UniversityTutor Races Past 200 Paying Customers

In: Business Ideas|Success Stories|UniversityTutor.com By: Brian Armstrong

7 Sep 2010

UniversityTutor.com hit a little milestone this past week: 200 paying tutors!

At $10/month each this might not sound like a lot (and it really isn’t) but for me it was pretty cool because this was my original goal for myself way back when I first started the site, more than 2 years ago.

In fact, (this is really silly but) during that entire time I’ve had this little stickie note on my computer desktop with that goal written down:

When I started I thought it would take maybe 6 months tops to reach this. Now it’s finally done – it only took about two years longer to accomplish than I thought it would! :) (With some nice setbacks along the way.)

My daily stats dashboard:

I took the occasion to implement a change I’ve been thinking about for a while on the site: making the free account unlimited.

Below is a summary of the changes and some screenshots of the new signup process I recently deployed.

Old business model:

Tutor signs up
First 3 times they are contacted on the site it is free
After the third contact, I ask them to upgrade (conversion rate around 1.8%). Those tutors who don’t upgrade can no longer use the site.

New business model:

Tutor signs up
Right after filling out their profile they are asked to choose a free listing or featured listing
Featured listing gives you top placement in search results, featured on the homepage, etc (conversion rate currently at 4%).

Main difference is that now you can keep the free listing forever if you want (you never get kicked off). Instead, the incentive to upgrade is getting more tutoring inquiries with a featured listing (show up on homepage, first in search results, badge on your profile, etc).

Here are some screenshots of the new signup flow:

You can see all the benefits listed on the final signup page. This is the most important one.

And here here are some examples of “featured” tutors:

Random thoughts on the change:

I was sort of worried about making the free listing unlimited because it creates less of an incentive for tutors to upgrade. But so far this looks like it was nothing to worry about – conversion rate to paid is actually better (need more data to say for sure here).
I think the new signup flow where it asks them to upgrade from the beginning (but doesn’t prevent them from doing it later) is mostly responsible for this. Tutors no longer have to wait for their “free trial” to expire for me to ask them to upgrade.
I changed the wording from a “Free Account” vs a “Pro Account” to a “Free Listing” vs a “Featured Listing”. This wording change seems to work better here since “pro” is an ambiguous term, but a “featured listing” makes it clear exactly what they are paying for.
I also added language to the page saying “Featured listings receive 4x as many inquiries as free listings on average” which is true (I ran some numbers).
In large part, this new signup flow is modeled after the Sortfolio.com signup flow which I really like. So they deserve a shout out here.

If you think about the freemium business model as a spectrum (crude diagram below), then this change is definitely a shift to the left (towards more free):

[100% Free -------------------- Freemium -------------------- 100% Paid ]

But it seems to have worked well here in earning more (ironically). The tricky part about Freemium is where to draw the line between free and paid and the decision is different for every business. I read a great piece of advice recently which said (I’m paraphrasing) “If your site benefits from network effects (basically that the value of the site grows with the number of users) then you should give more things away for free, and if it doesn’t benefit from network effects then you should make more things paid.”

That advice was helpful to me in this case – a tutoring directory definitely seems like it has some network effects. I didn’t want to be losing those ~98% of tutors from the site who tried it out but didn’t want to upgrade. This allows me to capture both groups and build a bigger site.

The site is growing even faster now that I made this change and it’s already over 220 paying tutors as I write this. So this may turn out really well (too early to say for sure). What are your predictions on this change?

Until next time, keep breaking free!
Brian Armstrong

P.S. To read up on the whole UniversityTutor story, you can view the category page here.

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49 Responses

Matthieu

September 7th, 2010 at 9:24 am

Thanks for sharing! Very interesting!

Brian Armstrong

September 7th, 2010 at 9:55 am

Glad it helped!

Danny Cooper

September 7th, 2010 at 10:36 am

Great article, Brian! So much so that it inspired me to read five or so of your other posts, you have some really solid content on here.

