Have you ever struggled with homework or a research project that was too difficult for even your parents or smartest friends to offer help? Do Yahoo Answers and Wikipedia just not give you the specialized homework help that you need? The Online Teacher is the answer to your problems! The Online Teacher is an online service that provides real time homework help from credentialed teachers and graduate students who are experts in their fields. Here’s how it works: 1. go to the website and find your subject and grade level i.e. “Economics, 12th grade”. 2. select how many hours of tutoring you would like to purchase i.e. “2 hours”. 3. pay online 4. you can start your video chat and even share files with the tutor so that you know you’re looking at the same thing. Don’t have a webcam? That’s okay! You can also chat using a dialogue box!
Online education is a relatively new financial sector that has already grown into a $60 billion industry. Studies show that more than 3 million Americans are enrolled in an online class as of 2013 and 80% of students use the internet every day for homework help.1 There is a huge market for this type of business. To prove my model, I have tested it in a sample classroom of 36 high school seniors. I multiplied the quantity demanded by 1,000 to reflect my projected market. See the demand schedule below:
Price in $/hour
There are some factors that pose a threat to Online Teacher. Most students who can afford to use my service come from wealthier households who hire full time tutors and have no use for my service. I fear that the current recession may be a barrier to the expansion of Online Teacher. I also have a few competitors such as tutor.com, tutorvista.com, and Sylvan Learning that already established themselves as top web based tutoring sites.2
My investors would be delighted to know, however, that my service is far superior in many ways. First, these sites do not offer per hour, real time web based video chat. Secondly, my service includes homework help in all subject fields unlike the rest who only offer tutoring in math, English and science. The demand for education is inelastic and the market for online learning will always be there. I have already begun advertising via Facebook and Twitter. I have 1,200 likes on Facebook, 3,000 Twitter followers, and have interest in running Groupon deals this year.
The tutors are my only variable costs. I have enlisted the help of 100 credentialed teachers across the U.S. and 200 graduate students from top universities. These tutors are on call at various hours of the day willing to tutor online for $15/hour. I can realistically manage about 20,000 hours of work per month from the 300 tutors. My only fixed costs include customer service, bandwidth and website maintenance because the tutors are required to have their own computer and internet connection. My internet service and hosting costs are $45/month. I have hired two customer service representatives to work from home for $1,500/ month each. They take care of all refunds, complaints, questions, etc. I have a background in web design and computer science so I can take care of site maintenance, while only paying annual hosting fees. See costs of production below:
My fixed costs of production amount to $3,055/monthmaking my cost per unit $19.53/hour. The supervision and maintenance of this website is a lot of work. Sometimes, I ask myself “Is it even worth it?” For the right price it can be. Below is the schedule of what I am willing to supply (my own blood, sweat, tears, and time) at each price per month:
There are no visible factors that can possibly change my ability to supply this service. Labor productivity will never be an issue in this business. I can choose from so many graduate students who would jump at the chance to make $15/hour at their own leisure. I also don’t know anyone who wouldn’t love the opportunity to work from home to answer customer calls for a few hours per day for $1,500/month. I have a highly skilled and well-educated work force. I also don’t see technology or input costs being a factor either. My internet service from Comcast is locked in for two years so those costs can’t increase for a while and I am well versed in all technologies that can help me maximize profits. I also have the government on my side. In 2009, President Barack Obama pledged $500 million in funding for online courses and materials to be spent over the next decade.3 If I can prove my business model, I can apply for those funds to help expand Online Teacher.
Looking closely at the projected market demand and supply curve above, the equilibrium price for Online Teacher is $25/hour. At that price, I can generate $250,000 in revenue. With all that money, I can hire more people who can possibly increase my total product and create new complementary products.
There truly is need for a service like Online Teacher. Students all across the U.S. need that extra hour of homework help and somewhere out there is an investor who can help make it happen! I believe that with excellent customer service, quality online tutors and smart marketing, this business could really take off. I plan to offer a 5% equity stake in my company for a $20,000 investment. I know my company is worth a lot more but in my current, broke state, it’s a cut I am willing to take.
I wrote the introduction and paragraph 3 (supply) for this group essay. Also, I created the model of the product that we are using in our presentation to the sharks.
I wrote paragraph 2 (demand) of the essay and was also in charge of gathering everyone’s paragraphs and compiling them into one coherent essay. I did a lot of editing. I also contributed a large part of the research to this project.
I helped student 4 write paragraph 7. I also helped come up with the idea for our product. I was pretty much the group leader.
I wrote a bulk of the essay- paragraphs 4, 5, 6 and 7 in exchange for not having to talk when we’re up there presenting.