How Does Coursera Make Money? The Coursera Business Model In A Nutshell

Coursera is an American massive open online course (MOOC) provider founded by Andrew Ng and Daphne Koller in 2012. Coursera revenue is categorized according to consumer, enterprise, and degrees. The consumer category accounts for the majority of revenue with multiple studies and course options for individual students looking to upskill.

Business Model Element	Analysis	Implications	Examples
Value Proposition	Coursera’s value proposition is built on providing accessible, high-quality education to learners worldwide. For Learners, Coursera offers: – Diverse Course Catalog: Access to a vast library of courses, specializations, and degrees. – Flexibility: Self-paced learning and course scheduling. – Accredited Content: Courses from top universities and institutions. – Skills Development: Opportunities for career advancement. For Institutions, Coursera provides: – Global Reach: A platform to reach a global audience. – Technology Infrastructure: Tools for course delivery. – Credentialing: Options for accrediting courses and programs. Coursera focuses on democratizing education and addressing the diverse learning needs of individuals and institutions.	Democratizes education by making high-quality courses and degrees accessible to learners worldwide. Offers flexibility in learning with self-paced courses and customizable schedules. Provides accredited content from renowned universities and institutions. Facilitates skills development and career advancement opportunities. Extends the global reach of institutions and offers the technology infrastructure for online course delivery. Enables the accreditation of courses and programs. Attracts learners seeking accessible and accredited education and institutions aiming to reach a broader audience.	– A diverse catalog of courses, specializations, and degrees. – Flexibility in self-paced learning and scheduling. – Accredited content from top institutions. – Opportunities for skills development and career advancement. – Extends the global reach of institutions. – Provides technology infrastructure and credentialing options. – Appeals to learners seeking accessible and accredited education and institutions aiming to expand their reach.
Customer Segments	Coursera serves multiple customer segments, including: 1. Individual Learners: Students and professionals seeking personal and career development. 2. Employers: Companies investing in employee training and upskilling. 3. Universities and Institutions: Educational institutions offering online courses. 4. Governments and Nonprofits: Entities supporting education and skill development initiatives. Coursera caters to a diverse range of users, from individual learners to institutions and organizations.	Focuses on diverse customer segments with varying education and training needs. Customizes user experiences based on individual preferences and objectives. Provides a platform for various customer types, including individual learners, employers, universities, and government agencies. Offers a versatile range of courses and programs to meet the needs and preferences of different user groups.	– Serving diverse customer segments broadens the user base. – Customized experiences cater to individual preferences. – Provides a platform for various customer types. – Offers a versatile range of courses and programs.
Distribution Strategy	Coursera’s distribution strategy centers on its online platform, partnerships with universities and institutions, and corporate collaborations. Users can access Coursera’s platform through its website and mobile apps, making it accessible across devices. Coursera partners with top universities and institutions to offer their courses on its platform. Corporate collaborations enable companies to provide Coursera courses to their employees. The company leverages these partnerships to expand its course catalog and reach a broader audience.	Utilizes its website and mobile apps for direct access to its platform, catering to users’ device preferences. Collaborates with universities and institutions to offer a wide variety of courses from trusted sources. Partners with corporations to provide employee training and upskilling solutions. Leverages partnerships to expand its course catalog and reach a broader audience. Maintains a multi-channel distribution strategy for accessibility and convenience.	– Website and mobile apps cater to users’ device preferences. – Partnerships with universities and institutions expand the course catalog. – Corporate collaborations provide employee training solutions. – Leverages partnerships to reach a broader audience. – Multi-channel distribution enhances accessibility and convenience for users.
Revenue Streams	Coursera generates revenue through subscription plans, course enrollments, enterprise solutions, and degrees. Its primary revenue streams include: 1. Subscription Plans: Revenue from paid subscriptions offering access to Coursera Plus and guided projects. 2. Course Enrollments: Revenue from individual learners who pay for individual courses, specializations, or degrees. 3. Enterprise Solutions: Revenue from companies and organizations offering Coursera courses to employees. 4. Degrees: Revenue from learners enrolling in degree programs offered by partner institutions. Subscription plans are a significant source of revenue.	Relies on subscription plans as a primary source of income, offering premium features through Coursera Plus and guided projects. Earns revenue through course enrollments as individual learners pay for courses, specializations, or degrees. Gains revenue from businesses and organizations offering Coursera courses to employees through enterprise solutions. Generates revenue from learners enrolling in degree programs offered by partner institutions. Prioritizes subscription plans for recurring revenue. Utilizes course enrollments, enterprise solutions, and degrees for additional income.	– Subscription plans provide a recurring and steady revenue stream. – Course enrollments generate income from individual learners. – Enterprise solutions cater to businesses and organizations. – Degrees offer revenue from learners enrolling in partner institution programs. – Prioritizes subscription plans for recurring revenue. – Utilizes course enrollments, enterprise solutions, and degrees for additional income.
