Pricing Models


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Pricing Models

  1. 1. Alternative Business Models Education Publishing 2.0 (or 1.9)
  2. 2. Why Look At New Models? <ul><li>Commoditization of core businesses because of standards </li></ul><ul><ul><li>Differentiation is increasingly difficult </li></ul></ul><ul><li>New disruptive technologies are changing models at the margin </li></ul><ul><ul><li>Wait and it will be too late </li></ul></ul><ul><li>Expectations outside of education are changing expectations of buyers </li></ul><ul><li>A window in on early stage innovation </li></ul>
  3. 3. Our Panel <ul><li>Subscriptions – Mark Tullis, </li></ul><ul><li>iTunes & Ad Network – Joe McDonough, </li></ul><ul><li>Open Source – Martin Knott, </li></ul><ul><li>Micro-Distributorships – Lee Wilson, </li></ul><ul><li>Embedded Sponsorships – Lee Wilson, </li></ul>
  4. 4. Format <ul><li>Brief presentations by panelists </li></ul><ul><ul><li>8-10 minutes each </li></ul></ul><ul><ul><li>Covering what, why, results </li></ul></ul><ul><li>Q&A 20-25 minutes </li></ul><ul><ul><li>Take notes, challenge us! </li></ul></ul>
  5. 5. Pricing 2.0 Mark Tullis VP Strategic Relations 05/21/10 The A ssociation of E ducational P ublishers
  6. 6. Subcription + Digital Pros 05/21/10 The Association of Educational Publishers Modular Cost Effective Flexible Engaging
  7. 7. Subscription + Digital 05/21/10 The Association of Educational Publishers Student Usage & Performance Compare U&P Assess Customize Pattern Match Recommend Best Practice Analyze = Data
  8. 8. Subscription + Digital <ul><li>Pros: </li></ul><ul><ul><li>Cost effective for customers (Goal: pay for use) </li></ul></ul><ul><ul><li>Instant & universal updating </li></ul></ul><ul><ul><li>Can be customer-customized </li></ul></ul><ul><li>Cons: </li></ul><ul><ul><li>Some schools unfamiliar with model (this is improving) </li></ul></ul><ul><ul><li>Renewal dependent on customer service (+ or -) </li></ul></ul><ul><ul><li>Champion turnover risk </li></ul></ul><ul><ul><li>Other renewal risks </li></ul></ul>05/21/10 The Association of Educational Publishers
  9. 9. 05/21/10 The Association of Educational Publishers $60 - $24 = $36
  10. 10. iTunes and Ads Joe McDonough 05/21/10 The Association of Educational Publishers
  11. 11. <ul><li> Content-agnostic, Web 2.0 sales point for classroom instructional content. Offers a single distribution portal and purchase point for content from multiple publishers, such as NBC News, PBS, McGraw-Hill, National Geographic and more. </li></ul><ul><li>HotChalk Network: Network of over 50 education-focused Web sites that offer free, ad supported content. Currently reaching over 7 million unique visitors and growing and is the #2 education property online as rated by comScore. </li></ul>
  12. 12. MyLibrary Content Management & Distribution Benefits <ul><li>Publisher: </li></ul><ul><li>New distribution point for added sales </li></ul><ul><li>Be part of a successful grass roots education movement </li></ul><ul><li>School/Districts: </li></ul><ul><li>Choice of on demand content from top publishers </li></ul><ul><li>Simple to set up and use… multiple Systems no longer needed </li></ul><ul><li>Saves districts thousands in monthly broadband costs </li></ul><ul><li>Teachers weave content into their curriculum in seconds </li></ul><ul><li>Added classroom discussion materials aligned to state standards </li></ul>
  13. 13. HotChalk Network Benefits <ul><li>Publisher </li></ul><ul><li>Concentrate on doing what you do best: Publish Great Content </li></ul><ul><li>Be part of a much larger education property and attract larger advertisers </li></ul><ul><li>Education-focused ad network-only appropriate ads for your audience are placed </li></ul><ul><li>Advertiser </li></ul><ul><li>Huge audience reach </li></ul><ul><li>Targeting options for specific demographics </li></ul><ul><li>Options: Optimize performance with access to many sites at once for best results </li></ul><ul><li>Manage marketing buy from one location instead of dozens </li></ul><ul><li>Online tracking ability for best ROI </li></ul>
  14. 14. Moodlerooms, Inc. Martin G. Knott CEO 1101 East 33 rd Street Suite C 301 Baltimore, Maryland 21218 443-451-7225 DD 410-250-7335 Cell [email_address]
  15. 15. What is an LMS Administrators, advisors, registrars, & parents have specified system roles to review progress Instructors can build or copy courses, create and distribute assignments, as well as tests, deliver lessons, provide feedback, and manage records anytime from anywhere Students access, class work, course content, review, and submit homework, assignments, collaborate with one another, and participate in discussions on-line.
