While comparing top edTech companies in the Russian internet market, I noticed an interesting scaling problem baked into the economics of their courses — one they all seem to live with. I’m not talking about product-driven edTech platforms like LinguaLeo, but companies that create educational courses for upskilling or career transitions.
Product EdTech Theorem #1
The absence of deadlines in an educational course leads to ↑ Revenue and ↓ Completion Rate (COR). Conversely, the presence of deadlines leads to ↓ Revenue and ↑ Completion Rate.
This simple theorem is easy to derive intuitively and is confirmed by managers at edTech companies. The practical takeaway for prospective students: in a self-paced learning format, you’re less likely to finish the course, earn the certificate — or get your money back if things go sideways.
And a corollary follows directly from this theorem:
In courses without deadlines, the number of refunds → 0.
Type "A" Companies
These companies build courses with a noble goal: to help as many students as possible reach their educational objectives — most commonly, to land a job.
The proven way to boost Completion Rate (COR) is through hard motivation: strict deadlines and an elimination-style structure. That’s exactly what Product EdTech Theorem #1 tells us. But a «strict deadlines» model is impossible without a team of experts coordinating students, answering questions quickly, and reviewing assignments.
Students at these courses tend to have a strong experience, reflected in high NPS scores (above 50%). This, in turn, drives a steady stream of new paying students through organic and referral channels — and generates solid Revenue (Revenue = avg. price × students). But it also means growing Costs tied to the expert team.
The result: as the student base grows, Revenue scales linearly — and so do variable Costs. That’s not the economics of a product business, where Revenue grows exponentially while Costs stay fixed (or capped).
Type "B" Companies
These companies treat courses as a product business: minimize variable costs and grow revenue by attracting as many students as possible through any means available.
«Minimize costs» unravels into a chain reaction: no student support team → no strict deadlines → minimal course completion → low NPS (zero percent on a good day) → almost no organic acquisition of new paying students.
The end result: they set out to build a product business, managed to drive variable costs to near zero — but now critically lack the student volume needed to drive meaningful revenue growth.
The Dilemma
The dilemma is the choice between path «A» and path «B.» Neither path actually produces a scalable product business from a single course. So companies find their optimal growth strategy elsewhere: launching as many courses as possible, across as many topics as possible — and scaling through volume.
If both paths lead to the same place — scaling by course count — and deliver roughly the same profit margins, the question becomes: why do so many companies choose path «B»? Especially when path «A» builds a strong market reputation, while path «B» results in a narrowly capped market and steadily rising customer acquisition costs.