Old Pichawe Chat online education: Pricing of online education

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For the Chinese Internet online education entrepreneurship boom, I black horse author Wei Chi specifically invited online education for many years of entrepreneurs old skin, a system of in-depth discussion line education. In 2009, the company founded China's first 1-1 online education website, and now he is working on an online education website for an internet boss. Both the old and the small are dry-controlled, so the series will take away all the fancy decorations and useless rhetoric, and use clear logic and detailed data as the support to deeply explore the problems of the online education industry at all levels.

Are you ready? This series of articles will probably be the most dry articles on online education in China Internet. Our first issue is the basic problem of line education survival-pricing.

Author: Old Piver

Graphic design: The dream of Zhang

People are willing to pay for online education services

Q: Is the Internet free culture prevalent in China and are people willing to pay for online education?

At present, online education users pay habits are still in cultivation, as in the year just the rise of the net shopping, although the market Foundation already exists, but the consumption habits are far from forming. With the current trend, the initial formation of a large-scale online education consumer market at least 3-5 years, but the consumer market has shown an unstoppable trend.

On May 4, YY's 2013Q1 earnings conference call, Lee Colling's speech explained the online education consumer market is an unstoppable cause, Lee Colling said: "The study found that once users choose online education, it will be difficult to return to the traditional education." The convenience of online education, time elasticity, 1 to 1 of the teaching methods, and even the maintenance of the relationship between students are traditional education is deficient.

Gong founded 91 foreign teachers, Lee Colling announced YY will give full impetus to the education business, Liu Yan identified online education market will burst and acquisition of online education institutions benefit for the exchange, Xiaoping put a lot of investment in the field of online education-the Chinese Internet elite have been using action to prove the online education market good growth situation. Perhaps as Xiaoping says, "online education is likely to be as pervasive as electricity in two years ' time, and people are generally willing to pay for online education for only 3-5 years."

Motivation for people to buy online education services

Q: Who would be willing to buy an online education service?

At present, because online education does not have a good model to really cut into the needs of Chinese education-exam-oriented education, so now all online education services in China's Internet can only meet the two motives for the purchase of education services: 1. Improve the quality of their own; 2. Vocational skills training. On the basis of these two motives, the main consumer groups in China's online education are college students and white-collar workers, although online education consumer groups seem to be relatively narrow, but the consumption capacity is very strong. According to the authorities surveyed, white-collar average willing to pay for professional skills to increase the annual cost of 10000 yuan, and college students on average willing to spend 1000 yuan in extra-curricular study.

And white-collar consumption will be online education really open the market opportunity, because the pace of life work, white-collar more need to use "debris time" to learn. Market research shows that "more than 90% of white-collar workers choose to study at night, hoping to control the study time within an hour, 2-3 times a week,"-a non-online education that can meet this type of learning. In the market survey, college students have more leisure time, so they prefer to choose traditional teaching in small classes to improve themselves.

Therefore, online education in the initial stage of development, the main consumer will be the working family, the workers will be willing to their own professional skills (oral, programming, sales, etc.) to promote the purchase of online education services.

Pricing and cost composition of online education

Q: How can online education be priced compared to traditional training institutions?

In order to discuss the pricing of online education, it is necessary to have a deeper understanding of the cost composition of online education. Traditional training institutions (new Oriental, learn and think, etc.) the cost composition is: The venue rents about 15%, the market promotion 15–20%, the sales cost about 15%, the teacher salary 30–50%. and online education will not have to pay high site fees, teachers are very cheap, with 91 foreign teachers and VIPABC online education Web site to recruit foreign teachers, they can use the price of 10-20 dollars per hour to hire foreign teachers, using the advantages of the Internet, Teacher resources worldwide can be used at low cost for online education, and on average, online education teachers ' salary costs are 70% or even lower for traditional institutional teachers.

Although the fees for teachers and venues are very low, but the initial cost of setting up an online education is very high, and online education has a high demand for content quality and product interaction, so upfront research and development costs, as well as servers and other facilities, must be high input, said old leather, a seemingly good online education site, Upfront investment should be at least 20.5 million (if your own research and development of education software will be higher). But later, due to the Internet and the features of the software, the marginal cost of online education services [Note 1] is almost zero, so the late cost of spending will be very low--now enjoy the same education, online education pricing only half of the traditional education, and in the future, this price will be lower, Traditional educational institutions will face a "price attack" of horror of online education.

As a result, the lower the cost of online education, the higher the pricing power, and the greater the advantages of education combined with the Internet and software. A formed online education site, its large cost will focus on marketing and sales.

The psychological price of online education in the public mind

Q: How much do people want to spend on online education?

The problem is more complex, because people's willingness to pay differs in different online education models, but the basic and "Maslow needs" [Note 2] coincide. In other words, people are willing to pay more for "physical needs", such as vocational skills training for higher incomes. and respect for demand, self-realization level of things, people's willingness to pay will be very low, for example, not many people will be for NetEase open class happiness and death research courses paid.

In general, as long as there is a willingness to buy the group, the same content, online education pricing can be chlorotrifluoroethylene between offline training, taking 91 foreign teachers, for example, to provide 1 to 1 foreign teachers in 300/hour, customer purchase rate is relatively stable, and the line for the same service new Oriental charges about 500 yuan/hour.

Comments：

1. Marginal cost: in economics and finance, marginal cost refers to the increase in the total cost per unit of new production (or purchased products). This concept indicates that the cost per unit of product is related to the total product volume. For example, the cost of producing only one car is enormous, and the cost of producing a 101th car is much lower, and the cost of producing a 10,000th car is lower (because of economies of scale). However, given the opportunity cost, marginal costs may increase as production increases. In this case, the material used in the production of a new car may be of better use, so the maximum number of vehicles can be produced with the least amount of material, so as to increase marginal profitability.

2. Maslow's Hierarchy of needs theory: Maslow's Hierarchy of Needs theory (Maslow ' hierarchy of needs), also known as the "Basic demand Hierarchy Theory", is one of the theories of behavioral science, which was presented by American psychologist Maslow in a 1943 paper on human motivation theory. The theory divides the requirements into five types, from low to high, as well as from lower to higher levels, as follows: physical needs, security needs, emotional and attribution needs, respect for demand, self-realization of demand. Two other needs: the need for knowledge and aesthetic needs. These two needs are not included in his hierarchy of needs, which he believes should be between respect for demand and self-realization. The value and application of hierarchy theory are also discussed.

Next, the Wei and the old will discuss the life and death of online education: How to recruit online education, please look forward to!

Author Introduction:

Old skin, many years online education entrepreneur, China's first 1 to 1 online education website founder, now for an Internet boss to create online education website to provide services, online education has a profound understanding and a unique understanding.

Wei Chi, the name of the strange I Black horse author, like to observe the Internet, believe that "change is the world change" idealist, entrepreneurial control, product control, dry control.