  16. 16. What is Moodle <ul><li>Moodle is an Open Source Learning Management System (LMS) developed by Martin Dougiamas, in 2001. </li></ul><ul><li>Moodle is growing at unprecedented rates because: It is </li></ul><ul><li>Very user friendly </li></ul><ul><li>Meets all accessibility requirements, </li></ul><ul><li>Scalable from the individual user and with the assistance of Moodlerooms (MR) to an enterprise solution, </li></ul><ul><li>Highly integrated and richly functional, and </li></ul><ul><li>Allows teachers, students and administrators in academia, corporate, and government to communicate seamlessly. </li></ul>
  17. 17. Why Moodle? <ul><li>Moodle is a proven, fully functional, flexible, free open source online learning management system </li></ul><ul><li>Moodle extends the classroom to an online environment using collaborative social interaction to improve the learning process </li></ul><ul><li>The users of Moodle directly contribute to its upgrades and enhancements </li></ul><ul><li>Moodle is a community that listens to its users </li></ul><ul><li>Moodle has 20 million users in 196 countries and is available 75 languages </li></ul>
  18. 18. Why Moodlerooms? <ul><li>Moodlerooms provides Moodle training, support, hosting, customizations, tools, and course conversions. </li></ul><ul><li>Moodlerooms unique hosting platforms ensure each customers Moodle runs on redundant, load balanced, enterprise class servers and can handle 1 million concurrent users. </li></ul><ul><li>Moodlerooms, the world’s largest Moodle Partner, returns 10% of its revenue back to the Moodle community. </li></ul><ul><li>Moodlerooms solutions along with Moodle provide a platform that is not locked or limited by a single vendor. </li></ul>
  19. 19. Pricing Model <ul><li>MR delivers Software As A Service (SAAS) </li></ul><ul><li>Our price is on a per user per year basis </li></ul><ul><li>There are three tiers and each one adds more tools and a higher level of service </li></ul><ul><ul><li>Basic </li></ul></ul><ul><ul><li>Standard </li></ul></ul><ul><ul><li>Premium </li></ul></ul>
  20. 20. Selection of Pricing Model <ul><li>We spent the first year and a half testing the market and gathering data on similar companies </li></ul><ul><li>The data demonstrated that clients were seeking other services and wanted them incorporated in a single price point. </li></ul><ul><li>Also, some customers were afraid of the low cost of our services </li></ul>
  21. 21. Implementation Problems <ul><li>Determining what service to place in the specific tiers. </li></ul><ul><li>Making sure we addressed what the market was telling us </li></ul><ul><li>Working out the transition from the old to the new with existing clients </li></ul><ul><li>Reconfiguring the Web site to accommadate the changes </li></ul>
  22. 22. Results <ul><li>Too early to tell but the initial reaction is mostly positive, especially the price per user </li></ul>
  23. 23. Lessons Learned <ul><li>Do not under estimate the value of a youthful Director of Marketing </li></ul><ul><li>Look at a host software products and Web configurations </li></ul><ul><li>Chose these products cautiously and do not place unreasonable time constraints upon the selection and launch timetable </li></ul><ul><li>Do not be afraid to use a focus panel. The BLE Group was superb and worth every penny </li></ul>
