Coursera Business Model | How Does Coursera Make Money?

Coursera platform offers online courses and degrees from leading institutions and organizations with whom the company has partnered.

Coursera Inc. (COUR) is a supplier of online education that connects students to massive open online courses (MOOCs), specializations, and even degrees. 

Coursera was founded in 2012 by Andrew Ng and Daphne Koller of Stanford University’s School of Computer Science. 

Instead, the firm partners with colleges and other organizations to provide a platform for which students pay a fee.

Coursera originally partnered with a few universities (Stanford, Princeton, University of Michigan, and The University of Pennsylvania) to offer courses online. 

Coursera collaborates today with corporations, governments, and nonprofits. 

The Coursera platform provides over 3,000 courses, certifications, projects, and specialized sectors to millions of learners worldwide as of May 2021.

What is Coursera?

Coursera provides MOOCs (Massive Open Online Courses) to companies and institutions through its online education platform. 

You can find educational information in a wide range of areas, including finance, data science, and software engineering.

Coursera business model charges students for enrolling in and completing approved online courses and degrees. 

Hence, Coursera makes money by charging companies and other organizations a membership fee to access the site’s content.

Two former Stanford professors founded the company in 2012, and it has enjoyed tremendous success thus far. 

Coursera boasts over 3,800 courses and 50 million enrolled students. The company has also received venture capital investments of roughly $350 million.

Company NameCoursera Inc.
Company TypePublic
FoundersAndrew Ng & Daphne Koller
ProductMassive Open Online Courses Platform
Founded Date2012
HeadquarterCalifornia, USA
Area ServedWorldwide
WebsiteVisit Website

How Does Coursera Work?

Online education network Coursera features MOOCs (Massive Open Online Course) from major universities and schools worldwide.

The site currently has more than 3,800 courses. There are multiple categories in which students can locate them, including:

  • Computer Science
  • Business
  • Language Courses
  • Data Science
  • Arts and Humanities and many more.

The University of Pennsylvania, Stanford, and Duke has produced courses on Coursera. Businesses such as Google, Facebook, and IBM are participating in the game.

Udemy and MasterClass, by contrast, provide instructor-led courses taught by subject specialists.

A majority of courses involve pre-recorded videos that students can view each week or at any time throughout the course.

A typical course involves a series of assignments that must be submitted and tests that must be passed.

Coursera offers several credits through its Specializations, which are micro-credentials sponsored by the site. A student’s expertise is assessed through a capstone project that concludes a specialization.

MasterTracks and Professional Certificates, which are more in-depth specialties designed for professionals, include additional courses.

Finally, Coursera provides recognized university degrees to both undergraduate and graduate students. 

The University of Colorado Boulder, the University of Illinois at Urbana-Champaign, and the University of Illinois at Paris are university partners in business, computer science, public health, and data science.

Coursera Business Model

The MOOC was originally conceived by individuals with idealistic expectations of the internet. 

Coursera, for example, was developed without a commercial model in mind. However, Coursera has successfully monetized its platform. 

However, it is worth noting that monetization has effectively eliminated the original MOOC concept, which was rooted in principles like open access and building online communities.

Students who enroll in personal development courses must pay to interact meaningfully with the content. This seems to be a constant trend across most of the major online education platforms.

Coursera has built a sustainable business strategy by delivering a diverse variety of products at various pricing. 

There are more than 3,000 free auditing courses are available, “Guided Projects” for $9.99, “Specializations” for $39.00, and online degree programs beginning at $9,000.

How Does Coursera Make Money?

Coursera began with the aim of making the best education available free of charge to anyone who seeks it but has subsequently diversified its revenue streams.

Coursera earns money through a wide range of products and services, such as certifications and subscription services.

Coursera Business Model

Coursera works on a freemium business model, which enables students to enroll in courses for free. They are only required to pay if they wish to get certification in the form of certificates or degrees.

Let’s take a closer look at each of the firm’s income streams in detail below.

Professional Certificates

Professional certificates are a collection of courses geared at acquiring expertise in a certain sector to enhance one’s career.

Some of the popular topics include Google Cloud Services,  Data Analytics, Automating IT Support Tasks using Python, DATA Analytics in SAS, and other business topics.

Coursera’s professional certifications are delivered via a subscription-based approach. Students will need to pay a monthly subscription fee to access course materials. The cost of membership ranges from $39 to $89 per month.

Students can also sign up for individual courses or specializations that cover many of the same topics as the professional certificate programs or even the company’s degrees and MasterTracks.

Consumers interested in more information may enroll in Coursera Plus, which offers access to more than 3,000 courses, specializations, and professional certificates. A year’s subscription to the package costs $399.

University Degrees

Coursera collaborates with renowned institutions worldwide to provide its students with fully recognized Bachelor’s and Master’s degrees.

Students can earn degrees in Data Science, Public Health, business, computer science, and engineering.

They are frequently half the price of degrees earned on campus. That is one of those degrees’ main selling points.

Coursera reports that the average student is 35 years old and has 14 years of professional job experience.

The degrees are taught by the same instructors who teach in person. Scholarships are offered to students who are deserving of such assistance.

Generally, a course of study lasts from 12 to 36 months, depending on the degree and the curriculum chosen.

Coursera For Business

Coursera For Business enables businesses to offer their workers access to over 3,800 courses on Coursera’s site.