If you don’t mind me asking, how much traffic is UniversityTutor receiving now? In one of your other articles I think you said 500 visitors a day?

Cheers!

Brian Armstrong

September 7th, 2010 at 6:22 pm

About a 1000 uniques a day now. Thanks Danny!

Sebastian Marshall

September 7th, 2010 at 11:04 am

Hey, I like this post a lot – big congratulations on persevering and getting there from here.

Question: I’m looking at your “subscribers” bar in the chart, and your churn/cancel rate seems really, really low – any insights on that? Or am I reading it wrong, and you were just adding new subscribers at the same or faster rate than cancellations most of the time?

Congrats again, it’s awesome to meet a project goal like that. You must be walking on air right now, I always am when I hit a long term milestone like that. Best wishes.

Chad DePue

September 7th, 2010 at 11:48 am

Brian – Great article and congratulations! And at the top of HN, too! You just need a Mixergy interview for the trifecta!

Brian Armstrong

September 7th, 2010 at 11:37 pm

Ha…thanks Chad. The site is still pretty small time, but would love to some day :)

Richard

September 7th, 2010 at 12:08 pm

Brian,

Congratulations on reaching that milestone. With 200 paid listings, do you find any issues with some searches returning too many featured results? Do you utilize auto-rotation code for the homepage and search results to ensure each paid listing gets enough impressions while not overrunning the results pages with featured listings?

Brian Armstrong

September 7th, 2010 at 11:38 pm

Hi Richard,

On the homepage yes they auto-rotate. Haven’t seen a problem with too many paid listings yet, especially when they search by both location and subject (usually there are only 1 or 2 featured, sometimes none). But if it becomes an issue I suppose the price could always go up. Haven’t thought too much about this yet. Thanks!

Mubashar Iqbal

September 7th, 2010 at 1:48 pm

Congratulations on reaching your milestone, gives hope to the rest of us struggling along :)

Brian Armstrong

September 7th, 2010 at 6:23 pm

Thanks Mubashar :)

Tom

September 7th, 2010 at 3:56 pm

Way to go Brian!!!

Brian Armstrong

September 7th, 2010 at 6:23 pm

Thanks Tom!

John Stracke

September 7th, 2010 at 6:09 pm

“Featured listings receive 4x as many inquirires” — “inquiries”. If this typo is only in this blog post, no big deal; but I figured I’d speak up in case it’s on the site.

Brian Armstrong

September 7th, 2010 at 6:24 pm

Got it fixed, thanks John!

Chuck Cohn

September 7th, 2010 at 6:25 pm

Congrats on the milestone, Brian. Nice work.

Brian Armstrong

September 7th, 2010 at 11:40 pm

Thanks!

kareem

September 7th, 2010 at 6:39 pm

congrats brian! you might want to try A/B testing moving the featured box to the left of the free box on this page and see what it does to conversions:

http://www.startbreakingfree.com/wp-content/uploads/2010/09/Screen-shot-2010-09-06-at-11.10.31-PM.png

kareem

Brian Armstrong

September 7th, 2010 at 11:40 pm

Yep – good idea Kareem. There is prob lots more split testing I could do, and this would be a good candidate.

September 7th, 2010 at 7:45 pm

Congratulations, Brian, on meeting your goal – and in such a tight economy!

Thanks for sharing your success – along with your projected timeline and the realworld payoff – with us now.

Brian Armstrong

September 7th, 2010 at 11:40 pm

Glad you found it useful!

Jason Demant

September 8th, 2010 at 9:02 am

Congrats Brian! It seems so often you read about a company that is an overnight success. While that makes a fun story and a good read, this is much more inspirational to me. You’ve grinded through it, tried a lot of things, and grew the business slowly. Congrats again.

On a sidenote, I like that you posted your goal on a post-it note on your desktop, I’ve decided to do the same.

Jason

Walid Taha

September 8th, 2010 at 1:10 pm

Congrats Brian!

