With the uprising of technology and easy access to anything and everything, education has been made a lot easier and more accessible too. One such education technology company that has made online learning effortless is – UNACADEMY.
You must have heard of Unacademy to be providing free courses to students to learn new and upfront skills. But if it is doing so for free, How does it earn? Let’s dive into the revenue model of Unacademy to reveal the secrets behind its revenue generation.
But, before that let’s learn a few things about Unacademy and how it functions.
What is Unacademy?
Unacademy is one of India’s largest online learning platforms. It was originally started as a YouTube channel by Gaurav Munjal in 2010. It was later officially registered as an ed-tech company founded in 2015 by Munjal, Roman Saini, and Hemesh Singh. The company is headquartered in Bangalore.
The company, since then, has managed to hire top educators from India to provide the best learning experience. Unacademy offers study materials for classes 6 to 12 and also offers plenty of preparation for exams like JEE, NEET-UG, UPSC, and other competitive examinations.
Unacademy has a wide range of services. Apart from education, multiple accusations have significantly increased the areas of services for the startup. Some of the major services offered are as follows.
- Daily live classes where students can learn, interact and get their doubts cleared one-on-one with top leading educators.
- Practice sheets, lecture notes, mock tests, and quizzes in the form of PDF for daily revision to not restrict learning to only live classes.
- A subscription provides the students with unlimited access to all the live and recorded sessions which they can go through anytime and anywhere from whichever device they wish to.
- Relevel (acquired company) online skill assessment and job forum. Working as an independent body helps students and professionals to test their skills and get the best job per their skill set.
- Graphy online marketplace for educators and influencers to sell their content.
Few facts about Unacademy
- Unacademy has more than 20 million students currently learning through the app, with almost 2.5K+ free live classes held every day.
- It has hired more than 55 thousand top-quality educators.
- Anybody with a smartphone and a good internet connection can learn from anywhere in the country. Also, Unacademy is making its ever-possible move to reach the remotest parts of the nation.
- Unacademy recorded a huge spike in its revenue from 22 crores in the Financial year 2019 to 86 crores in the Financial year 2020, which is almost four times the previous ones. This makes knowing the revenue model of Unacademy more interesting.
- In the year 2022, the cost-cutting exercise results in laying off more than 1000 employees and educators. The management took a few bold decisions of pay cuts and reducing expenses by removing the free snack and beverages for office employees and reduction in travel expenses.
Revenue Model of Unacademy
The revenue model of Unacademy is a type of Freemium Business model. A freemium business model offers a basic plan with few services and resources for absolutely free. At the same time, it offers an advanced plan with more exclusive features in exchange for a certain fee in the name of – The premium plan.
Below are a few points that elaborate on the revenue model of Unacademy:
Unacademy Class Subscription:
The major chunk of revenue Unacademy generates is through plus subscriptions. Free classes on youtube influence the learners to opt for upgrade courses in form of premium subscriptions. Flagship educators and courses come under the subscription and the prices vary on factors like course and duration.
Paid subscription provides in-depth learning experiences backed with one on one doubt solving, high-quality video lectures, quizzes, PDF notes, and more.
Apart from all these, it also provides mock tests under the course, however, these are at an average level for competitive exams.
Here is JEE (engineering competitive exam) subscription plan.
Unacademy initially started as a youtube channel providing free content. But now it has a structured youtube channel for every competitive exam like UPSC, JEE, CAT, Railways, and more. Along with competitive exams, it has dedicated channels for schools and college students like 10 – 12, engineering, and all.
These are a few youtube channels that are performing well in this segment.
All the content on the youtube channels posted by Unacademy is quite authentic and almost every channel has more than 500k subscribers some have even reached up to 2M subscribers and have over 200 million video views.
The youtube channels are monetized and ads run continuously resulting in a good source of revenue for the company. Most, most of the time educators follow the marketing grid, converting leads into paid subscribers. Overall, these channels work as a revenue generator and marketing campaign too.
Unacademy’s masterstroke of acquiring Tapchief and rebranding into Relevel was a successful plan. It disrupts the unmannered operations of hiring industries into a completely new revolution as most media houses say.
The hiring industry in India focuses mostly on skills but it also considers other factors such as qualifications, gaps, and percentages which are not highly required if the candidate has a relevant skillset. Under this circumstance, the most suitable candidate may get rejected.
So, to fill up this gap, Relevel provides an ultimate platform where any candidate will get a job based on the skillset one has. The candidate has to pay 1,999 (which varies from test to test) to appear in the skill assessment test which is known as the tournament. 3 tournaments comprise front-end development, back-end development, and business development.
