How Does Duolingo Make Money? Duolingo Business Model In A Nutshell

Duolingo is an EdTech platform leveraging gamification to enable millions of users to learn languages. Duolingo leverages a hybrid between ad-supported and freemium models. Indeed, the free app makes money through advertising. Free users are also channeled into premium subscriptions with an ad-free experience and more features.

Table of Contents

Origin Story

Duolingo is a language education platform that has become one of the most popular ways to learn a language online.

It was created by Luis von Ahn, who also developed CAPTCHA, reCAPTCHA, and the Google Image Labeller.

Indeed, it is the reCAPTCHA model that provides the basis for Duolingo.

The model is used to digitize books through CAPTCHA forms and crowdsourcing to translate key words or phrases not understood by computers.

Duolingo works similarly. While learning a new language, its users are in fact translating actual website content.

When multiple users give the same translation for a particular sentence, Duolingo considers it to be a legitimate translation and saves it accordingly.

Valued at close to $1.5 billion, Duolingo employs a gamification process across 40 different language courses to increase learner engagement.

It boasts a registered user base of 500 million people, with 42 million of those using the application on a regular monthly basis.

Duolingo’s Value Proposition:

Language Variety: Duolingo offers courses in 40 different languages, catering to a wide range of learners interested in acquiring new language skills.
Gamified Learning: The platform uses gamification techniques to make learning fun and interactive, motivating users to continue their language learning journey.
Freemium Model: Duolingo offers a free language learning experience, allowing users to get started without any cost. Premium subscriptions provide additional benefits for a fee.
Translation Contribution: Users actively contribute to translations of real-world content, providing practical language practice while assisting in content translation.
Certification: Duolingo offers English language certification, which can be valuable for individuals aiming to demonstrate their English proficiency for various purposes.

Customer Segments:

Individual Learners: People of all ages and backgrounds who want to learn a new language for personal or professional reasons.
Students: Students of all levels, from primary school to university, who use Duolingo for language classes or to supplement their language studies.
Language Enthusiasts: Individuals passionate about languages and culture who use Duolingo to explore and learn multiple languages.
Educational Institutions: Schools, universities, and language learning centers that integrate Duolingo into their curriculum to enhance language education.
Businesses: Companies that use Duolingo to provide language learning resources to employees for improving language skills in international business settings.

Distribution Strategy:

Mobile Apps: Duolingo offers mobile apps for iOS and Android devices, allowing users to learn languages on the go.
Website: The Duolingo website provides a web-based platform for users to access language courses and track their progress.
App Stores: The Duolingo mobile apps are available for download on Apple’s App Store and Google Play Store, making it easily discoverable for users.
Partnerships: Duolingo partners with educational institutions and organizations to expand its reach and provide language learning solutions to students and employees.
Social Media: Duolingo maintains a presence on social media platforms to engage with its user community and promote language learning.

Marketing Strategy:

Freemium Model: Duolingo’s free language learning app serves as a primary acquisition channel, allowing users to start learning without cost.
In-App Advertising: The company generates revenue through advertising within the free app, targeting a wide user base.
Premium Subscription: Duolingo offers Duolingo Plus, a subscription plan that provides an ad-free experience, offline access, and additional features. Marketing efforts promote the benefits of Duolingo Plus to users.
Educational Partnerships: Collaborations with educational institutions and schools introduce Duolingo to students and educators, promoting its use in language education.
Word-of-Mouth: Duolingo encourages users to share their language learning achievements and experiences with friends and family, leveraging word-of-mouth marketing.
Certification Promotion: The company promotes its English language certification as a cost-effective and accessible alternative to traditional proficiency tests.

Duolingo revenue generation

During the initial years of the company, Duolingo sold language translation services to customers such as CNN and BuzzFeed.

In 2017, the app pivoted toward a freemium model with revenue generated exclusively by advertisement impressions.

At $6.99/month, users can also upgrade to the ad-free Duolingo Plus which delivers several other perks:

The ability to download lessons and access them offline.
Unlimited hearts and skill tests.
Access to progress quizzes.
A monthly streak repair.

In 2019, projected revenue for Duolingo Plus alone was $84 million spread across 1 million-plus users.

For those learning English as a second language or wanting to enter a U.S. college, the app also offers English certification for a one-time fee of $49.

The Duolingo exam is substantially cheaper than other proficiency tests that can cost as much as $200.

This type of documented English-language proficiency has become particularly popular in the wake of the COVID-19 pandemic, as many countries have been forced to close their learning institutions.

The scheme has enjoyed a 1500% year-over-year growth since it was introduced.