Thank you also for the nice write up. I liked your analysis a lot. It seems there are two benefits to letting free accounts persist indefinitely. The first is that the user may change their mind about upgrading over time. Clearly, there is always a temptation to get the better service in exchange for a pay, and the users may see the tradeoff differently over time. The second is that your users still get improved service from the free users, and it’s a benefit that the users get without you having to pay additional costs to get it.

Thank you for the inspiring post!

Brian Armstrong

September 10th, 2010 at 6:25 pm

Hi Walid, yep you are right on – having the free users stick around does benefit me – more clients find the website useful, and I also put ads on free tutors profiles. Capture the best of both!

Eric Northam

September 8th, 2010 at 1:54 pm

Great job and congratulations Brian! It’s also great to see another example of hot to utilize the Freemium model to improve your site and eventually convert more paid users. Cheers and now on to 500!

Brian Armstrong

September 10th, 2010 at 6:26 pm

Thanks Eric – yep I’m a big fan of freemium, it seems to be the winner of the web 2.0 biz models.

James

September 8th, 2010 at 2:15 pm

Congratulations, that’s fantastic. I’ve looked into joining your site, but it seems very location-based at the moment. I’m growing an online organic chemistry tutoring business (I’m in Jerusalem) but all my clients are in the US. How can I can best use your site to grow my business?

Brian Armstrong

September 10th, 2010 at 6:28 pm

Hi James, Good point – right now it really is location based so there isn’t a good way to be listed across multiple locations (or only for online tutoring). I haven’t seen the software be good enough in most cases for online tutoring to work in math/science related subjects where keyboards can’t enter formulas or diagrams. What software do you use for your online tutoring?

James

September 11th, 2010 at 5:04 am

I use Skype video and a small personal whiteboard. I’m able to whip chemical structures up really quickly by hand and show them. If you’ve got 10 minutes I’d love to show you how it’s done.

Felipe

September 9th, 2010 at 1:49 pm

It’s great being able to follow your journey from 2008 to now… I think we’ll see the network effect lift your tutor numbers exponentially from now on

Brian Armstrong

September 10th, 2010 at 6:28 pm

Agreed, thanks Felipe!

College Town Menus (CTM)

September 12th, 2010 at 10:55 pm

Great work, Brian! I agree, onto a higher benchmark goal, 500 should be no sweat now! I wan to try your new approach on my website and track the progress. I’ve been getting more inquiries FROM restaurants about CTM, which is great.

Also FYI, you mention
“To read up on the whole UniversityTutor story, you can view the category page here.”
—but you dont even list THIS article as UniversityTutor category. Add it so that people can see the aggregate of all UT articles!

Cheers.

Brian Armstrong

September 12th, 2010 at 11:25 pm

Great point, just got that fixed! Thanks ;)

September 13th, 2010 at 4:09 pm

congrats, only thing i wud say is agree with above, the model may not be sustainable once you have a larger number of subscribers – every extra subscriber reduces the value of subscription for everyone else.

as you say you could increase the price if u hit this problem, or maybe offer a featured and premium listing ($5, $10, or 10-15 whatever) different price plans with different benefits.

also i notice that the featured listings on the homepage is kind of useless because the subject doesnt come up with their name.

http://www.startbreakingfree.com/wp-content/uploads/2010/09/featured1.png

only if the tutor has said it in the first 2 lines of their info.

maybe you should add a specialist subject line under name and location? sure they wud get a lot more clicks

love the site

Brian Armstrong

September 13th, 2010 at 8:19 pm

Yep thats a good point, thanks!

James Kennedy

September 18th, 2010 at 5:46 pm

Hi Brian –

Congratulations on this great milestone. You are totally rocking it. The site looks fantastic and I’m amazed you’ve managed to do it all solo. It is an inspiration.

If I had to guess, I’d say having too many premium members won’t be a problem. Right now, people probably see that they get a fair bit of value without having to sign up to premium. When all the premium spaces edge out the non-premium members, there will be more motivation to upgrade.

