Lesson 1 of 3 Last reviewed 28 September 2026 11 min

How education and edtech work

The segments of education, who pays in public and private systems by region, the revenue models, and approximate cost structures.

Industry brief, with a one-minute summary: Education and edtech

Firm processes and online tests change from year to year and differ by office. Use this to prepare, and confirm the exact current steps on the firm's own careers page.

Key takeaways

In education, the person who pays (a government, a parent, an employer) is often not the person who learns.
K-12: schooling from kindergarten to grade 12 (about ages 4 to 18). Public schools are funded by government; private schools charge fees.
Higher education: universities and colleges. Funded by government grants, tuition fees, research grants, and gifts.
Test preparation and tutoring: coaching for entrance exams (such as JEE and NEET in India, the gaokao in China, the SAT in the US) and extra help with school subjects.

Key idea

In education, the person who pays (a government, a parent, an employer) is often not the person who learns. Most costs are teachers and buildings, so the business depends on filling seats and keeping students year after year.

The segments

K-12: schooling from kindergarten to grade 12 (about ages 4 to 18). Public schools are funded by government; private schools charge fees. International schools teach a foreign curriculum (British, American, International Baccalaureate, Indian CBSE) and are common in the Gulf and Asia.
Higher education: universities and colleges. Funded by government grants, tuition fees, research grants, and gifts.
Test preparation and tutoring: coaching for entrance exams (such as JEE and NEET in India, the gaokao in China, the SAT in the US) and extra help with school subjects.
Vocational and professional training: skills for jobs, often paid by employers or government programmes.
Edtech: digital products for learners (apps, online courses), for institutions (learning platforms, school software), and for employers (corporate learning).

Public and private education by region (general patterns, check the country)

Public and private education by region (general patterns, check the country)
Region	K-12 pattern	Higher education pattern
Europe	Mostly public and free; some private and faith schools	Mostly public; low or no fees in many countries (for example Germany); higher fees in England
US	Mostly public, funded by local taxes; private schools are a minority	Mix of public and private universities; high fees, student loans, large endowments at top private universities
India	Large public system; private schools are more than a fifth of schools and a larger share in cities	Large private sector; intense competition for top public institutes; big test prep market
Gulf	Many citizens use free public schools; most expatriate children attend fee-paying private schools	Growing mix of public universities and branch campuses of foreign universities
China	Mostly public; for-profit tutoring in core subjects was restricted from 2021	Mostly public; very competitive entrance exam
Africa and Latin America	Public systems plus fast-growing low-fee private schools	Public universities plus many private institutions

So-what

Private education is largest where public systems are stretched or where many residents are expatriates.

How money is made

Tuition fees per student per year (private schools, universities, coaching centres).
Government funding per student or per programme (public schools and universities; sometimes paid to private providers).
Other school income: registration, transport, uniforms, meals, activities.
Edtech: subscriptions, one-off course fees, licences sold to schools or companies per user, and revenue shares with universities for online degrees.
Research grants and gifts for universities.

Approximate cost structures, percent of revenue

Approximate cost structures, percent of revenue
Line	Private K-12 school (approximate)	Consumer edtech company (approximate)
Teachers and staff	45 to 65 percent (Taaleem in Dubai about half of revenue)	20 to 35 percent (teachers, content creators)
Buildings (rent or facility costs)	10 to 20 percent if leased	Small, unless it runs offline centres
Marketing and sales	2 to 5 percent	25 to 50 percent at many growing firms
Technology	2 to 5 percent	10 to 15 percent
Other operating costs	8 to 12 percent	5 to 10 percent
EBITDA margin	20 to 40 percent for premium for-profit schools that are full (Taaleem's premium schools about 42 percent in the nine months to May 2026, a period without the summer)	Often negative while growing

So-what

Schools are a people and buildings business; consumer edtech is a marketing and retention business.

Key metrics

Enrolment (students) and capacity utilization (students divided by available seats).
Student-teacher ratio: students divided by teachers.
Average fee per student, and fee growth allowed by regulators.
Retention (re-enrolment) rate: the share of students who return next year.
Outcomes: exam results, school inspection ratings, graduate employment. These drive demand.
For edtech: paid users, CAC, completion rate (share who finish a course), renewal rate, and engagement.

Check your understanding

In a private school, which cost is usually the largest?

Terms in this lesson

Revenue Fixed cost Capacity utilization CAC (customer acquisition cost)Churn and retention Value chain K-12 Student-teacher ratio Re-enrolment rate Completion rate

Sources for this lesson (2)

Recognized public explanations of case-interview concepts and frameworks
Taaleem Holdings: earnings release for the nine months to 31 May 2026 (July 2026)

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