Udemy Business Model: How does Udemy Make Money?

Udemy is an online platform designed to help people learn new skills from the comfort of their homes. It connects students with teachers who create courses on a wide variety of topics, from design to business and everything in between. The platform supports multiple languages, making it accessible to learners worldwide. Instructors earn money when their courses sell, but they pay a fee to Udemy, which varies based on how the student discovered the course. Udemy also offers businesses a subscription service, giving their employees access to courses for a yearly fee.

A Brief History of Udemy

Founded in 2010 by Eren Bali, Gagan Biyani, and Oktay Caglar, Udemy has experienced rapid growth. What started as a small venture has blossomed into a global platform with over 50 million students and more than 150,000 courses. From humble beginnings, Udemy’s valuation has reached $2 billion, a testament to its success in the e-learning market.

Udemy Company Overview

• Country of Origin: United States
• Established: 2010
• CEO: Greg Brown
• Headquarters: San Francisco, California
• Founders: Eren Bali, Gagan Biyani, Oktay Caglar
• Chairman: Sohaib Abbasi
• Primary Offering: Online training courses
• Employees: Between 100-5,000
• Website: Udemy.com

How Udemy Operates

Udemy acts as a marketplace for courses. Rather than creating its own content, it provides a platform for teachers and experts to offer their courses. Instructors are free to set their own prices for the courses they create. Whenever a course is sold, Udemy takes a percentage of the earnings. This model allows the platform to provide a vast range of subjects for learners while giving instructors access to a broad audience.

Why Udemy Stands Out

Udemy appeals to two key audiences: lifelong learners who want to explore new topics at their own pace and busy professionals who need quick, targeted learning solutions. For those looking to dive deep into new areas of interest, Udemy offers a wide variety of courses. Meanwhile, professionals who need to sharpen their skills can find quick, focused lessons that fit their schedules. This flexibility is what sets Udemy apart from other e-learning platforms.

How Udemy Makes Money

Udemy follows a marketplace model similar to giants like Amazon and eBay, and it generates revenue through several different streams:

1. Subscription Service:
   Udemy Pro offers users access to premium courses for $20 a month after trying out free options. This subscription ensures consistent revenue from those opting for higher-quality, exclusive content.
2. Organic Sales:
   When users find Udemy through organic searches or word of mouth and purchase a course directly, both the instructor and Udemy share the profits equally, creating a long-term sustainable model.
3. Promotions by Instructors:
   If a student buys a course through an instructor’s referral link, the instructor earns 97% of the revenue, while Udemy keeps a 3% share. This system encourages instructors to promote their own courses and grow their student base.
4. B2B Model:
   Udemy offers a specialized service for businesses, providing a range of short, accessible courses aimed at upskilling employees. Small teams (5 to 20 people) can access these courses for $360 per year, with different pricing available for larger teams.

Udemy’s Business Strategy

Unlike traditional education platforms, Udemy doesn’t employ its own instructors or partner with academic institutions. Instead, it opens its doors to independent experts, allowing them to share their knowledge with a global audience.

• For Individual Users:
  Udemy initially attracts learners by offering free or trial courses. If students find value in the courses, they can continue learning by paying for more advanced content. This model helps Udemy attract a steady stream of new users and retain them with quality content.
• For Businesses:
  Udemy’s B2B model provides businesses with flexible, pay-as-you-go learning options for their teams. Smaller companies can easily pick and choose modules for specific needs, while larger organizations benefit from custom plans and tools to track employee progress. The courses offered cover areas such as technology (34%), work skills (31%), and personal development (35%).

Conclusion

Udemy’s success lies in its dual approach—offering individual courses to learners while also catering to businesses with subscription-based services. Since its inception, Udemy has continuously improved its offerings to stay relevant in the fast-evolving e-learning space. The platform’s mix of free and discounted courses helps attract a wide variety of users, contributing to its steady growth.

From its beginnings as a small e-learning platform to its current status as a global educational powerhouse, Udemy continues to grow by providing affordable and accessible learning options for both individuals and businesses alike.