  24. 24. Partial Client List <ul><li>Louisiana State University </li></ul><ul><li>Rutgers University </li></ul><ul><li>Cornell University </li></ul><ul><li>Santa Cruz, CA Schools District </li></ul><ul><li>Killeen, TX Public Schools </li></ul><ul><li>District 206, IL </li></ul><ul><li>Intel </li></ul><ul><li>The Lubrizol Company </li></ul><ul><li>University of Mary Washington </li></ul><ul><li>Thunderbird School of Global Management </li></ul><ul><li>Norwalk Public Schools </li></ul><ul><li>City College of San Francisco </li></ul><ul><li>New Jersey Institute of Technology </li></ul><ul><li>Medical College of New York </li></ul><ul><li>Frederick County Public Schools </li></ul><ul><li>San Mateo Community College </li></ul><ul><li>Wicomico County Public Schools </li></ul><ul><li>University of Louisiana Monroe </li></ul><ul><li>Cisco </li></ul><ul><li>Baptist Health System </li></ul><ul><li>Wabash College </li></ul><ul><li>St. Paul’s School </li></ul><ul><li>Xavier High School </li></ul><ul><li>Cranbrook Schools </li></ul>
  25. 25. Micro-Distributorships We Are Teachers
  26. 26. Definition Micro-Distributorships <ul><li>50% of sales at every education company I have worked at is from an educator reference </li></ul><ul><ul><li>No sales, no marketing, no contact </li></ul></ul><ul><li>Enabling teachers to act as sales agents </li></ul><ul><li>Web based social networking </li></ul><ul><li>They can sell their own materials </li></ul><ul><ul><li>The 1% rule </li></ul></ul><ul><li>They will sell publisher materials </li></ul><ul><ul><li>Ideal for long tail products (back list) </li></ul></ul>
  27. 27. Why? - We Are Teachers <ul><li>A new business model to formalize an informal aspect of the market </li></ul><ul><ul><li>15% commission </li></ul></ul><ul><li>Reward teachers for what they have always done </li></ul><ul><li>Leveraging the power of social networking specifically for education </li></ul>
  28. 28. Challenges <ul><li>The value of a network is logarithmic </li></ul><ul><ul><li>Building it quickly is important </li></ul></ul><ul><ul><li>Wholesale membership from associations </li></ul></ul><ul><ul><li>Facebook Widget </li></ul></ul><ul><li>Publisher willingness to place products in an open environment </li></ul><ul><li>Helping publishers configure their presence </li></ul><ul><li>Sorting out the e-commerce interface </li></ul>
  29. 29. Results <ul><li>17,000 teachers in the network </li></ul><ul><li>80 publishers across many disciplines </li></ul><ul><ul><li>2,000+ products in the catalog </li></ul></ul><ul><li>42,000 teachers in the Facebook widget </li></ul>
  30. 30. Embedded Sponsorship
  31. 31. Why Whyville? <ul><li>A frontal assault on reforming Science Education in California failed (CAPSI) </li></ul><ul><li>Social worlds harness the power of identity creation </li></ul><ul><ul><li>Tweens turning outward </li></ul></ul><ul><li>Allowing kids to connect directly with each other is a natural path to engagement </li></ul>
  32. 32. Whyville <ul><li>Virtual world for Math and Science </li></ul><ul><li>Founded 1999 </li></ul><ul><li>3 million+ users </li></ul><ul><li>70% girls </li></ul><ul><li>Sponsorship driven </li></ul>
  33. 33. Embedded Sponsorship Defined <ul><li>Not banner ads </li></ul><ul><li>Sponsors build activities that engage learners with content they care about </li></ul><ul><li>Toyota Finance – Virtual cars </li></ul><ul><li>Texas Workforce – Bioplex </li></ul><ul><li>6 months to 36 months </li></ul><ul><li>Development fees up front with maintenance fees ongoing </li></ul><ul><li>Measured in CPM – but on deep engagement </li></ul>
  34. 34. Results <ul><li>A new media company </li></ul><ul><li>Going global </li></ul><ul><li>Sustained engagement with math and science content </li></ul><ul><ul><li>After 10 visits kids stay involved for 18 months </li></ul></ul><ul><ul><li>150-250k active users per month </li></ul></ul><ul><li>“It isn’t about eyeballs – it is about eyeballs connected to brains” </li></ul>
  35. 35. Q&A 05/21/10 The Association of Educational Publishers