Online Course · Monetization

What's the right formula for the online education instructor payment model?

Shipeng Fu Founder at Knowledgette

January 26th, 2015

Hi there,

Our company is somewhat like Coursera for professionals in a specific industry. It is also similar to plurasight or with our unique twists. We are designing payment models for our instructors who are essentially contractors for us. Below is one of our payment models for instructors. I'd like to brainstorm with people here. Any suggestions and feedback are highly appreciated.

Total Payments=upfront +fixed income + royalty income

Upfront: one can choose to take upfront payment or not. Royalty will be lower for those choose to take upfront. e.g. if you take upfront, royalty will be 20%, other wise 30%.

Fixed income: a small portion of the entire revenue is shared (volume weighted average) with every instructor no matter what, even if his/her lecture is not viewed at all.

Royalty income: the rest of the entire revenue * royalty * popularity of the lecture

Popularity=unique view of the lecture/unique view of the entire library

Too many founders wing it when it comes to financials; they have no idea how to explain them to investors. In this course, we’ll teach you how to build a basic financial model; read financial statements; and understand cash flow, balance sheets, and income statements.

Steve Strassmann Visiting Scientist at Harvard Medical School

January 26th, 2015

Payment modeling is how you manage risk. With upfront payment, the instructor has no risk and your company bears all of it. With royalties, your company has no risk and the instructor bears all of it. The blend you end up with will reflect your perception (and the instructor's perception) of the risk involved. If I normally get paid $1 to teach one class, I'll accept 20 cents royalty instead, but only if I have trust the class will be taught at least 5 times. So, before asking what the payment model should be, you should lay out what the risk model is.

Anil Pattni Hackathon, Startupbus Buspreneur and Makerfaire Evangelist

January 27th, 2015

Hi Shipeng, I'm interested in learning more about this opportunity. Bit about me, I'm the founder of OCHackerz tech incubator for entrepreneurs and startups, we've been running for 5 years, I've held 120 events, ranging from marketing tech products, campaigns, hackathons, makerfaires, training seminars, fireside chats and much more. You can learn more at Please review and let me know how you wish to proceed. I look forward to hearing from you. Best Anil

Shipeng Fu Founder at Knowledgette

January 30th, 2015

Steve, Thank you so much for your input! -Shipeng