Future monetization strategies

von Ahn recognizes the difficulties associated with monetizing content that is given away for free.

This has skewed Duolingo’s revenue generation model, with 80% of earnings coming from just 4% of its users (its power users).

To that end, Duolingo hopes to be able to replicate the Spotify model of subscriber monetization.

The company will look to increase the number of downloads of its app and convert more customers onto paid plans by adding new features.

While the free version is important to schools, universities, and the poor, von Ahn argues that it has a bigger role to play.

He makes comparisons between Duolingo and a younger Spotify, where the latter used its free version to increase word-of-mouth advertising and get more people engaged with the paid offering.

Key takeaways

Duolingo is a language education platform that uses gamification to help users learn a selection of 40 different languages.
Approximately 80% of Duolingo revenue comes from Duolingo Plus, a paid plan free from ads with increased functionality. However, those on the Duolingo Plus account form just 4% of the 500 million registered users.
Duolingo founder Luis von Ahn recognizes the challenges associated with monetizing content that is given away for free. He hopes to be able to replicate the success that Spotify experienced when faced with a similar predicament as a young company.

Element	Description
Value Proposition	Duolingo offers a compelling value proposition for its users, including: – Language Learning: Access to free language learning courses in multiple languages. – Gamification: Engaging and interactive lessons through gamified elements. – Accessibility: Availability on various devices, including smartphones and computers. – Progress Tracking: Tools to monitor and track language learning progress. – Community Interaction: Opportunities to connect with other learners and practice languages together. – Cost-Efficiency: Providing free access to most content with optional premium features. – Personalization: Tailoring lessons to individual learning preferences and levels. – Offline Learning: Offline mode for learning without an internet connection.
Core Products/Services	Duolingo’s core products and services encompass: – Language Courses: Offering a wide range of language courses, including Spanish, French, English, and more. – Gamified Lessons: Providing interactive lessons with gamification elements like rewards and challenges. – Duolingo Plus: Premium subscription service offering an ad-free experience, offline learning, and more. – Duolingo for Schools: Tailored solutions for educators and students, allowing teachers to track progress. – Mobile App and Website: Accessibility through a mobile app and web platform. – Community Forums: A platform for learners to interact, practice, and ask questions. – Skill Tree: Organized lessons in a structured tree format for easy progression. – Language Incubator: A program that allows volunteers to contribute and create new language courses. – Certifications: Providing language proficiency certificates for a fee.
Customer Segments	Duolingo serves a range of customer segments, including: – Individual Learners: People of all ages and backgrounds interested in learning a new language. – Educators: Teachers and schools using Duolingo for Schools for language instruction. – Language Enthusiasts: Individuals passionate about languages and linguistics. – Parents: Parents looking for language learning resources for their children. – Travelers: People preparing for international trips and wanting to learn a new language. – Professionals: Individuals seeking to improve their career prospects through language skills. – Language Teachers: Language instructors incorporating Duolingo into their teaching. – Mobile Users: Smartphone users looking for language learning apps. – Companies: Employers interested in language training for their employees.
Revenue Streams	Duolingo generates revenue through various revenue streams: – Duolingo Plus: Charging users a monthly or annual fee for premium features and an ad-free experience. – Certification Tests: Offering language proficiency tests (e.g., TOEFL) for a fee. – Ads and Promotions: Displaying ads to free users and promoting language courses and products. – Enterprise Solutions: Providing language learning solutions to businesses and organizations. – Duolingo for Schools: Charging educational institutions for premium services and analytics. – Crowdsourcing: Leveraging the contributions of volunteers in the creation of new courses. – Merchandise: Selling Duolingo-themed merchandise and products. – Language Incubator Sponsorship: Partnering with organizations for language course development. – Affiliate Marketing: Earning commissions through affiliate marketing for recommended language products. – Donations: Accepting voluntary donations from users to support the platform.
Distribution Strategy	Duolingo employs a strategic distribution strategy to reach and engage learners: – Mobile App and Website: Providing access to language courses through a user-friendly app and web platform. – App Stores: Distributing the Duolingo app on major app stores like Google Play and Apple App Store. – User Engagement: Encouraging daily practice through notifications and reminders. – Social Sharing: Allowing users to share their language learning achievements on social media. – Word-of-Mouth: Leveraging satisfied users who recommend Duolingo to others. – Community Building: Fostering a community of learners through forums and discussions. – Educational Partnerships: Collaborating with educational institutions and schools. – Duolingo for Schools: Offering tailored solutions for educators and students. – Search Engine Optimization: Optimizing content for search engines to attract new users. – Localized Content: Providing courses in various languages to cater to a global audience.