Towards Economic Models for MOOC Pricing Strategy Design Yongzheng Jia, Zhengyang Song, Xiaolan Bai and Wei Xu Institute of Interdisciplinary Information Sciences Tsinghua University 1 st DMMOOC, DASFAA – March 27, 2017
Introduction Motivations Introduction Challenges for MOOCs: low completion rate, operational Contributions Market sustainability, etc. Structures B2C Models Proportion of paying users increases for online education Model 1 Model 2 % of paying users for online education: Bundled 26% (Year 2015) ⇒ 70% (Year 2016) Courses Analyze Sales % of paying users for MOOCs: 11% (Year 2016) Data (Source: Survey from jiemodui in Jan, 2017) Overview Insight 1 Insight 2 Little academic research on analyzing the business models Insight 3 Future Work Conclusion 2 / 28
Introduction Contributions Introduction Contributions Market Structures Build theoretical models for the pricing strategies B2C Models Model 1 Model 2 Analyze sales data from 1236 real MOOCs Bundled Courses Get business/education insights from models and data Analyze Sales Data Overview Insight 1 Insight 2 Insight 3 Future Work Conclusion 3 / 28
Introduction Market Structures Introduction Contributions Market Structures B2C (Business-to-Customer) B2C Models Model 1 Model 2 B2B (Business-to-Business) Bundled Courses C2C (Customer-to-Customer, e.g Udemy/Skillshare) Analyze Sales Data Overview Insight 1 Insight 2 Insight 3 Future Work Conclusion 4 / 28
B2C Business Models Overview Introduction Basic Strategy: Freemium Contributions Market Structures Open and free basic courses + fee-based online value-added B2C Models services Model 1 Model 2 Bundled Objectives for B2C pricing strategies: Courses Analyze Sales Data Model 1 - Maximize per-MOOC profit Overview Insight 1 Model 2 - Maximize per-user profit across multiple MOOCs Insight 2 Insight 3 Future Work Conclusion 5 / 28
B2C Business Models Market Configurations Introduction Contributions Basic assumptions for each MOOC M : Market Structures B2C Models Exclusive license to the platform Model 1 Model 2 One seller (MOOC platform), multiple buyers Bundled Courses Flat-rate price p Analyze Sales Data The assumptions holds for most of the MOOCs around the Overview Insight 1 world. Insight 2 Insight 3 Future Work Conclusion 6 / 28
Model 1: Maximize per-MOOC profit Overview and Notations Overview of Model 1 For MOOC M with enrollments J , given users’ utility of Introduction Contributions taking the course without paying and users’ utility (i.e. WTP) Market of the certificate under price p , get the profit maximization Structures pricing strategy for M . B2C Models Model 1 Model 2 Key Notations Bundled Courses V j - Utility to user j of taking the course and buying a Analyze Sales non-free certificate (i.e. WTP) Data Overview ¯ V j - Utility to user j of taking the course or without paying Insight 1 U j ( x j , p ) - Consumer surplus for user j with decision Insight 2 x j ∈ { 0 , 1 } under price p . ( ∀ j ∈ { 1 , 2 , · · · , J } ) Insight 3 Future Work U j (0 , p ) = ¯ U j (1 , p ) = V j − p, ∀ j ∈ { 1 , 2 , · · · , J } (1) V j , Conclusion 7 / 28
Model 1: Maximize per-MOOC profit Demand Functions Introduction Definition (Demand functions) Contributions Market Structures The decision of user j under price p (i.e. demand function) is: B2C Models Model 1 1 if U j (1 , p ) > U j (0 , p ) Model 2 x ∗ j ( p ) = ∀ j ∈ { 1 , 2 , · · · , J } (2) Bundled 0 Courses otherwise Analyze Sales Data Add up all the demand functions of x ∗ j ( p ) for j ∈ { 1 , 2 , · · · , J } , Overview the aggregate demand function (i.e the total demand of MOOC Insight 1 M ) is D ( p ) = � J j =1 x ∗ j ( p ) Insight 2 Insight 3 Future Work Conclusion 8 / 28
Model 1: Maximize per-MOOC profit Cost Structure Introduction Contributions Market Structures Cost Structure B2C Models Model 1 Model 2 Bundled MOOC services have high fixed cost but low marginal cost Courses (denoted as ¯ c for MOOC M ). Analyze Sales Data Overview Insight 1 Insight 2 Insight 3 Future Work Conclusion 9 / 28
Model 1: Maximize per-MOOC profit Profit Maximization Introduction Contributions Market Structures Theorem (Pricing Strategy for Profit Maximization) B2C Models Model 1 The profit maximization pricing strategy for MOOC M is: Model 2 Bundled Courses p = argmax p [ D ( p ) · ( p − ¯ ¯ c )] (3) Analyze Sales p is the platform’s best pricing strategy for MOOC M . ¯ Data Overview Insight 1 Insight 2 Insight 3 Future Work Conclusion 10 / 28
