Setting Up an Online Tutoring Business: A Complete Overview

Setting Up an Online Tutoring Business: A Complete Overview

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Last Updated: 18 July 2024

Online tutoring has been on the rise for the past few years. Even traditional brick-and-mortar schools are transitioning or expanding to online tutoring. This is due to the rapid adoption of mobile devices as it enables students to learn at their own pace. Further, the demand for online tutoring is being fuelled by parents who like the convenience and flexibility it offers. 

According to research, the global online tutoring market size is estimated to reach up to USD 23.75 billion by 2031, growing at a CAGR of 14.20% during the forecast period (2024-2031). So, if you are looking to set up an online tutoring business, this is the right time. 

Table of Contents

Online Tutoring: An Ever-Evolving Concept

Online tutoring is not just a passing trend, it is going to be the future of education worldwide. In this ever-evolving landscape of online tutoring, the possibilities are limitless. As the digital revolution continues, we can expect further innovations and refinements in the way education will be provided and received. Mentioned below are the industry statistics that show a bright future of this industry. 

 Here are the top online learning statistics and trends in 2024: 

  • The online learning industry is the fastest-growing market with a 900% increase since 2000.
  • 70% of students consider online learning better than traditional classroom learning. 
  • The number of online learners is expected to reach 57 million by 2027. 
  • 63% of learners from the US engage in online learning in their daily activities. 
  • Online learning increases employee and student retention by as much as 50%.
  • 95% of online learners recommend online tutoring to other students.
  • The online learning industry in the US generated $74,800 million in online learning revenue in 2023.

These are the top online learning statistics that ultimately prove that online learning is growing fast and this industry offers many lucrative opportunities for aspiring entrepreneurs who are considering setting up an online tutoring business. Furthermore, let’s understand which factors are contributing to the rise of online tutoring.

Factors Contributing To The Rise Of Online Tutoring

The online tutoring industry will continue to gain momentum in the coming years, presenting limitless opportunities for entrepreneurs looking to start online tutoring businesses. Let’s have a look at the factors contributing to the rise of this lucrative industry.

1. Flexibility of Schedule

Online tutoring websites offer absolute flexibility in scheduling learning lessons. Learner and tutor merely have to check with each other’s availability to fix a slot. This is much better than a traditional classroom school where pupils have to follow a set schedule. Studying at a convenient time results in better focus, knowledge retention, and an enhanced learning experience.

2. Tailored Tutoring

In a typical classroom of 30-40 students, the teacher can’t give enough attention to everyone. Some students pick up things faster, while some lag behind. In online tutoring, more specifically private, one-to-one tutoring, this problem gets addressed effectively. The tutor can take the time to understand weaker areas of a student and curate the syllabus accordingly. This process is also described as self-paced learning.

3. Saves Commute Time & Cost

Online tutoring platforms eliminate the travel time for both learners and tutors. This is still an undervalued benefit since most of us have been conditioned to a learning and work culture, where traveling to a public office or institute is very much the norm. In online tutoring, much of the worries related to travel cost, time, and rush hour traffic don’t exist. Notably, with no traveling, tutors and learners also decrease their carbon footprint, making online tutoring more environment-friendly and sustainable.

4. Wider Geographical Reach

The geographical constraints become irrelevant in online tutoring. Tutors and students can easily find each other from anywhere in the world. All they need is a computer or tablet device and an active internet connection. Online tutoring platforms also allow tutors to widen their customer reach across different geographical locations, which has its own perks from meeting new people, learning about their cultures, to sharing experiences.

Got an idea to kickstart your Online Tutoring Business?

The Lifeline of a Business – Revenue Generation Channels

To set up an online tutoring business, it’s good to have a solid business idea that you feel will connect effortlessly with your target audience. But without a healthy and steady inflow of revenue, a business usually can’t survive for too long. Therefore, it’s a must to consider ways to monetize your business right from the beginning. Here, cues can be taken from the way existing platforms are generating their revenue. Following are the most popular revenue generation channels for online tutoring businesses:

1. Commission

Commission remains the most common source of revenue generation for online tutoring services. Its working can be best explained by Preply, a student-tutor marketplace. It allows tutors to set their own pricing. For the 1st transaction, the platform charges 100% commission on the payment received by the tutor. After that, a flat 33% rate is applied to successive lessons. The rate keeps dropping(upto 18%) as tutors register more hours on the platform.

2. Freemium

The Freemium model works on the “win first, earn later” basis. Win implies customer loyalty while earning the money they’d spend on the platform. Some platforms offer basic platform functionality for free while charging a fee for the usage of other advanced features like HD video, interactive tools, smart reports, and analytics, etc.

The other approach is to offer complete access to the platform for a limited number of days. Once that free usage period has expired, customers would have to make payments to continue accessing the platform.

3. Subscription

Subscription can be a great source of revenue generation. Its application can differ based on how an online tutoring platform operates. For platforms built that contain eBook libraries and video tutorials by subject matter experts, subscription plans can be offered to range from limited to complete access to content. In the case of a solely student-tutor marketplace, subscription packages can be offered in the form of bundled lessons on a weekly, monthly basis.

