Why should I offer my tutoring services through a more expensive specialized marketplace instead of a cheaper general classifieds website?

Question

I have posted a related question, but it seems the thread of that question has taken a different direction from what I originally intended. The thread mostly discusses the merits of the startup and why investors see it as attractive, which is interesting, but not what I needed.

My (original) question is a bit more micro. Why should I, as a tutor, work for a tutoring agency when they take a cut? I could just put an ad on gumtree or "ebay for tutoring".

Let me explain my reasoning.

The company (GoStudent)'s model is like Uber for tutors. The company pairs you with students and handles payment but takes a cut from every tutoring session. The difference is that Uber has a strong premise. As a taxi driver, I have to keep finding new customers, so I am happy to have a cut taken to "pay" Uber for finding each new customer.

As a tutor, clients generally order a continued service. It will reoccur every week e.g. Friday 4PM. Thus, I don't need to spend much time finding customers - it might happen a few times per year, at most, when existing clients drop out. The only value this company gives me is once per student (to find them). Yet I have a reoccurring cost every lesson. This doesn't seem worth it. I'd rather just pay eBay/gumtree/Craigslist $10 as a one off fee (if not $0).

Wouldn't every "rational" actor (in this case tutor) simply post an ad on gumtree themselves? Yet the company has thousands of tutors. There are 5 reasons I can think of as to why someone would work for them:

1. Your credentials and skill is so low that outside of this company, you would fetch a lower price. E.g. I failed school and am very rude, but this company is still willing to hire me as a tutor. I normally would fetch $0-5/hr but now I can get $20/hr. Thus, I don't see how this company could attract high quality tutors, unless they fell into any of the following 4 buckets. A high quality tutor could get paid much more than $20/hr privately.

2. I don't know that gumtree and these tutor versions of gumtree exist. However, this lack of information seems transitory. Eventually I will meet friends/colleges at University who would know about these sites.

3. You're not very good at marketing yourself on gumtree etc. This is plausible, say if you got great grades and are very sweet but are not good at communicating it on gumtree

4. You don't know how to tutor. Starting out, people may want some guidance on how to tutor and materials to support their tutoring. However, I'm not sure if this company provides that. In any case, there isn't a strong case to stay with them for a long time, as over time you become a proficient tutor and can list with gumtree etc.

5. You want a "guaranteed stream of students" as the company puts it. Whilst this is nice to have less down time if a student quits, I would only be missing 1 out of several clients for a week or so as my ad on gumtree churns. It seems like a very expensive insurance policy.

Are there any other reasons as to why I should work for them? Ultimately my question is: why should I work for this company given that I could make more doing the same thing by myself? Am I missing something obvious to these other tutors?

(... really this thinking could be applied to other services like management consultancy, psychotherapy but anyway)

Answer 1

As I wrote in my answer to your last question:

It might be true that at the moment you don't have much of a reason to use such a service. You have other client acquisition channels which provide you with all the work you need and the other services provided by that platform do not justify their commission for you either.

But this might change in the future if this company establishes itself in the public perception as the one go-to place for people looking for tutors. Anyone looking for a tutor will look on that website first. And when you are not on it, they won't consider you. So it might get much more difficult for you to find clients.

So while you might not have a reason for going through them right now, there might be a point in the future where you have no other choice.

OK, but then you might wonder how this service could ever establish itself when everyone thinks like you and avoids them as long as there is not enough peer pressure? Keep in mind that other people are not you. They might have other circumstances and priorities which affect what choices are ideal for them:

• They might not know how to properly advertise themselves on classified websites

• They find the additional services provided by the platform more valuable than you do. If those services save people a considerable percentage of the time they spend on non-billable tasks (client acquisition, payment handling, bookkeeping, dealing with tech problems...), then that can amortize the commission for them. Perhaps that's not even true, but they might be experiment with the platform to see how well it works out for them.

• They believe that the platform offers them protection from problem clients. I haven't looked, but I could very well see such a platform providing:

  • Collection services to coerce non-paying clients. Or even paying the tutors in any case and shouldering the risk of non-paying clients themselves.
  • Better privacy and personal safety by concealing the personal information of tutors in ways they couldn't when dealing with clients directly.
  • Legal protection from clients trying to sue when their kid failed a test. The client would have a contract with the platform, not with the tutor. So they would have to sue the platform. Which is far better equipped to deal with frivolous lawsuits than a private person would.

• They operate in a market niche where the clients are already accustomed to using that platform over others.

Answer 2

If you are able to keep yourself booked on your own, and each of your clients is recurring and likely long-term, then you would probably not benefit much from using the agency. However, it's likely that not all tutors have the know-how and wherewithal to find their own students, or perhaps not all tutoring relationships are recurring or long term. Many people seek tutors for cramming and/or prepping for a specific exam. If you are a tutor for those kind of students it's much harder to keep yourself regularly booked and it may be (much) easier to use an agency to provide you leads and handle all the payments. The agency may also be more attractive to prospective students who can look at a large number of different tutor ratings and reviews from other users.

Answer 3

If you were looking to be a tutor as a full time job, the security of not having to lose money because of a cancellation and not having to regularly find dozens of students to fill your weekly work schedule might work in this agency's favor.

This is especially true in places where the going rate for tutoring is low. I suppose you can likely work for this company from anywhere in the world. It's true that in most major U.S. cities you can charge much more than $20/hr; but in, say, Eastern Europe, Latin America, or southeast Asia, $20/hr might be quite a high rate. This is similar to your point #1, but it's not because the tutor has poor credentials or ability. It's because they live in a place where the rates for such services are much lower than in the U.S.

The company's website makes it seem like they essentially have an unlimited stream of students and can fill up your availability, no matter what it is. If you live in a place where there aren't many potential clients, the freedom this provides to work as much as you want without the risk of not being able to find students during the times you want to work and without the unpaid effort of finding your students and marketing yourself could be a major advantage.

But I agree that if you're looking to have just a couple of students to earn a bit of extra spending money, and you live in a major U.S. city where you'll be able to market yourself without the agency's help, this is likely not worth it.