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How Does Udemy Make Money (Business and Revenue Model)

The Udemy business model

How Does Udemy Make Money?
Here’s what you should know:
  • What is Udemy, and how does Udemy work?
  • How does Udemy make money?
  • Udemy Pro (Monthly Membership)
  • Instructor Revenue Share (Commission)
  • Udemy for Business
  • What is the Udemy business and revenue model?
  • Udemy’s funding and valuation
  • Udemy’s profit and revenue

How does Udemy make money if some of its courses are free and the rest are so inexpensive? Well, here is a full, in-depth, breakdown of their three (3) revenue streams and the different products and services they offer, as well as the Udemy business model, their year-over-year revenue, and how Udemy works.

What is Udemy, and how does Udemy work?

Udemy is known as a Massive Open Online Courses (MOOCs), which means their online learning platform that provides online access to learners is open access and can have unlimited participation.

All courses are courses taught by third-party instructors who create, upload, and earn money by adding their courses to the more than 155,000 courses readily available on the Udemy marketplace. Students can then find and purchase these courses and take them at their own pace.

Founded in 2010 by Eren Bali, Gagan Biyani, and Oktay Caglar, Udemy has gone on to amass more than a $3.25 billion valuation.

Some of Udemy’s competitors include Coursera, eDX, MasterClass, and other online course providers.

Udemy App in Apple App Store | Udemy Business Model | How Does Udemy Make Money?
Source: Apple App Store

How does Udemy make money?

Udemy has more than 40 million students enrolled in more than 480 million courses across 180+ countries on their platform. They also have more than 70,000 instructors teaching more than 155,000 courses on the platform, as of February 2021.

So, how does Udemy make money off of those 40 million students, 7,000 enterprise customers, and 70,000 instructors?

Below is a breakdown of Udemy’s revenue model, what services they offer, and how much they charge for each one.

Here are the 3 ways of how Udemy makes money (in 2021):

Udemy has a revenue model that makes money in three (3) ways.

#1. Udemy Pro (Monthly Membership)

Udemy Pro is a monthly subscription service that Udemy launched in November of 2019 for those looking for IT certifications.

Members pay a monthly subscription fee of $19.99 to get unlimited access to subscription content which includes IT certification topics like mastering AWS.

Udemy Pro Cost:

  • $19.99 per month
Udemy Pro | How Does Udemy Make Money?
Source: Udemy

#2. Instructor Revenue Share (Commission)

All of Udemy’s courses are created by third-party instructors who upload their courses to be sold on the platform. The commission, or revenue split, depends on who made the sale.

Every time a course sells, Udemy gets a revenue share of each sale. There are three (3) types of revenue splits between Udemy and the Udemy instructors. They are paid user acquisition, organic, and instructor promotions.

How it works is: (1) Users purchase a course organically or through promotion. Then, depending on how that sale was made, (2) Udemy and the Udemy instructor will split the revenue from that course sale.

Revenue Share Commission:

  • Paid User Acquisition Channel Sales: 75% to Udemy / 25% to instructor
  • Udemy Organic: 50% to Udemy / 50% to instructor
  • Instructor Promotion: 3% to Udemy / 97% to instructor
Udemy Business Model
Source: Udemy

Instructor promotions are sales made by the instructor through coupons or course referral links. Organic sales are made on the Udemy platform without any additional marketing by Udemy or the instructor. And paid user acquisitions are sales made on behalf of Udemy advertising the instructors’ course(s) through affiliates that Udemy partners with.

Note: There are over 70,000 instructors and 155,000 courses on the Udemy platform.

#3. Udemy for Business

Udemy also taps into the business-to-business (B2B) revenue model with Udemy for Business with over 5,000 courses taught by more than 1,500 instructors on the business platform.

This service provides 7,000+ enterprise clients with the tools to train and up the skillset of their employees through online learning – including some big client names like Adidas, Lyft, Booking.com, and Volkswagen.

Cost:

  • Team of 5-20 users: $360 / user / yr  ($1,800 – $7,200)
  • Enterprise of 21 or more users: custom pricing
Udemy For Business
Source: Udemy

Note: It’s reported that Udemy for Business makes over $100 million annual recurring revenue (ARR).

What is the Udemy business and revenue model?

Udemy makes money through a few revenue models that they combine within their company, they are:

  • Commission based business model
  • Software as a service (SaaS) business model
  • Marketplace business model
  • Business-to-business (B2B) revenue model
  • Massive Open Online Courses (MOOCs) business model

Udemy’s funding and valuation

According to Udemy’s Crunchbase profile, Udemy has raised $296.5 million over 11 rounds giving them a valuation of $3.25 billion as of November 2020.

Udemy’s profit and revenue

Although Udemy has not released any year-end numbers, Forbes makes note that two sources close to the company said revenue would exceed $400 million in 2020. Though other sources put their revenue as high as $653.9 million.