Marketing Strategy	Coursera’s marketing strategy includes content marketing, partnerships with universities and institutions, and learner success stories. The company creates and shares content that highlights the value of its courses and the achievements of its learners. Collaborations with universities and institutions promote the credibility of the platform. Success stories from learners demonstrate the real-world impact of Coursera courses. Coursera also utilizes email marketing and online advertising to reach a global audience.	Utilizes content marketing to showcase the value of its courses and the potential for skill development. Collaborates with universities and institutions to build trust and credibility. Shares learner success stories to demonstrate the real-world impact of Coursera courses. Utilizes email marketing and online advertising to reach a global audience and attract new learners. Fosters a sense of community and inspiration among its user base.	– Content marketing highlights course value and skill development opportunities. – Partnerships with universities and institutions promote credibility. – Success stories demonstrate the real-world impact of Coursera courses. – Email marketing and online advertising attract new learners. – Fosters a sense of community and inspiration among learners.
Organization Structure	Coursera’s organizational structure includes teams dedicated to software development, content curation, marketing, partnerships, data analytics, and learner support. Software development teams focus on platform enhancements and feature development. Content curation teams curate and maintain course content. Marketing teams handle promotional efforts and content creation. Partnerships teams collaborate with universities and institutions. Data analytics teams provide insights for course recommendations. Learner support teams assist users with inquiries and issues. This structure supports platform excellence, content quality, marketing effectiveness, institutional collaborations, data-driven strategies, and learner satisfaction.	Employs specialized teams for software development, content curation, marketing, partnerships, data analytics, and learner support. Prioritizes platform enhancements and feature development through development teams. Ensures the quality and relevance of course content through content curation teams. Manages promotional efforts and content creation effectively through marketing teams. Collaborates with universities and institutions through partnerships teams to expand the course catalog. Utilizes data analytics to provide course recommendations. Assists users with inquiries and issues through learner support teams. Ensures platform quality, content relevance, marketing effectiveness, institutional collaborations, data-driven strategies, and learner satisfaction.	– Specialized teams drive platform excellence and innovation. – Ensures quality and relevance of course content. – Manages promotional efforts and content creation effectively. – Collaborates with universities and institutions for platform growth. – Utilizes data analytics for course recommendations. – Assists users with inquiries and issues for enhanced satisfaction. – Ensures platform quality, content relevance, and data-driven strategies.
Competitive Advantage	Coursera’s competitive advantage lies in its extensive course catalog, partnerships with top universities, diverse customer segments, and global reach. Extensive Course Catalog: Offers a vast library of courses, specializations, and degrees across various domains. Partnerships with Top Universities: Collaborates with renowned institutions to provide accredited content. Diverse Customer Segments: Caters to a broad range of learners, including individuals, businesses, universities, and governments. Global Reach: Provides access to education on a global scale, addressing the diverse needs of learners worldwide. Coursera stands out as a platform that offers high-quality, accredited education to a global audience.	Derives a competitive advantage from: – A diverse catalog of courses and degrees. – Collaborations with top universities for accredited content. – Serving diverse customer segments with varying educational needs. – Providing education on a global scale. Stands out as a platform that democratizes education and addresses the diverse learning needs of individuals and institutions worldwide.	– Offers a diverse catalog of courses, specializations, and degrees. – Collaborates with top universities for accredited content. – Caters to a broad range of learners, including individuals, businesses, universities, and governments. – Provides access to education on a global scale. – Stands out as a platform that democratizes education and addresses the diverse learning needs of individuals and institutions worldwide.

