavioral sciences lessons to coach students to be more disciplined.

During its 2019 partner's conference, several panelists also urged those offering courses to "break the fourth wall" by adding more personal touches to lessons. By making online education a more accurate simulation of classroom learning, it will become more engaging.

To the same aim, speakers spoke about the need for more interaction between teachers and students. This would mean that universities would have to make more professors available to interface with online students.

Partnering with Governments and Big Business

The Abu Dhabi School of Government has partnered with Coursera to provide its employees access to a vast amount of content for professional development. This is representative of another growing trend in Coursera’s business: partnering with governments and businesses with massive workforces.

Coursera also currently works with Singapore, Egypt, and India. In a conversation with Forbes, Coursera’s CEO, Jeff Maggioncalda, cited a McKinsey report that warns of 50% of today’s jobs being at risk of replacement by automation. Coursera plans to capitalize on a product of this trend: increased demand for retraining and lifelong education.

Coursera seems to be doing just that. It already services over 25% of Fortune 500 companies, including Amazon (AMZN), Google (GOOGL), and P&G (PG). And as automation continues to increase the demand for retraining, this number will likely rise.

Key Challenges

Coursera’s biggest challenges are maintaining its revenue growth and competition as the online education space is becoming increasingly crowded. Companies like Pluralsight, edX, Udacity, and LinkedIn offer services comparable to Coursera’s. To stay on top of the heap, Coursera will need to grow at increasing rates in the years to come.

New Developments for Coursera

Coursera is expanding its footprint in Latin America by partnering with Universidad Autónoma Metropolitana (UAM) in Mexico, Universidad de Palermo (UP) in Argentina, and Universidad Nacional de Colombia (UNAL) in Colombia, which offers Coursera's first Spanish-language degree program: an online software engineering master's program.

With these additions, Coursera has 15 Latin American university and institution partners and more than 530 courses available in Spanish. It also is exponentially increasing the number of learners in this region. From 2019 to 2020 alone, it added more than 5 million learners.

How Does Coursera Make Money FAQs 

What Are the Strengths and Weaknesses of Coursera as a Company?

Coursera offers its online learning platform to a global base of learners. In addition to their extensive reach, they offer courses to students who, ordinarily, would not have the ability to access them under traditional learning schemes.

Coursera's weaknesses lie in the areas that make them great. Because their student body far outnumbers their faculty and staff, it has become difficult and time-consuming to grade coursework. As a result, they instituted a peer-grading system, whereby each student must grade a certain number of their peer's work.

This has not fared well with many as it compromises student privacy and may not truly reflect the quality of work submitted.

What Is Coursera’s Yearly Revenue?

For 2020, Coursera earned $293.5 million in revenues, 59% more than 2019's revenues of $184.4 million.

What Is Coursera Business Model?

Coursera's business model involves offering online courses, certificate programs, and degrees in exchange for tuition and access fees. Coursera partners with hundreds of organizations, institutions, and universities to deliver content to learners around the world.