Before I started working on ElpisDesign, I spent considerable amount of time in Ed-Tech creating ClickEinstein, ClickEinstein Pro and Zold ERP(Taken Offline). All of them related to Education.
Even though ClickEinstein is not really made for a conventional Indian setting, we still explored Indian market and talked to several people involved in Indian Education System. This article lists some of those learnings.
Background
Selling to schools is a form of B2B (business to business) selling. B2B sales normally happen when
- You are helping the client make more money (example: Advertising) or
- You are helping the client save more money (time is also money) (example: Buffer for Managing Social Media)
Schools operate in a slightly different way than a regular company. If you are trying to sell something to school or a college, you need to understand how THEY make money before YOU make money. Most of these points are valid for colleges as well, so I’ve used the word School and College interchangeably.
1. A school is a “not-for-profit”
There is a legal difference between a regular enterprise and a school. A school is a not-for-profit. It was a shocking surprise for me, personally. Especially when they are charging over ₹10,000 a month just for tuition-fees and have a few thousand students paying every month.
If ₹ 1,00,00,000+ in monthly recurring revenue is not enough to make an institute profitable, I don’t know what else is.
While a school is not-for-profit… It’s not-for-loss also. So everything they earn is shown as an expense. After paying all the salaries, most of the remaining cash is spent on school maintenance. (opportunities?)
There is also some serious amount of money that is not reflected in the “official” cash-books. I am not sure about the state of that ₹ after demonetisation, but there are opportunities to get to that cash.
2. Schools earn from Admissions (and fees)
This is something that I can’t stress enough. Help a school get more admissions, and get a decent chunk out of it. Admission counselling is a REAL business.
Time for an example: Educomp Smart Classes used to be a selling point for school which helped them get better fees from students. Not to mention, the schools with smart classes are also perceived better by parents (Source: Educomp sales team). This perception automatically leads to better sales… oops… admissions.
There is an opportunity for startups to find ways that improve reputation of the school. This improved reputation helps schools increase the fees or generate more demand. They make money, you make money.
3. Schools earn from “extra stuff”
Assuming average monthly tuition fees of a school student as ₹ 10,000 and hoping that the student will spend 12 years (144 Months) at school. The lifetime value of the customer (student) is more than ₹ 14 Lakh/student. That is obviously not enough so some schools force parents to buy, even the uniform, from the school. This is some extra revenue for the school.
If you can create a product or service where you charge the parents ₹ X. You can keep a part of it and donate the rest to the school. Yup, they are not-for-profit, they accept donations. 🙂
PS: If you create a product that students really want, you can avoid that donation. Yes, there are some really amazing products in the market.
4. Schools don’t need efficiency
Of course, it’s good to be efficient but for a school there is no monetary benefit of becoming efficient. If we make a tool to cut the time to teach a subject in half, most schools should not be interested in it. Reason is simple: Teachers are paid on a monthly basis, whether they work 10 hours a week or 60 hours a week, they are paid the same. Making teaching more efficient, no matter how lucrative, is a hard to sell concept in an Indian context. (Disclaimer: ClickEinstein tried doing that, yay).
Product, services or processes that help schools drive more sales/admissions are obvious exceptions. For instance, help schools save printing cost of admission brochures by setting up online payment options for the soft copy of the brochure. Schools will be happy to hear from you.
5. Attrition rate makes improvement risky
A very clear way of improving education is to give better trainings to teachers. Unfortunately, for private schools, the job prospects of a teacher improves manifold after training. Especially when there is such shortage of great teachers. This makes many schools avoid the training programs altogether.
This is a major challenge for schools in implementing their training strategies. (Opportunities?)
Bonus: Public Schools are Private; Private schools are also private
So, private sector schools are called public because they allow “general public” to get education. Private schools are normally open only to a particular section of the society. It’s a bit messed up, I know. You can read about public schools here.
Final Words
In this article I talked about how a school works, financially. Although, I personally find the not-for-profit requirement of a school to be double-standard. Deep down I know, for sure, that there are some really amazing public schools out there.
I would love to know thoughts about the Indian Education System(not only schools) and how it can be improved.
Featured Image Source: https://inhabitat.com/solar-powered-i-slate-tablet-tested-by-indian-children/
The article was originally published here.
Yogesh Raut
Great insights Aman. I completely agree with you. Though most of us are aware of the “not-for-profit” status of schools, your analysis is bang on point and gives a very clear picture of our Indian education system as a whole. I am a big believer of alternate/open education system which I hope will make inroads into India in current decade.
I strongly believe that building products for end users will make more business sense for startups.
We built eduZilla ERP (https://eduzilla.in) for private training institutes and coaching classes but stayed away so far from Schools/Colleges intentionally for the same reasons you mentioned. Let’s keep in touch.
Aman Gautam
Thank you for the kind words, Yogesh. I also see a great potential in the upcoming systems, specially in areas without enough infrastructure.
Btw, great work with EduZilla!! Let’s stay in touch. 🙂
Amit Shroff
Aman, thanks for this article. If you have some time I would like to discuss few things. Since we are planning to work on some program with schools around India. I spoke to facutly in my kids school and they are really excited and welcomed the idea.
Could you give me some more idea about how does the tieup and financials work. Who should be contacted for a group level tieup and how to find these information.