Here are some rough estimates for the development, marketing, and support costs for launching the TOEFL Primary API.
Initial API platform build: $500K - $800K Includes core architecture, cloud hosting, security, docs site Ongoing engineering: $200K per year 2-3 dedicated developers for enhancements and maintenance Content integration: $50K per partner Customizing API for each platform's content and use cases
Launch campaign: $300K - $500K Webinars, paid ads, conference booth, initial collateral Ongoing promotion: $100K per year SEO, social media ads, developer community engagement
Technical docs, integration guides, samples Customer Support: $200K per year 2 dedicated reps for onboarding, technical support Account Management: $100K per year 1 account manager for ongoing partner relationships
These estimates can be refined further by benchmarking comparable platform initiatives and factoring geographic and segment variability. But it provides an initial ballpark for planning the core operational requirements and their associated costs. The key will be balancing these investments with the revenue potential to maintain healthy margins.
Assuming TOEFL Primary is generating $50 million a year currently and the aim is to more than double that figure by Year 2, it means we need to generate at least an additional $50 million over the two years, targeting at least $75 million in Year 1 and $100+ million by Year 2.
Given our proposed API solution and the potential it carries, here’s how we might break down additional revenue streams.
By offering the API to educational platforms, schools, and institutions, we can charge an upfront integration fee.
Year 1: 500 platforms x $10,000 each = $5 million Year 2: 1,000 platforms x $10,000 each = $10 million
Usage-based Subscription Pricing
Schools, institutions, and apps might pay a monthly/annual fee based on the number of students or tests taken through the platform.
Year 1: 200,000 students x $10/year = $2 million Year 2: 400,000 students x $10/year = $4 million
Offer advanced analytics, personalized learning recommendations, and additional resources at a premium.
Year 1: 50,000 subscriptions x $20/year = $1 million Year 2: 100,000 subscriptions x $20/year = $2 million
Partnerships with EdTech Companies
Provide exclusive access, customized test prep material, or co-branded solutions for large EdTech players.
Year 1: 10 partnerships x $500,000 = $5 million Year 2: 20 partnerships x $500,000 = $10 million
Bulk Licensing to Schools/Districts
Offer packages to schools and districts where they can get volume discounts, ensuring larger deals.
Year 1: 50 schools x $50,000 = $2.5 million Year 2: 100 schools x $50,000 = $5 million
Licensing to Test Prep Providers
License out real TOEFL items to test prep providers to simulate the high-stakes exam experience.
Year 1: 100 providers x $20,000 = $2 million Year 2: 200 providers x $20,000 = $4 million
Adding these up, we get:
Year 1 Additional Revenue: $17.5 million Year 2 Additional Revenue: $35 million
This means by the end of Year 2, the revenue, when combined with the original TOEFL Primary earnings, would be:
Year 1 Total Revenue: $50 million (base) + $17.5 million (additional) = $67.5 million Year 2 Total Revenue: $50 million (base) + $35 million (additional) = $85 million
While it's short of doubling the original figure by Year 2, it's a substantial increase. For achieving the targeted $100+ million by Year 2, more aggressive strategies, higher pricing, or exploring other revenue streams would be necessary.