I would still come up with some price point above the $10. You can leave everything as is but figure out some excuse for some people to pay you more. This could be a badge, extra verification or who knows. I do know that at least having some upgraded feature should give you an easy bump in the figures.

I look forward to the Mixergy interview ;)

James

September 19th, 2010 at 3:28 am

The $10/month price point is actually a little higher than what competing services like tutornation charge ($70/year). I wouldn’t pay for a badge or some kind of bogus “tutor certification”, because there’s no value in it. However if some extra service that could be offered to paying clients – as I suggested to Brian, perhaps the option (opt ional of course) to make communications from students to tutors public, or some extra exposure from being a “featured” tutor – that might work.

James Kennedy

September 20th, 2010 at 3:21 pm

You bring up an interesting point about value.

I’m sure there is something that can be added to a higher price plan. It is not about providing ‘bogus’ features – it is about making an offer which people can make their own minds up as to whether they would accept or not. In any group, there will always be a % who are willing to pay more than the others. Right now, the pricing model doesn’t offer anything for these people. The price point is not optimised. There is a good discussion on this over at …

http://blog.whatclinic.com/2010/09/your-prices-are-too-low.html

James

Brian Armstrong

September 21st, 2010 at 1:04 am

Hey James, yep I think you are right and there is good economics behind this idea of segmenting the market. I will have to think a bit on how I could differentiate the product. Thanks!

sanjayej

June 27th, 2011 at 5:54 am

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daniel

September 23rd, 2010 at 9:44 am

hi James,
i want to ask u something..can u give me your email or email to me?
this regarding universitytutor.
thanks

daniel

September 24th, 2010 at 12:32 am

correction..actually i want to ask brian..
can u email to me? :)

Brian Armstrong

September 24th, 2010 at 5:58 pm

Hi Daniel,

Contact form here: http://www.startbreakingfree.com/contact/

Scott Bourquin

September 28th, 2010 at 6:18 pm

Great insights into doing something you want to do and as Winston Churchill said “Never, never, never, never give up.” Most people would have given up after a few weeks. Two years is awesome. Keep going! When Nike says “Just Do it!”, most people ask “Just Do What?”. You found your “What?” and that is what more people need to do.

Scott

szkolenie bhp

September 29th, 2010 at 5:45 am

good article, good job:)

Jolanda Mistrot

October 4th, 2010 at 3:13 am

Terrific web-site, where did you find that information in that post? I am pleased I found it even though, ill be checking back quickly to see what other articles you’ve.

Kenya

December 2nd, 2010 at 3:49 am

Hi Brian,

First of all, congratulations on all of your sucessful endeavors in life. I do have a question. I have an amazing business opportunity that I’m involved in right now, which oddly enough, the company I’m with started in your home state of Texas (by reading your posts I gathered that you are from Texas?) Anyway, my company is the fastest growing privately held company in all of the USA and we are only in parts of 4 states. It is an MLM company and I’m trying to find ways of simply getting people to look at my business. It is literally a 25 minute video online and right now I’m still working on my warm market, but I want it to grow faster than it is. We have the perfect product for entrepreneurs, no inventory, no collections and we guarantee savings (in other words customers don’t have to spend a dime, they save money on something they already purchase). Can you help me just get people to take a look at my business. I’m not in this to convince anyone to join my business…I am just trying to find people who are sincerely money motivated and who want to become financially free within 2-5 years. I just need help getting it in front of the masses. I will continue working my warm market, but I don’t really know many sucessful, entreprenerial type of people, and that’s who I’m looking for (motivated, sucessful people with INTEGRITY…that’s one thing my company is built on and that’s never sacrificing integrity for growth, so that’s very important to me). Thanks for anything you can do to help me. I appreciate it.

Sincerely,
Kenya from upstate NY

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Breaking Free

UniversityTutor Races Past 200 Paying Customers

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