Features of Tournament
- In different rounds of the tournament, each has MCQs and follows a different niche of skills.
- AI-based skill evaluation program.
- Skill enhancement training and complete chart of performance
Based on the skill ranking, over 500+ companies including Cred, Ola, Bisleri, and Paytm hire the most suitable candidate. However, the reality check of Relevel might not be much fascinating. The tall claims like 100% placements and jobs within 15 days might be a misguided marketing gimmick. A candidate has to pay around Rs 1,999 to appear in a skill test but he/she might end up with false hope because the tests are highly advanced level and most of the candidates unable to score good marks have to leave empty-handed.
The Unacademy Group-owned Graphy is a tool created to assist local creators in expanding their audiences. They can also hold live cohort-based classes, sell their abilities, and do other things thanks to it. Influencers, educators, and subject matter experts from all around the nation are welcome on the brand-new Graphy, which serves as a SaaS platform.
Unacademy’s Graphy announced its Graphy Creator Grant on June 22, 2021. The grant is intended to assist candidates in starting their online school.
Graphy is a subscription-based platform, initially providing a 15-day free trial but later on the user has to buy a subscription. The major source of revenue from Graphy is directly through the subscription and per sale of the content.
Today if everyone, including the ones who use or do not use the resources provided by Unacademy, still knows about Unacademy, is because of its marketing.
Unacademy uses a plethora of techniques through content marketing and digital marketing to attract its customers, i.e, a student or anyone who wants to learn. It uses social media marketing, email marketing, techniques of remarketing, and advertisements on and off different websites to generate leads and doesn’t stop until it has converted the potential customers into permanent customers.
Unacademy also uses different offers regularly for different courses. These offers might include discounts on live classes, future study material, lifetime access, live mock tests and quizzes, premium content, etc. Its paid subscription offers customized services to the students, which also includes all of the above services. Hence again, attracting more and more customers.
Unacademy also offers personalized sessions with the educators wherein students have to directly pay the educator of their choice and the company takes a cut from that payment as a platform.
Though it does offer free courses, these In-app purchases are a good addition to the revenue model of Unacademy. Some of these purchases are one-time and some could be valid for a certain period.
Current Scenario: Revenue Model of Unacademy
After the enormous success in FY2020, Unacademy recorded a growth of 4x times comparing the growth in FY2019. The overall revenue observed was 86 cr in FY2020 and the estimated expense was 386 cr, resulting in a loss of 300 cr. A similar cycle of loss was incurred in FY 2021. Also, Unacademy turned unicorn in October 2020 but it has no effect on the company’s profitability.
Due to the high expense, it even cut down the workforce. By mid-2022, it has laid off about 1000 employees, which are around 12 – 15% of the workforce. In July 2022 it has cut down major expenses like
- Free snacks and beverages for office staff
- Business-class flights, and luxury hotels for top educators and CXOs
- IPL sponsorship
- Management salaries
In the next 2 years, Unacademy will launch its IPO, and all these cost adjustments are just for the proper launch of the IPO in the future.
Our Thoughts: Revenue Model of Unacademy
The revenue model of Unacademy was amazing, and the free education service is a good cause. But the implementation of the plan was not up to mark. As per Unacademy, their monthly cash burn is about 15 million USD which is far higher than any of its peer startups. And such a huge expense has arisen due to untamed hirings and trivial expenses. Unacademy also targeted top coaching institutes, offering blank check deals to top educators. It was a huge cash burn which was just to crush the competition. However, it was not favorable for the startup and resulted in a pile of over expenses.
The Unacademy IPO is about to launch in the next two years which may underperform owing to the current economic conditions that may take more than a year just to revert to pre-crisis levels, not to mention the inflation frenzy encompassing the corporate space. These factors may push Unacadmey down the same path as Paytm and Zomato. Moreover, the revenue model of Unacademy cannot fit the current trend as it is a company that has not made a single dollar in revenue since its inception and has continuously compounded its losses over the years.
In 2020, the company spent Rs 3 crores for every 1 crore they made as revenue, this indicates weak fundamentals and downward spiraling profitability which is again not a good sign in terms of the IPO. However, Unacademy has taken several steps to improve its profitability and strengthen its fundamentals. Just recently, Unacademy released a notification informing its employees about the cost-cutting exercise that will directly influence company-based incentives like free snacks and beverages, transport and travel expenses for higher executives, senior educators, as well as the founders. Unacademy has also announced that the CXOs and founders will be taking major pay cuts to bring the company back on track.