Behind The Scenes Numbers From UniversityTutor.com (Revenue & Expenses)

In: Education|Updates By: Brian Armstrong

15 Feb 2010

This entry is part 18 of 21 in the series UniversityTutor.com

Things have been growing nicely at my business, UniversityTutor.com, in the last few months.

Here are a few graphs that I have auto-generated each week to see what’s going on. I really like the idea of having a “dashboard” for your business like this to help you see the cycles and spot anomalies early on. If you can’t measure it then you don’t know how close you are getting to your goal, so I recommend having something like this for your business if you don’t already. These I custom programmed but you could have your programmer do something similar or make them in Google Analytics or Excel.

These show daily totals for a bunch of different metrics that I track, and a cumulative total for number of paying subscribers.

The last month:

The last quarter:

A few points…

If you are wondering what happened around Jan 1st to cause subscribers to go up, I don’t really know. I think it was just the new year. December was sluggish.
I did do some marketing to get new tutors (hence the spike in the yellow line) but I don’t think this is what caused the whole subscriber increase – it was probably just from tutors starting the new year and wanting to get new jobs.
At $10 per month, the subscribers is the main metric I watch. To get an idea of the business model you can check out the tutoring jobs page. So you can multiply $10 times the number of subscribers to get an idea of the monthly revenue.
The expenses are almost nil, about $70 per month in web hosting cost and sometimes I play around with different marketing expenses but these aren’t much. So the profit margin is high and it’s been cash flow positive since almost the first month I launched it.
It is now two years ago that I started this project and I have to say I thought it would have grown much faster than it did. Two years is a long time! But then again I’m always impatient and there were some failed experiments along the way which slowed things down.
On the plus side, it is truly passive at this point (I spend probably an hour per week on it) and it is growing nicely so it could become a popular site and valuable asset over time.

Probably the best thing that can help the site grow at this point is to start ranking better in search engines for some tutoring related keywords (to draw in more parents and students). The site ranks really well in some cities, but not so well in others, so hopefully as it continues to garner new links it will build reputation with Google.

Hopefully this helps give you get an idea of what goes on behind the scenes in a business like this. If there is anything else you want to see, just let me know in the comments. And if you have any ideas on how I could take it the next level, I’m always curious to hear people’s feedback on the site.

Until next time, keep breaking free!
Brian Armstrong

This post is part of a series on: UniversityTutor.com

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16 Responses

John Chen

February 15th, 2010 at 7:05 am

Do you have any idea about the size of the market? It might be you’re in a super tiny market..?

Brian Armstrong

February 15th, 2010 at 7:32 am

Hey John, I have no idea the total market size but I know it’s quite big (think about Kaplan, Sylvan, Kumon, etc) who’ve made a good franchise business out of it all over the U.S. So I’m only scratching the surface. I will say that I think part of the lackluster growth is due to it being a consumer product. Consumers tend to be reluctant to pay for web based services, whereas business will spend money to make it. The 37Signals guys made a good point about this in one of their talks, how when they switched it to a business product it took off.

For anyone interested here is the talk:
http://37signals.com/svn/posts/981-the-secret-to-making-money-online

What do you think?

Chuck Cohn

February 15th, 2010 at 8:22 pm

John, from what I’ve read, the loosely defined “tutoring” market is $12 billion. About half of that is No Child Left Behind / SES tutoring provided within schools. Then there is extremely specific test prep tutoring [not SAT/ACT, but things like Armed Forces tests, scuba diving classes and other things that I wouldn't consider "academic tutoring"]. In terms of what is relevant to University Tutor, I’d be the market is about $3 billion to $5 billion. So it’s a big market. That’s just in the US. I’ve never seen any OUS stats, but would love to see them if anyone has access to that data.

Brian Armstrong

February 15th, 2010 at 11:03 pm

Thanks for the data Chuck, had a feeling you would know that :)

Interesting to note that UniversityTutor is now growing outside the U.S. fairly well too (mainly English speaking countries, Australia, Canada, and UK). Haven’t done the work to translate the site into other languages, but the cities are all there for the whole world so there are a handful of people in maybe a dozen other countries too.

Patrick Toerner

February 15th, 2010 at 9:36 pm

Hey just curious Brian, you spend $70 a month on hosting?

Brian Armstrong

February 15th, 2010 at 11:04 pm

Yep, I use Slicehost.com (1GB plan). I’m pretty happy with it. Ruby on rails apps use more memory than you might be used to if you are doing PHP or something like that (if it sounded high).

http dev

February 16th, 2010 at 9:39 am

Well it looks like your subscriptions are picking up, so hopefully the revenue will continue to grow. good luck and thanks for sharing!

Brian Armstrong

February 19th, 2010 at 5:13 am

Thanks!

Chris Guthrie

February 17th, 2010 at 12:41 am

Hey Brian,

I think you’re at a place in your business where you really should just start to market it via Adwords (or better yet Facebook) to acquire more tutors. You have a website that is set up for scaling and one that is self reinforcing (the more tutors you get the more likely someone visiting the site is able to find a tutor and recommend it to a friend).

I’d also get rid of the Google Adsense unit in the bottom right corner of the footer as I’m sure that does nothing in revenue and instead just shows off your competitors.

Going back to my first point though – as long as you can convert people through your ads into paying subscribers for less than it cost to acquire them then you’re gold right?

Chris Guthrie

Brian Armstrong

February 19th, 2010 at 5:13 am

Yep good points and thanks Chris. I’m doing some adwords now…the payback period is long (in other words doesn’t convert right away) so I’m not crazy about bidding tons more for the traffic, but it’s a start. Facebook is a bit better for sure.

Paul

February 19th, 2010 at 8:44 am

Hi Brian,
thank you for sharing, great information.
I have set a google alert for universitytutor.com and noticed that alert gives me _consistently_ 15-20 pages from your site (tutor profiles). Not random links to your site as i would expect from google alert, but actual pages of your site. I’ve never seen this.
Can you share, how you do this?
Thanks again

Brian Armstrong

March 2nd, 2010 at 6:47 am

Hmm…I’m not sure honestly. It is probably new tutor’s creating profiles that are showing up. The Google Alert should show mentions by other websites as well but there probably aren’t as many of those. Hope it helps!

Aaron K

March 4th, 2010 at 4:07 am

Brian–
This business is a great idea. I’m pretty sure you have a growing asset on your hands. I am envious. And, thanks for posting the behind-the-scenes details.

Luke

April 19th, 2010 at 2:03 am

Hi Brian,

I just signed up on universitytutor.com and ran across this posting. I’m curious, if you have over 12,000 tutors on the website, how is it that you only have 150ish subscribed? 11,850 are still on their first three clients??

Luke

Brian Armstrong

April 19th, 2010 at 6:07 am

Hi Luke…yep well the 12k is number of tutors who’ve signed up over all time. Some of those haven’t used their 3 contacts yet. Some have used the 3 and not subscribed. Some have used the 3 and subscribed, but are no longer subscribed. And yes…about 150 at the time that graph was taken were still subscribed :) It might seem low, but from what I’ve seen this is about average for most “freemium” products 1-2% conversion rate. I agree, I had higher expectations coming in though.

Breaking Free

Behind The Scenes Numbers From UniversityTutor.com (Revenue & Expenses)

The last month:

The last quarter:

A few points…

16 Responses

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