Economics of Online Tutoring

The Broken Economics of Online Tutoring

Recently, there have been lots of discussions going on around the monetary part of teaching on the Internet or being an independent tutor in general in the Edupreneurs Club. Being a recovering online coach myself I can absolutely relate to the problem of making a living as an independent educator. Yes, the economics of online tutoring are friggin’ hard.

The thing is this: I think many online tutors do not evaluate their underlying business model or, as one of the Club member put it, wonder if you are carrying buckets or building pipelines. My guess is that many tutors are carrying buckets with no bottom.

The following back of the envelope business plan is of course just one of many scenarios and you should run through this on your own based on what you would like to achieve with your independent tutoring service.

Scenario 1

For this first scenario I assume that the tutor wants to earn €4.000 per month. This leaves enough room for taxes, health insurance and all other deductions that come along. Maybe she would also like to save some money for rainy days or her retirement. We also assume that our model tutor is somewhere in the mid-range when it comes to pricing, offering a 1h lesson for €25. As our tutor wants to have a family life, she only tutors from Monday through Friday which leaves us with around 20 working days per month.

Based on these numbers we can not only calculate how long she has to work but also how many clients she needs to acquire.

With a goal of €4.000 per month our tutor needs to teach 160 hours. Spread over 20 working days this means 8 hours of teaching every day from Monday through Friday which also means 8 clients a day.

If we assume that she has dedicated clients who take two lessons per week she needs to teach 20 clients per week.

Now, you can reflect on how this scenario is representative of your own teaching business and if you think this scenario is realistic at all. And there is more.

We also need to add some bumper time between the lessons as you cannot jump from one lesson directly to the other. If we take 15 minutes we need to seven of those breaks to the 8 hours of teaching which brings us to 9 hours and 45 minutes total hours of work.

Then you need to prepare for a lesson in some way or the other. Adding 10 minutes of preparation to each lesson (material research, correcting exercises etc) we end up with 11 hours and 5 minutes of total hours of work each day. I really hope our tutor has someone who takes care of the daily business at home.

In a five hour work week we would then come up to 55 hours and 25 minutes or 221 hours and 40 minutes per month. This also means that we are down to around €18 per hour in reality and probably dead by the end of three months working like this.

Besides the pure impossibility of working like that, I also don’t think that many online tutors actually have 20 students as paying clients. Also, two lessons per week are not the norm and what about cancellations or vacation breaks.

On top of that you need to offer a discount to loyal clients as they will order lesson packages, especially when they have two lessons per week. This means that the €25 per hour are more like €20 or even less depending on the discount.

Scenario 2

Let’s quickly do a second run with a tutor who charges €40 per hour and see how this ends up.

With the same monthly goal of €4.000 she only has to work 100 hours per month, 5 hours teaching per day. This also means we are down to 12,5 clients per week.

Adding bumper (1 hour 45 minutes) and preparation time (1 hour 20 minutes) to the teaching time, we end up at 7 hours and 5 minutes per day. Though this sounds more realistic you need to take into consideration that as an independent online tutor you are also the one who is responsible for client acquisition. And at €40 per hour it is obvious that you need to ramp up your related services, as well. Like being more flexible with rescheduling and cancellations.

Conclusion

At this point it should be quite obvious that even as a top end tutor in terms of hourly rate you will just be able to keep your head above the water.

Online group lessons are also still not a viable option as far as I can see it as it tends to be difficult to find a reliable webinar platform that also offers a friction free way to charge for and manage classes.

I guess that’s why many tutors either quit or move on to more scalable business models like selling ebooks, self-directed courses or something to that extend.

While online tutoring is great to get your feet wet in the education space. It is not a viable business in the long term as you waste your biggest asset time for little pay that won’t get you nowhere in the end. It is better to invest that time and energy in creating and promoting a product or simply look for a classic 9 to 5 job.


Picture AttributionShare Alike Some rights reserved by Dave Dugdale

  • andrew

    Kirsten that’s a brilliant and very realistic objective description of the online tutor’s quandary. For it to be a viable occupation, you have to have a platform with resources, an admin & accounts function, a client acquisition and management activity and time for research & development. To be able to have time and money to do this you need to to be billing sufficiently to break even on say 15 hrs per week, and to be making good money at average 20 hrs per week over say 9 months (earning gross between 3000 and 3600 euros per month on avrage over the year. That means you have to be in an hourly price range of at minlmum 50 to 60 euros per hour, ie double the market price. But to sell that, you need to have a product that is a speciality – straight language teaching wont hack it (legal, financial, technical for instance). Or be a star trainer-coach catering to top earners. This of course is if youre living in a European country – in countries where the cost of living and taxes are much lower, you wouldn’t need to earn so much.
    So I guess that explains why most online trainers work for companies that provide the platform, the admin and the sales or just do this as a side activity to supplement their income.

    • Stiglets Mustofa

      Exactly, that’s exactly why online trainers work for companies… they provide the platform etc.

      In our exp we found that to be the case anyway. The online thing just wasn’t working, one of our problems was also that students who enquired about it were always skeptic about it all, and you have to work harder to get that trust factor.

      When I applied to blooms I didn’t even add to my cv that I did online tuition.. lol, we’ll that was before I became a independent tutor.

      I think online tutors are generally young students who try it out for a few months to make money just enough to bridge that gap when finding a job. But for full time experienced tutors, I think you have to do one on one sessions and build that long term relationship. Go the extra mile etc. Obviously you’ll have to charge a much higher rate.

  • UK Tutoring Services – Cambodi

    An excellent and very truthful appraisal concerning the tutoring industry. When you look at countries where the GDP is rock bottom the figures become even more frightening.

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  • AJ Flannagan

    Kirsten, I agree that being a sole tutor online is especially difficult. Nevertheless, working with a global online tutoring provider can be a rewarding yet fulfilling position. There are many educational institutions in the USA such as Northstar Academy, Florida Virtual Academy, etc where teachers work from home and often with heir babies in hand and deliver online education. This is a growing trend in education. I would also note that many US universities such as Stanford, UCLA and others have created online high schools and many are venturing into middle schools. There are many US based online tutoring services that work along side major universities such as “The Tutor Matching Service” but they have yet to move into middle school and primary aged school children areas. Across Asia and in Australia, primary aged school children are beginning their tutoring at age 3, 7 days per week, in hopes of getting a scholarship into one of the private high schools or universities. This trend is rising at alarming rates. There are companies such as Study Buddy, TeachMEnglish, Kaoala Club Tutor etc that are creating platforms to take advantage of these trends. For organizations like this, they are always looking for superior tutors, qualified in subjects and some that aren’t to tutor students. Many teachers, students in Masters and PhD programs are signing up as a medium to make additional income.