The Math Behind Teachers Pay Teachers

10 min read

Teachers Pay Teachers describes itself as "the world's first open marketplace where teachers buy and sell original teaching materials."

The reported size and scope of the site vary; the site's home page states that is has 1,850,000 members, with over $25,000,00.00 in profits paid to teachers.

A recent Business Insider article profiled the top 10 sellers, and described overall sales of $30,000,000.00 from 1,800,000 members.

Of these 1,800,000 users, it looks like (as of today, May 15th) approximately 37,400 are selling materials. Of the people selling materials, over half have 5 items or less on offer. Just under a thousand sellers have over 25 items on offer.

For these estimations, we'll use the sales numbers from the Business Insider article, and the seller numbers from the web site.

As stated earlier, Business Insider reports $30,000,000.00 in sales - and at the outset, we need to remember that sales is what was paid for materials, and that the sales total is split between the individual authors and Teachers Pay Teachers. The Business Insider article is also not clear on the period during which these sales occurred, but fortunately, this NY Times article from 2009 describes "$600,000 in sales since (Teachers Pay Teachers) was started in 2006 - so, for the sake of our estimations, we will estimate high and assume that sales revenue for the last three years (2010-2012) has brought in $30,000,000.00. Our initial estimations will not attempt to address what goes to teachers, and what goes to Teachers Pay Teachers; we will delve into that at the end of this post.

The Business Insider article describes the earnings from the top 10 sellers:

The top 10 sellers on the platform have generated more than $5 million in sales, netting around $4.4 million in total.

So, out of 37,400 people selling items on the site, 10 people account for $5,000,000.00 in sales, or approximately 1/6th of all sales.

Taking what's left, that means that 37,390 people account for $25,000,000.00 in sales. Let's examine a couple scenarios to look at how many people can be making money on Teachers Pay Teachers.

Scenario 1: Average all remaining sales among all remaining members

In this scenario, the remaining 37,390 members would average approximately $668.60 in sales per person over three years, or around $222.90 annually, or just over $18.50 a month.

While the actual sales will likely be closer to the scenarios that follow, this initial calculation provides a baseline.

Scenario 1 Calculations

25,000,000/37,390 - the split of total sales among all members.

Scenario 2: The next 1,000 members account for the next 50% of sales

In this scenario, the next 1,000 members would account for $12,500,000.00 of sales over three years, or $12,500 apiece, for an average $4167.00 in sales a year, or just over $350 a month.

This leaves the remaining 36,390 people averaging $343.50 for three years, for an average of 114.50 a year, or around $9.50 a month.

Scenario 2 Calculations

(25,000,000*.5)/1000 - 1000 people get 50% of remaining sales for three years
(25,000,000*.5)/36,390 - the remaining 36,390 people get the remaining half of sales for three years

Scenario 3: The next 1000 account for 25%, the next 5,000 account for 50%

In this projection, the top 1000 sellers account for a total of $6,250,000.00 in sales over three years, or $6,250.00 apiece, for an average of $2,084.00 a year, or little over $173 a month.

The next 5,000 sellers account for a total of $12,500,000.00 in annual sales, or 2,500.00 apiece, for an average of 830 a year, for an average of $70 a month.

The remaining 31,390 people average of $200 in sales over 3 years per person, or about $67.00 annually, or $5.50 a month.

Scenario 3 Calculations

(25,000,000*.25)/1000 - 1000 people get 25% of remaining sales for three years
(25,000,000*.5)/5000- 5000 people get 50% of remaining sales for three years
(25,000,000*.25)/31,390 - the remaining 31,390 people get 25% of remaining sales for three years

Scenario 4: The next 1000 account for 30%, the next 2,000 account for 20%, the next 4,000 account for 20%

In this projection, the top 1000 sellers account for a total of $7,500,000.00 in sales over three years, or an average of $7,500.00 per seller for three years, averaging 2,500.00 annually, for a little under $210.00 a month.

The next 2,000 sellers account for a total of $5,000,000.00 in annual sales, or an average of $2500.00 per seller over three years, averaging for a little over $830 a year, or $70.00 a month.

The next 4,000 sellers account for a total of $5,000,000.00 in annual sales, or an average of $1250.00 per seller over three years, averaging for a little over $415 a year, or $35.00 a month.

The remaining 30,390 sellers account for a total of $7,500,000.00 in annual sales, or an average of $246.80 per seller over three years, averaging for a little over $82 a year, or $6.85 a month.

