The True Cost of Freemiums in Edtech

An industry veteran has some on-point advice about what you pay for and what you get.

GUEST COLUMN | by Elliott Levine

They say, “the best things in life are free,” but that is not always the case. With education technology (edtech), sometimes the cost of “free” ends up being unreasonably high in the long run.

A while back, I was recruited to work for a company offering a free, online portal solution that not only let teachers share important information with students and their families but also granted parents access to their children’s attendance and grades. The plan was to subsidize this “freemium” model through online fundraising. But that didn’t work. 

While hundreds of teachers, students and parents came to rely on capabilities provided by this hub, few people had the wherewithal or desire to pay for them. The company eventually folded, leaving everyone scouring for a replacement.

Today, freemium business models are even more rampant. Vendors entice educators with edtech ideas that seem wonderful but have real challenges lurking below the surface.

What is a “Freemium” Model?

Before launching into those models, it is important to understand what a freemium is and why it has been a trend for more than a decade. Think about freemiums as a model embraced early on by tech industry giants such as Facebook, Google and Twitter. These companies gave away access, trying to build their subscriber base and figuring out their monetization model along the way. For consumers, these models are great.

They provide massive value without anyone having to pay a single cent. And many of us — especially young millennials and Gen Z’ers — have been conditioned by our digital experiences to believe we should never have to pay anything to communicate, share information, download data or use basic online productivity software. 

But a vendor must eventually find a way to generate income and please investors. Many try but end up failing to do this, especially in edtech. Which brings us back to the edtech freemium business models educators should know about.

Uncertain Business Models

A popular model that should give you pause involves vendors giving away their online educational materials to schools but passing along related research and development costs to other partners. On the surface, this seems like a win-win for schools. 

Where this reasoning breaks down, however, is here: while schools may be getting five dollars of edtech value per student from those companies, other vendors must raise prices to compensate. In the end, the real overall cost of educational materials could rise to as much as $20 to $30 per student.

The other prevalent freemium business model is characteristic of vendors who give away their edtech materials for free but with paid-for, add-on features. Anyone who has downloaded a free but limited version of software from the internet is familiar with this model. The reasoning behind this is that you’ll become so enamored with the possibilities, or so frustrated with the limitations of the free version, that you’ll happily upgrade shortly after.

This may work for some, but it is not very effective for educators because most school districts maintain strict budgets. They view free edtech as “good enough” and do not typically approve upgrade fees. 

In time, most freemium companies struggle to meet revenue targets. Their investors become impatient and companies aggressively try to convert schools to a paid model. In certain situations, school districts might be charged for the service by the company without warning. Ultimately, most school districts balk at such tactics, and many of these freemium edtech firms end up going out of business.

Rogue Edtech Creating Challenges

Freemium edtech can pose several other challenges. For one thing, some school districts invest heavily in more traditional educational systems only to find some teachers “going rogue” and using freemium content instead. When this happens, disruptions in educational continuity occur.

It also becomes more difficult for districts to make sound curriculum decisions when they do not know what is  happening in the classrooms. For example, if a central office invests in an expensive math curriculum, and freemium content enters the mix, it is almost impossible to measure how well that system is paying off — if at all.

It is also not possible to know if the freemium or open source content being used is working better because there are no analytics in place. Math scores could rise or fall, and there would be no way of knowing what contributed to that result.

Rising Tide of Security and Privacy Concerns

Cybersecurity is another key concern with freemium approaches. Earlier this year, the FBI issued an unusual warning due to the rapid growth of edtech in U.S. school systems as well as the impact that the widespread collection of student data can have on privacy and safety.

There are barely 300 companies today that have signed the Student Privacy Pledge, a list of legally enforceable commitments companies take to affirm they safeguard student data.

These are the only companies that have been reviewed and blessed by the Future of Privacy Forum (FPF) and the Software & Information Industry Association (SIIA)If teachers are going rogue by using freemium edtech products in classrooms, where potentially private student data is being entered and shared online, schools become vulnerable to potential privacy violations through the Family Educational Rights and Privacy Act (FERPA) and can be subject to possible litigation.

None of this is meant to scare anyone into believing that all free edtech is bad or that every freemium vendor is doomed to fail.

On the contrary, many of these offerings have tremendous value — or educators would not be so interested in them.

But educators must enter freemium situations with caution and be aware that saving money on edtech today can end up costing them if they are not careful.


Elliott Levine is Director of Education for the Americas Region of HP, Inc. and the company’s first Distinguished Technologist focused solely on edtech. He drives strategy and go-to market tactics for HP’s $1B+ education sales in the U.S. and Canada. A sought-after global speaker, he speaks on innovation and the future of learning. He’s developed patent-pending personalized learning and virtual instruction products. A former K-12 district administrator, he has led startups and served in senior management, product development, marketing and strategic planning roles. He currently serves on startup boards as well as an advisory board member for WNET, the largest public television station in the U.S., and an advisor for 3D Africa, a nonprofit supporting educational opportunities for young women in Africa. Contact Elliott through LinkedIn.


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