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Pricing models for digital learning platforms

18/02/2020

Wintersemester 2019 - FESTO Didactic

EXECUTIVE SUMMARY

Motivation and Objectives:

With the launch of the digital learning platform FestoLX, Festo Didcatic wants to establish customizable learning paths as a complementary service to their tangible product offering. With its learning platform, it tries to move away from infrequent one-time payments to constant revenue streams by using a subscription model.

With the support of the Institute for Entrepreneurship and Innovation at the Vienna University of Economics and Business, Festo Didactic now aims to lay out a budgetary mapping of the educational sector in Austria, Switzerland and Germany. Ultimately, the company’s question whether the planned subscription model for the learning platform is feasible or not and what barriers could hamper its success has to be addressed.

Approach:

In order to develop a coherent pricing strategy, an iterative approach was employed. As a first step, maps of the educational landscape in the three countries were created through a comprehensive internet research. After contacting over 170 potential primary users of the new learning platform (principals, heads of departments, digital learning experts, etc.) in Austria, Switzerland and 3 representative regions in Germany and the conduction of 22 expert interviews, we subsequently identified four main problem dimensions:

  • Budgetary outlook

  • Internal resistance

  • Legal requirements

  • Decision process

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Based on these four dimensions and the other insights we gained with the interviews we compiled a general answer on our research questions as well as specific implications for the various educational institutions the countries of interest.

Outcomes:

Overall, a subscription model is certainly feasible for FestoLX. Among all institutions a tendency or sometimes even ability for annually renewable contracts as well as annual one-time payments was concluded. However, in order to meet the specific needs of every heterogeneous target group, several aspects need to be considered. Moreover, institutions in the three countries must be addressed differently.

In Austria, the budget varies considerably among institutions. Out of all public educational institutions, vocational schools and HTLs appear as the most promising customers. In Germany, the budgets vary among states, making Bavarian institutions the most promising customers. Swiss institutions have sufficient budget and above all an outstanding interest in digitalizing their educational sector. What is more, with Switzerland cooperating with the industry, the implementation of FestoLX will be easier than in Austria or Germany.

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