The ‘Subscription Sharing’ Model
The net revenue from Preptical’s subscribers will be equally divided between Preptical and Tutors. Preptical uses its 50% share to cover the costs of running the platform and marketing for courses while distributing the other 50% among individual Tutors according to the revenue share methodology called “Subscription sharing”.
The core idea behind the subscription sharing approach is that a subscriber’s money should go to the content and tutors they actually use and value.
How ‘Subscription Sharing’ works
With Subscription Sharing, your earnings as a tutor are directly linked to the money collected from each individual subscriber. We look at each subscriber in turn and assign you a share of 50% of their net revenue based on how important your lessons were to them (i.e your share of lessons they watched in that period)
To help bring this to life, let’s look at a few simple examples:
Example 1: A single subscriber
For example, let’s say there was only one subscriber, they generate net revenue (excluding transactional taxes) of €30 for the month and watch 10 hours of lessons. The amount available for sharing with the tutors of those lessons is 50% x €30 = €15.
Now imagine that some of the lessons they watched are, for example, your lessons with a total duration of 3 hours. Your lessons make up 3 hours out of the total 10 hours watched, so you earn 3/10 x €15 = €4.5 from that one subscriber for the month.
Example 2: Multiple subscribers
Now let’s expand that example to say 4 subscribers, each with their own usage patterns:
- Subscriber A is the person in the first example
- Subscriber B is a heavier user overall and watched 4 hours of your content
- Subscriber C only watched your content and none from anyone else
- Subscriber D didn’t actually watch any of your content at all
The amount you would earn from each subscriber in this example is shown below.
This example demonstrates a few important things about Subscription Sharing:
- The more subscribers who watch your lessons, the more you earn.
- The greater your share of a subscriber’s watch time, the more you earn.
- If a subscriber watches some lessons but not yours, you don’t share in their net revenue.
- If a subscriber solely watches your lessons, you get all of their net revenue.
Please note: The above examples are purely illustrative, and your earnings will, of course, vary depending on the number of subscribers, how much net revenue they generate, and which specific lessons they watch in a given month.
What is the effect of Subscription Sharing on tutors’ earnings?
The total amount paid out to tutors is 50% of the net revenue. Subscription Sharing simply affects how tutors’ earnings are allocated among individual tutors. We chose Subscription Sharing for Preptical because we believe it’s the fairest possible way to divide earnings. Subscription Sharing encourages Tutors to make content that is broadly appealing to many subscribers and each tutor is rewarded for creating unique, diverse, & valuable content that attracts and retains subscribers.
Net revenue is defined as:
Gross revenue from subscriptions minus taxes (including VAT and other transactional taxes paid by us or the buyer), refunds, reversals, affiliate costs, and costs we incur in relation to services offered as part of the Preptical subscription (including, without limitation, amounts we agree to pay to third-party service providers and other costs we incur in making those services available to subscribers), costs we incur in discounts and promotional offers, and payment processing fees.
For revenue share calculations, we adjust the subscription revenue received from each subscriber by a set percentage (%) to factor in the overall cost for refunds, chargebacks, affiliate fees, tuts creation, coupons and payment processing fees compared to overall gross revenue. This percentage is reviewed periodically.