Businesses can use the program to boost staff expertise for a fraction of the cost of traditional certifications.

The price depends on the size of the organization. A Coursera subscription is recommended for small teams and businesses, costing $400 a year.

Businesses of all sizes can benefit from the Enterprise plan. The pricing will likely be higher than with the team’s plan.

Enterprise packages come with perks such as a personal customer success manager and API connectors. 

In addition, various expert-curated course collections are available, as well as skills transformation plans.

Coursera For Campus provides equivalent options to the government (under Coursera For Government) and the educational sector (under Coursera For Campus).

MasterTrack Certificates

A MasterTrack certification from Coursera is a simplified version of a regular Masters’s program that can be attained through an institution.

A MasterTrack program emphasizes real-world projects that are relevant to business, in contrast to typical university degrees.

The courses typically last between three and six weeks, and students usually complete these programs in about a half year.

The MasterTrack coursework counts toward completing your degree if you are accepted into a full Master’s program (including those listed above).

MasterTrack offers tracks from $2000 to $4500 – the percentage of revenue to the institution is not disclosed.

How Much Does Coursera Instructors and Professors Earn?

Coursera does not compensate instructors or academics who teach on its platform. An institution (such as a university) offers the course, and its revenue is split with that institution.

According to reports, many institutions are planning on splitting their income with teachers. However, many do so to diversify their student populations and complement their curricula.

What is the Funding and Valuation of Coursera?

Crunchbase reports that Coursera has raised $443.1 million in venture capital funding throughout 13 rounds.

Some notable investors in the firm include Kleiner Perkins, the New Enterprise Associates, SEEK Group, the World Bank, and Future Fund.

Coursera was valued at $4.3 billion at its first public offering, in which it raised an additional $520 million.

What is the Revenue of Coursera?

Coursera’s yearly revenue for the fiscal year 2020 increased by 59 percent to $293.5 million as per its financial report.

Success Story of Coursera

Andrew Ng and Daphne Koller, two former Stanford Computer Science professors, founded Coursera in 2012. 

Their friendship began when they pursued graduate studies at Berkeley in the late 1990s, and they have remained good friends since then.

Coursera’s creators had not revealed when it was created, but it is reasonable to assume they followed the lead of their colleagues.

The Stanford professors Sebastian Thurn and Peter Norvig established Udacity, a platform for content creation, a year before its traditional launch date. The first-course Udacity offered was called ‘Introduction to Artificial Intelligence.’

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Coursera’s first rise to global prominence was uncannily similar. A Stanford-taught course on machine learning, ‘Machine Learning, was opened to the general public in 2012. Over 3.3 million students have taken the course.

Students from all around the world quickly signed up for the course. Over 104,000 students joined within days.

Koller and Ng had all the validation they needed with this crazy demand and a $16 million investment from Kleiner Perkins and New Enterprise Associates. They resigned from their Stanford teaching positions days after the course’s initial rollout.

Coursera made all courses on its platform free when it first launched in 2012. 

The company’s mission statement was to make the world’s greatest education accessible to anybody hungry for knowledge.

Coursera concentrated on collaborating only with the world’s top colleges (and continues to do so) for this very reason. Stanford, Princeton, the University of Michigan, and the University of Pennsylvania were its initial educational partners.

Coursera Business Model

Meanwhile, the co-founders of Coursera left the firm within the first few years of operation. By 2014, both Ng and Koller had advanced to positions of board oversight. 

Ng went on to work as the Head of AI Research at Chinese Internet giant Baidu before establishing his own artificial intelligence investment business in 2017.

While Koller worked for the Calico division of Alphabet (Google’s parent company) for four years before joining Google in 2016, he co-founded Google. 

She founded insitro, artificial intelligence-based medication research and development company in 2018. Additionally, she is working on Engageli, another EdTech company.

Rick Levin, a former Yale president, assumed the firm’s leadership in 2014 and handed it on to Jeff Maggioncalda, who has managed the company ever since.

Coursera continued to grow its platform throughout the years, adding commercial and academic partners and students.

The year 2020 was particularly wonderful. The new coronavirus caused people to stay at home longer, which many used to improve their abilities.

Coursera also made several beneficial contributions, for example, by providing governments with free access to its courses for jobless individuals.

The company’s registered user base increased by more than 65 percent to 77 million in 2020. 

Coursera chose to go public due to these favorable market conditions. The company went public on the Nasdaq stock exchange in March 2021.

Coursera has offices in several countries, including Colombia, India, and the United States, employing over 800 people.

Key Takeaways From Coursera Business Model

Coursera’s primary source of revenue is validated certificates, and at its current monthly revenue rate of $1 million, we predict that Coursera will earn $8-12 million in 2014. 

According to Coursera CEO Rick Levin, a few institutions have already begun to recoup their expenditures through pooled income. 

Coursera distributes 6-15 percent of its revenue overall to universities and 20% of gross revenue from its courses, according to documents acquired by The Chronicle of Higher Education.

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Coursera’s business model uses online courses, certificate programs, and degrees to exchange tuition and access fees. 

Coursera collaborates with hundreds of institutions, colleges, and organizations to bring high-quality content to learners worldwide.

What about Coursera’s profitability? The company currently employs over 800 people, but the need will grow to 170 by year’s end. 

Coursera, however, has plenty of room to experiment with new business models for investment returns for venture capitalists who have poured so much of their money into it. It has respectable sales and has ample cash on hand.