EdTech companies should do their own homework to size the potential market for their products. The size of the market for EdTech software products may be overstated. Spending on EdTech products and instructional products varies by school district. To complicate matters, the budgetary line item descriptions are not standardized. Generally, the largest line items are instructional spending (i.e., textbooks and supplemental materials) and hardware spending (i.e., PCs, tablets, Smartboards, etc.). These line items are upfront costs and are larger costs than instructional software products, which are usually subscription prices.
Mainstream EdTech software products are priced in the range of $3 to $7 per student per year. Some more supplemental products fall below this range, and a few of the larger EdTech companies command per-pupil pricing of between $8 to $17 per year.
There are about 49.5M students in K12 grades in the U.S. Based on a range of spending per pupil assumptions, the market size for EdTech software is between $1.8B and $8.6B. There is significant competition for dollars in this category. There are entrenched competitors, such as LMS vendors, and competition to displace other incumbents is equally challenging. This is why EdTech startups find it difficult to find revenue despite such huge market projections.