4. Promote Tutor Profiles

It’s a common eCommerce practice and can be applied just as well on online tutoring platforms. Tutors can be given enhanced search visibility or better matching with students for some extra fee.

5. Adverts

Provided adverts are relevant and don’t affect your brand image adversely, they can prove to be a great source of revenue for your website. It might come as a surprise but a language tutoring app called Duolingo is completely free and makes its earnings solely off paid ads.

Steps For Starting an Online Tutoring Business

There’s a lot of research, planning, and execution that goes into setting up an online tutoring business. For simplicity’s sake, we’ve compiled a list of key considerations that entrepreneurs must take into account before setting sail:

Step: 1 Current Market Scenario & Leading Players

As a basic prerequisite, the value of competition analysis can’t be highlighted enough. At the very least, it helps a business take stock of the current state of the market, the dominating players, their USPs, various customer segments, and their motivations.

From a geographical point of view, North America dominates the online private tutoring market covering approximately 32% of the global share. But that balance could be shifting in the next few years as developing countries of Asia, particularly, China, India, and Korea begin heavy investing in online tutoring, in the wake of the pandemic.

As it stands, the global online tutoring market is identified by some familiar businesses that have been at the forefront of eLearning for quite some time.

YoCoach-Online-Tutoring-Website-competitors

Step: 2 Select a Niche To Set Up Base

Online tutoring is a vast arena and it continues to witness an outpouring of successful new ideas, innovations, and business concepts. Having said that, it makes sense to first select a niche and set up a base. Some of the in-demand online tutoring services are as follows:

  • People with learning disorders such as dyslexia
  • People who struggle to get motivated about learning/education
  • Young learners who can’t attend school
  • People who need to prepare for special tests, exams, or job interviews.
  • Learners with proven difficulty in STEAM(Science, Technology, Engineering, Arts & Mathematics)
  • Learners who wish to improve their academic performance.

While a number of large online tutoring marketplaces might incorporate multiple or all of the aforementioned needs of learners, startups should be wary of treading the same path straightaway. Selecting a vertical marketplace, based on a single specialization is a better way to gain recognition in the market. Once your business has become stable, you can consider offering more services.

It’s important to make a distinction here that online tutoring isn’t limited to academic learning. Nowadays, there are tutoring websites for fitness coaches, culinary experts, music teachers, dance instructors, musicians, and likewise.

Step: 3 Feature Planning & Prioritization

Ideally, you’d want your ultimate online tutoring website vision to be realized as soon as possible. But good websites aren’t built overnight. They take time and investment, often over a long duration. For that reason, startups, which have limited financial resources, should opt for a lean-approach. The idea is to select and highlight only the most important business offerings. As you begin to gain traction, start to add more value to your services and continue to enhance your online tutoring business.

Following are the must-have features that you must consider when starting your online tutoring business: 

  • User management
  • Course management
  • Collaborative Tools like video conferencing, virtual whiteboard
  • Screen sharing and recording 
  • Document sharing 
  • Secure payment options
  • Multilingual and multi-currency functionality
  • Reports and analytics
  • Ratings and reviews
  • User-friendly design 
  • Security

Launch Feature Rich Online Tutoring Platform

Step: 4 Develop & Launch Your Online Tutoring Platform/Website

Once the features are finalized, you have to decide whether a ready-made software solution will serve your purpose or whether you need to custom-develop your platform. In custom development, you need to hire a dedicated team of web developers and designers who will build your platform from scratch. This development approach is time-consuming and needs huge financial investment. 

On the other hand, ready-made software is a quick and cost-effective option to launch your online tutoring platform. These software solutions have been tried and tested on the market. Moreover, these are customizable and scalable to meet the requirements of your business. 

Since we highlighted the importance of starting lean and focusing on offering value, rather than bells and whistles early on, an off-the-shelf solution makes the ideal choice. Yo!Coach is one such popular ready-made online tutoring software solution available in the market. This software comes pre-equipped with advanced features and functionalities essential to start an online tutoring business. By leveraging the capabilities of Yo!Coach, numerous clients across the globe have successfully set up their online tutoring businesses. 

After finalizing your development approach, the next step is to launch your website/platform in the industry and reach out to your target audience. 

Step: 5 Marketing – Get The Word Out

Even when you feel you’ve given your best shot in setting up your online tutoring business, your job is still half-complete without marketing. Marketing is the central force that drives user engagement with your business. It creates a buzz about your online tutoring business and helps target a wide section of your target audience. Below are some of the proven marketing avenues to generate awareness and promote your online tutoring business.

  • Blogging
  • Press Release
  • Email Marketing
  • SEO/SEM
  • Google Adwords/Microsoft Ad Center
  • Word of Mouth

Final Thoughts

Driven by high demand, technological advancements and growing acceptance, online tutoring is poised for continued growth and innovation, making it compelling for entrepreneurs to step in and start their own online tutoring business in the market.

If you have any questions related to the information shared in this blog, please feel free to write them in the comments section below. Also, if you or your team are planning to set up an online tutoring business, you can reach out to our experts and avail a free 30-minute personalized consultation session.

Looking to Start Your Online Tutoring Business?

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