Table of Contents

History of Coursera

The Coursera Timeline, from its inception to its IPO (image Source: Coursera prospectus).

Coursera is an American massive open online course (MOOC) provider founded by Andrew Ng and Daphne Koller in 2012.

Before launching Coursera, both Ng and Koller were Stanford University computer science professors with a mission to bring high-quality education to the masses.

The idea for the company came after Ng decided to offer a version of his popular machine learning class online.

Ng himself was inspired by Udacity founders Sebastian Thurn and Peter Norvig, who launched their first course on artificial intelligence in 2011.

To ensure the class would be ready for the start of the semester, Ng hired three freshman interns to develop the platform and course content.

The group expected around 20,000 people to sign up for the class once it was released. However, over 100,000 signed up.

At some point, Ng partnered with friend Daphne Koller – who was also interested in online education and alternative teaching methods.

The pair quickly realized they wanted to scale their idea, eventually deciding to leave Stanford and establish a for-profit business backed by venture capital funding.

The start-up raised $16 million with a couple more million dollars contributed by university partners. The three freshmen who initially developed the platform were also hired as paid employees.

Coursera began partnering with high-profile educational institutions such as Princeton, Stanford, and the University of Pennsylvania.

Over the years, the company would continue this tradition and attract more students in the process. COVID-19 induced lockdowns also contributed to growth as people used their extra free time to upskill or acquire new knowledge for the sake of it.

By the end of 2020, the platform boasted 77 million users.

In February 2021, the company received B Corp certification. This means Coursera has a legal duty to not only its shareholders but also to making a positive impact on society.

Today, Coursera partners with more than 200 universities and companies around the world.

Each partnership allows the individual to partake in learning that is flexible, affordable, and job-relevant.

Coursera mission, vision and core values

The Coursera Purpose Statement (Image Source: Coursera prospectus).

Coursera’s mission is to:

“Provide universal access to world-class learning so that anyone, anywhere has the power to transform their life through learning.”

Coursera’s core belief is “that education is the source of human progress.” Its vision is accomplished by building up a global platform connecting learners.

As the company highlighted:

The current system of higher education faces inherent challenges. The predominantly classroom-based model may not be able to keep pace with the rapidly emerging skills required to succeed in today’s workforce. While serving certain learners well, the in-person experience may fail to meet the needs of learners in more remote areas and non-traditional learners who need access to education and upskilling the most, both domestically and internationally. Lastly, the cost of education has grown considerably. According to the Federal Reserve Bank of New York, student loan debt in the United States was the second largest component of household debt at $1.55 trillion as of September 30, 2020, creating further headwinds for individuals navigating their careers and personal lives.

Below are some KPIs.

Coursera KPIs as per its financial prospectus.

Coursera revenue generation

coursera-revenues — The company generated over $293 million in 2020 and over $66 million in net losses. As Coursera tries to scale its platform, its cost of revenues (money shared with its partners which provide the courses’ materials) and sales and marketing expenses make up most of its costs to run the business.

coursera-revenues-breakdown — Some of the Coursera key performance indicators. The platform had over 76 million students in 2020, it had released 11,900 degrees by 2020, of which it recorded 387 Enterprise Customers. Of the total revenues, about 65% came from the consumer segment, and more than 20% came from the enterprise segment.

In general, Coursera works on a freemium business model. Students can take courses for free but must pay if they require official accreditation.

Coursera has multiple revenue generation strategies, split broadly into three segments: consumer, enterprise, and degrees.

Consumer

The consumer segment covers payments and subscriptions made directly by students. This is by far the most significant source of revenue for the company, amounting to $192.9 million in 2020.

Individual students have several options here:

Signature Track

For those wishing to earn an official certificate of completion upon completing a free course.

Coursera charges between $30 and $100, depending on the course topic.

Specializations

This option is essentially a bundle of a few different courses designed to help students deepen their knowledge in a specific area.

Students are charged monthly, with prices starting at $39.

Professional Certificates

A longer-term commitment of 1-6 months enabling students to gain new knowledge and launch their careers.

Some of the available topics include marketing analytics, project management, and social media marketing. Again, prices start at $39/month.