Model 1: Maximize per-MOOC profit Insights Introduction Contributions In the real market, the MOOC platform should: Market Structures B2C Models Reduce the marginal cost Model 1 Model 2 Increase the variance between the non-free and free services Bundled Courses Improve the quality of value-added services Analyze Sales Data Reduce the utility gained from taking the course for free Overview (Caution: may also reduce enrollments) Insight 1 Insight 2 Insight 3 Future Work Conclusion 11 / 28
Model 2: Maximize per-user profit Overview and Notations Overview of Model 2 Introduction Each user takes multiple courses, given her utility of taking Contributions the course without paying or buying the certificate under Market Structures price p , get the best strategy for the user and the platform. B2C Models Model 1 Key Notations Model 2 Bundled B j - Fixed budget constraint for user j Courses Analyze Sales K j - Maximum number of MOOCs that user j can take due Data to time limitation Overview Insight 1 p m - The price for course m ’s certificate Insight 2 Insight 3 x j,m ( p m ) - User j ’s decision function of whether she j will Future Work pay for the certificate of course m under price p m Conclusion 12 / 28
Model 2: Maximize per-user profit Problem Formulation � maximize x j,m ( p m ) · ( V j,m − p m ) (4) Introduction m ∈ [ M ] Contributions s.t. Market Structures x j,m ( p m ) · ( V j,m − ¯ B2C Models V j,m − p m ) ≥ 0 , ∀ j ∈ [ J ]; (5a) Model 1 Model 2 � x j,m ( p m ) · p m ≤ B j , ∀ j ∈ [ J ]; (5b) Bundled Courses m ∈ [ M ] Analyze Sales � Data x j,m ( p m ) ≤ K j , ∀ j ∈ [ J ]; (5c) Overview m ∈ [ M ] Insight 1 (5d) Insight 2 x j,m ( p m ) ∈ { 0 , 1 } , ∀ m ∈ [ M ] , j ∈ [ J ] . Insight 3 Future Work Objective function (4) - maximize user’s total benefit Conclusion (5a) individual rationality, (5b) budget constraint, (5c) time constraint 13 / 28
Model 2: Maximize per-user profit Solving Ideas Solving (4) is NP-hard Introduction Simplified when p m is the same for each course m ∈ [ M ] Contributions Market Structures B2C Models Theorem (Users’ Demand Functions) Model 1 Model 2 If p m is same for each course (i.e. p m = p, ∀ m ∈ [ M ] ), the Bundled demand function of user j is a function of p , { V j,m } m ∈ [ M ] , ¯ V j,m , Courses K j and B j , such that: Analyze Sales Data Overview � � � p, B j , K j , { V j,m } m ∈ [ M ] , { ¯ D j ( p ) = x j,m ( p m ) = F j V j,m } m ∈ [ M ] Insight 1 m ∈ [ M ] Insight 2 (6) Insight 3 Future Work and the aggregate demand function is D ( p ) = � j ∈ [ J ] D j ( p ) Conclusion 14 / 28
Model 2: Maximize per-user profit Insights Introduction Contributions Market In the real market, the MOOC platform should: Structures B2C Models Model 1 Schedule the popular MOOCs properly to reduce conflict Model 2 Bundled Bundle courses together to make attractive portfolios Courses Analyze Sales Data Incorporate pricing strategy for membership fee Overview Insight 1 Insight 2 Insight 3 Future Work Conclusion 15 / 28
Bundled Courses Introduction Contributions Market Structures B2C Models Model 1 Model 2 Bundled Courses Analyze Sales Pricing for bundled courses: Flat-rate + Membership Fee Data Overview Specializations on Coursera (or the XSeries on edX) Insight 1 Insight 2 Online Micro Masters on edX (or Udacity) Insight 3 Future Work Advanced Placement (i.e. AP) courses Conclusion 16 / 28
Analyze Real-world Sales Data Dataset Description Sales data from 1236 real MOOCs ( 1140 MOOCs closed) Introduction Contributions Three types of certificates: Market Structures Electronic Honor Code Certificate (Free) B2C Models Model 1 Paper Certificates ( 100 RMB) Model 2 Verified Certificate ( 300 RMB) Bundled Courses Analyze Sales From Definition (1) and (2) in Model 1 Data Overview If a user completes the course, then WTP > 0 Insight 1 Insight 2 If a user buys a verified/paper certificate, then WTP ≥ 100 Insight 3 If a user buys a verified certificate, then WTP ≥ 300 Future Work Conclusion 17 / 28
Analyze Real-world Sales Data Overview: Active Users vs. Paying Users Paying Users vs. Active Users 1000 Introduction Number of Paying Users Contributions 800 Market Structures 600 B2C Models 400 Model 1 Model 2 200 Bundled Courses 0 0 2000 4000 6000 8000 10000 Analyze Sales Number of Active Users Data Overview Insight 1 No direct relationship between the number of active users Insight 2 and paying users. Insight 3 Future Work Many factors as difficulties, popularities, and practicability Conclusion may affect the relationship. 18 / 28
Recommend
More recommend
