1. Introduction
Unacademy rapidly became one of India’s most recognizable edtech brands, scaling through aggressive content expansion, educator onboarding, and deep discounting.
But as funding slowed and competition intensified, profitability became the core challenge.
The key question:
How can Unacademy sustain growth while achieving positive unit economics?
2. The Core Problem
Unacademy faced the classic edtech dilemma:
- High cost of acquiring learners
- Heavy spending on educator payouts
- Low conversion from free to paid
- High churn after exam cycles
- Dependence on seasonal spikes (UPSC, JEE, CAT)
- Rising content production costs
Growth was solid — but profitability was not.
3. Why This Problem Emerged
A. Profitability Framework Review
Revenue Drivers
- Subscription revenue (Plus, Iconic)
- Ad revenue (minor)
- Test series + special classes
Issues:
- Low willingness to pay outside top exams
- High churn after exam attempt
- Free content cannibalizing paid content
Cost Drivers
- Educator payouts (fixed + incentives)
- Content creation & production
- Marketing (discounts, influencers)
- Technology & live-stream infra
- Offline expansion costs
Insight: Customer acquisition + educator payouts = majority of costs.
B. Growth Levers Review
Unacademy relied heavily on two levers:
- New category expansion (Banking, CAT, State PSCs, K-12)
- Educator flywheel (more educators → more content → more students)
Growth was happening, but profitability per category varied drastically.
C. Customer Lifetime Value (LTV) Analysis
LTV Components
- Subscription length (3–12 months)
- Retention after 1st attempt
- Average revenue per user (ARPU)
Findings:
- Exam prep is cyclical → retention drops sharply after exams
- High-competition categories have low LTV
- Educator loyalty programs increased cost per student
Conclusion:
Unacademy’s LTV was too low to justify its high CAC.
4. Key Insights
Insight 1: Not all exam categories are profitable
UPSC, CAT, and GATE have high-paying, sticky students.
But K-12, state exams, and low-fee categories dilute margins.
Insight 2: Educator cost inflation is a major margin killer
Top educators receive high fixed payouts + bonuses → poor scalability.
Insight 3: Free content pulls traffic but reduces paid conversion
A delicate balance is needed between free and paid content.
Insight 4: Offline expansion increases CAC but improves LTV
Offline + online hybrid is higher-cost but higher-retention.
5. Recommendations
Recommendation 1: Prioritize High-LTV Categories
Double down on:
- CAT
- GATE
- UPSC
- JEE/NEET
Reduce investment in:
- K-12
- Low-ticket state exams
- Experimental categories
Recommendation 2: Reduce Educator Cost via Variable Structures
- Lower fixed payouts
- Higher performance-based incentives
- Reduce dependency on star educators
- Build in-house academic teams for content-heavy courses
This increases margin predictability.
Recommendation 3: Optimize Free vs Paid Content Balance
- Keep short-form free content
- Lock high-value lectures behind paywall
- Focus on test series upsell
- Leverage YouTube for top-of-funnel only
Higher conversion = higher profitability.
Recommendation 4: Build a Sustainable Hybrid Model
Offline + online centers in:
- Delhi
- Bangalore
- Kota
Benefits:
- Higher retention
- Higher LTV
- Up to 2–3× ARPU
Recommendation 5: Improve Retention & LTV
- Progress dashboards
- Personalized revision plans
- Doubt-solving chat at scale
- AI-driven personalized schedules
- Renewal discounts targeted at high-churn groups
6. Expected Impact
Short-term (6–12 months):
- 10–15% reduction in educator payout costs
- 8–12% increase in paid conversions
- Lower CAC via focused categories
Medium-term (1–2 years):
- Higher LTV from hybrid centers
- Stronger retention from structured learning pathways
Long-term (3–5 years):
- Sustainable profitability with a defensible moat
- Balanced offline + online brand presence
- Reduced dependency on heavy marketing
7. Summary
Unacademy’s challenge is fundamentally one of unit economics, not growth.
By prioritizing profitable segments, rebalancing educator payouts, optimizing conversion, and building a hybrid model, Unacademy can move toward predictable and sustainable profitability.