What does a profitable online teaching business look like?
When I tell people what I do, I stick to this line: “I help ESL teachers start and grow their own online business that is profitable, sustainable, and scalable.”
I often see that these three words—profitable, sustainable, and scalable—don’t resonate with teachers like I expect. They’re simple words, but what on earth do they look like in an online teaching setting?
I’ve explained scalable in a previous post, now let’s talk about profitable.
If you want to teach ESL online, you have three options:
1. Work with online ESL companies who provide you with students and lesson plans to follow, such as VIPKid, Gogokid, Dada, iTutor, etc.
2. Work on freelancer platforms where you create your own profile and attract students who register with the platform, such as Verbling, italki, Cambly, etc.
3. Work independently and get students by yourself
Which option is profitable, or more profitable than the others?
To measure profitability, we can start with this simple equation:
Profit = revenue – cost = price x volume – cost
We can ignore cost and look only at revenue since there is little to no cost associated with teaching online:
Revenue = price x volume
For online teaching, we can put it this way:
Revenue/week = average hourly rate x average # of hours/week
Now that we have the equation, let’s compare!
Option 1: Working with Online ESL Companies
The hourly rate is fixed on your contract and the average is about $20, based on data I’ve collected from over 50 ESL teachers who are currently working with these companies.
The number of hours you can teach with these companies is determined by
– The maximum # of hours you can dedicate based on your and your students’ availability
– The # of sessions you can book with the company
The average is around 20 hours, according to those teachers. The equation is then, on average,
$400/week = $20/hour x 20 hours/week
That’s $1,600 a month.
There are usually incentives for teachers to work unpopular hours or take on a bigger workload. That could add $200 a month, bringing the average revenue to $1,800. I’ve met teachers who can earn over $4,000 (or even $6,000) a month, but this requires a lot of hours, very good reviews, and a strong student base. It’s uncommon and inconsistent.
Working with ESL companies = $1,800/month
Option 2: Working on Freelancer Platforms
On average, teachers get about $15 per hour and work 20 hours a week, based on data I’ve collected from over 30 teachers currently working on freelancer platforms, which gives us
$300/week = $15/hour x 20 hours/week
That’s $1,200 a month.
The problem with freelancer platforms is not only lower revenue but also a fluctuating student volume. You have to compete with other teachers for students registered with the same platform. Teachers sometimes get a few students but sometimes none. You manage your profile and it’s hard to charge a higher price than others offering similar services.
Working on Freelancer Platforms = $1,200 /month
Option 3: Working Independently
How about having your own online teaching business? Well, your revenue depends on your approach.
A general teacher potentially offers a wide range of services from conversational English to business English, accent reduction, exam preparation . . .
You will find it difficult to get students and charge a higher rate. The situation will get worse as more online companies and freelancer platforms enter the market, offering similar low rates with a large variety of teacher profiles. There is no way for you to compete if students can simply find your replacement for a bit less money.
Basically, general teachers with their own businesses will have a revenue lower than working with online companies or freelancer platforms (unless you have developed a strong clientele online and/or offline). And it is still difficult to grow your business to the next level by tapping into new clients.
As a niche teacher, you offer services to a specific group of people (read here to learn more about niche teaching) to address their specific problems with program-based services (read here to learn more about program-based teaching).
Being a niche teacher allows you to get students by yourself and at a higher rate. Why?
– With a niche, you are able to develop targeted messages that resonate with your niche so that your marketing is effective and affordable (read here to learn more about marketing).
– As a niche teacher, you are perceived as a specialist in your niche vs. a generalist somewhere out there. Compare a neurosurgeon and general physician—who earns more and works fewer hours?
Offering program-based services also allows you to charge a higher rate. Why?
– In program-based teaching, you manage student action by incorporating action elements into the program. You can hold students accountable with reminders and empower them to take action. Sufficient student action ensures the great results generated by the program (read here to learn more).
– The fact that you are more likely to get students results allows you to position your teaching as premium services that justify a higher rate.
Here are a couple of examples:
– Instead of teaching general English to Chinese kids for $20 an hour, my client Emily targets pre-kindergarten kids with a program that enables them to speak English with an American native-like accent in just 10 weeks. She charges $50 per hour for a 12-hour program, bringing her $600 per student up front. To earn $1,800 (average revenue with online companies), she only needs three students a month and gets more than that every month.
– Instead of teaching general business English, my client John helps non-English-speaking small business owners develop their English and business skills, which allow them to acquire more American clients and improve their revenue. John charges $100 per hour for his 15-hour program, bringing him $1,500 per client up front. To earn $6,000 a month (high-end revenue with online companies), he only needs four clients and consistently gets more than that every single month.
So what does a profitable teaching business look like?
It should be a teaching business with a well-defined niche and program-based services that allows you to get students on demand and charge the higher rate you deserve.
➢ Watch this video to learn more about how to start and grow your own teaching business that is profitable, sustainable, and scalable.