MasterTrack® Certificates

Featuring 4-7 month learning modules designed to earn credit toward a university degree.

These certificates focus on real-world projects that have practical applications.

Topics include data analytics, social work, and health informatics. Prices start at $2,000.

Coursera Plus

An all-in-one solution featuring unlimited access to 3,000 courses, Specialisations, and Professional Certificates.

Once the 30-day free trial has ended, students must pay $395 annually.

Enterprise

The enterprise segment incorporates business and government clients wishing to train teams of employees.

Coursera also includes universities offering online courses to students in this segment.

Some of the major clients to utilize the Coursera For Business service include L’Oréal, Danone, General Electric, Tata, and Proctor & Gamble.

For teams and smaller organizations, the cost is $399 per user per year.

For larger companies, prices are tailored to the size of the organization and are available on request. Its enterprise offering comprises:

Coursera for Business: seat license subscription through the Enterprise Plan where small and larger businesses can use to train their teams.
Coursera for Campus a subscription to college and university customers with either a fixed number of licenses or enrollments per campus or a fixed contract with unlimited learners.
Coursera for Government: a fixed subscription per licensed user per year.

Degrees

Lastly, the degrees section deals with universities that are offering complete Bachelor’s or Master’s degrees online.

Degrees are offered in a range of disciplines, including Business, Computer Science, Data Science, Public Health, and Engineering.

Prices for online degrees are substantially less than the equivalent in-person degrees because overhead costs are lower.

Most degrees can be completed in 2-4 years and prices start at $9,000.

How Coursera business model works

Coursera’s business model is based on an educational platform enabling educators, learners, and institutions to connect through a broad range of learning offerings: Guided Projects, courses, Specializations, certificates, and degrees. Its go-to-market strategy is based on freemium offerings.

The large registered learner base makes it easy to acquire users that can be converted into paying consumers or enterprise accounts.

Indeed the consumer learners represent the “top-of-the-funnel” or the main source of leads that can be converted in Enterprise or degree offerings.

In fact, in 2020, about 50% of new degrees were generated by registered free Coursera users and 30% of Coursera Enterprise leads were also sourced from the Enterprise platform.

The Coursera consumer flywheel starts with a platform that provides free, high-quality content with an efficient acquisition model. The company estimated in 2020 the student acquisition cost was below $2000 per student’s degree.

As noted in the introduction, Coursera partners with leading educational institutions to offer online courses to students.

These courses are pre-recorded video lectures the student can watch on a set schedule or at a more convenient time.

To facilitate learning, each course incorporates homework, assignments, exams, and a discussion forum. Importantly, courses are taught by actual university professors.

Interested students need to sign up for a free account and choose the subjects they are interested in studying.

Then, they must select the courses they want to take and decide whether they would like to receive accreditation for their successful completion.

In recent years, the company has moved away from its massive open online course heritage and toward a model where students pay for stackable, short-course credentials.

These credentials take the form of completion certificates which are endorsed by the high-profile universities Coursera partners with.

Coursera qualifications are looked upon favorably by employers, despite the company favoring a non-traditional, off-campus approach to higher learning.

Image Source: Coursera prospectus.

Who owns Coursera?

Below is a look at the ownership structure of Coursera, with the company last releasing data in December 2020:

New Enterprise Associates (18.3%) and Kleiner Perkins Caufield & Byers (9.2%) – venture capital firms.
G Squared (15.9%) – a growth-stage venture fund.
Northern Trust (7.9%) – a financial services company.
Andrew Ng (7.8%) – Coursera co-founder.
Jeffrey Maggioncalda (3.5%) – Coursera president and CEO.

Key takeaways:

Coursera is an American massive open online course (MOOC) provided founded by Andrew Ng and Daphne Koller in 2012. The idea for the company came after Ng noticed the popularity of an online extension to a machine learning course he was teaching at Stanford University.
Coursera revenue is categorized according to consumer, enterprise, and degrees. The consumer category accounts for the majority of revenue with multiple study and course options for individual students looking to upskill.
Coursera courses are taught by actual professors from top universities that endorse the completion certificates awarded to students. In recent years, the company has moved away from its massive open online course focus toward stackable, short-course credentials.