Scenario 4 Calculations

(25,000,000*.3)/1000 - 1000 people get 30% of remaining sales for three years
(25,000,000*.2)/2000 - 2000 people get 20% of remaining sales for three years
(25,000,000*.2)/4000 - 4000 people get 20% of remaining sales for three years
(25,000,000*.3)/30,390 - the remaining 30,390 people get 30% of remaining sales over three years

Flaws in our calculations

To be clear, this post outlines some general estimations based on the information we could pull from the web. These estimations are imprecise for a variety of reasons, and we will lay out a few of the larger reasons below. In the interest of being predictably imprecise, whenever possible we attempted to err on the side of overestimating what teachers earned, and to err on the side of underestimating what Teachers Pay Teachers earned.

First, we don't know the rate of growth of the seller base, or the rate of growth of sales. For this estimation, we used the numbers of the current site and averaged over three years. This provides a decent relative comparison, but it is not the same as having precise numbers for each year. Also, the sales period covered in these numbers is likely greater than the three years we used, which means that our averages will likely be higher than what people actually made.

Getting accurate sales numbers and user numbers by year would go a long way toward addressing this, but as stated in the opening, we used information available from the TpT site, and Business Insider. If anyone has better numbers, please send them along.

Second, we don't have accurate numbers about how sales totals break down across sellers. Accordingly, the different scenarios outlined above are rough approximations of how these sales could break down among members. Getting more accurate info on who sold what would eliminate this imprecision; while TpT allows us to filter by top sellers, this is a relative list, and doesn't give us any information about how much these sellers sold, or when they sold it.

Third, we base our calculations on having 37,400 sellers over a three year period. Realistically, there were likely fewer than 37,400 sellers in the past. As a result, our low-end estimations are almost certainly low for the people earning the least amount of money. This inaccuracy does not affect the calculations for the higher level earners. As noted above, this lack of precision could be addressed if we had accurate sales and user numbers for the last three years.

Fourth, the averages we lay out probably don't reflect how it feels to be paid from Teachers Pay Teachers, as the profits from sales likely fluctuate over time, and sellers don't need to be actively involved in the day to day of making sales. So, when a check comes from Teachers Pay Teachers, it likely feels more like a bonus than a salary - and that's a very nice feeling.

There are almost certainly other flaws in how I break this down. Please, point out other weak spots in the comments.

Sales and Profits

It was difficult to make a precise breakdown of exactly how much of the sales went to teachers, versus how much went to Teachers Pay Teachers, for some of the reasons outlined above, and due to a lack of information about the status of different sellers.

According to the Teachers Pay Teachers Terms of Service (see section 3C), the rates charged to Teachers Pay Teachers varies from 50% (only charged to Publishers), to 40% (charged to Basic Members for digital sales) to a low of 10% (charged to Premium members for physical content sales).

Because we couldn't identify Premium sellers from other sellers, or the number of physical and digital sales, we went with the lowest possible rate of 10% to estimate the cut going to Teachers Pay Teachers. Teachers Pay Teachers also charges a per-item charge for some items, which is also not accounted for in our calculations.

So, using the lowest possible estimation of 10% of all sales going to Teachers Pay Teachers, that means that Teachers Pay Teachers brought in 3,000,000.00 over three years (based on 30,000,000.00 in reported sales), for nearly a million dollars a year. If we go by the numbers on the Teachers Pay Teachers homepage, which states that teachers have been paid nearly 25,000,000.00 in profits, that increases the Teachers Pay Teachers take to $5,000,000.00.

Teachers Pay Teachers also offers Premium memberships, which run $59.95 annually. If only 3,000 of the 37,400 sellers buy a Premium Membership, that is an additional $179,000.00 a year.

To summarize, from looking at the publicly available numbers from Teachers Pay Teachers, a relatively small number of teachers earn more than $100/month. The majority of the sellers on Teachers Pay Teachers likely make significantly less than that, with the overwhelming majority of sellers earning under $10/month.

Conclusions

As noted above in the "Flaws" section, these numbers are approximations; in the absence of more precise data, these estimates can only provide an approximate and relative picture of how people are making money in Teachers Pay Teachers. But, given this relative information, it seems pretty clear that few people are generating enormous amounts of income from Teachers Pay Teachers. A small number of people are certainly doing well, and the way the site structures payment ensures a decent revenue stream if there is a large enough stable of people selling lessons.

It's also interesting to note that among the many things that Teachers Pay Teachers has done well, one thing stands out: they have mastered support for the granular lesson, or a small lesson that can be incorporated quickly and easily into a larger course structure.

However, given that some of the people further down the chain (those who are below the top 1500-2000 sellers) are working pretty hard (ie, maintaining 30, 40, 80 lessons) for a relatively small amount of money, it's hard to see how the promise of the site can maintain itself over time. In other words, it's great for the site owners, and the people at the top of the pile, but the overwhelming majority of sellers are left to split a relatively small slice of the pie.

And, to put this all in perspective: when Bill Gates pegs the annual spending on education at 600 billion dollars, a few million dollars being redistributed between teachers is really an almost insignificant drop in the bucket. Please don't misunderstand; extra spending money is great. But for the mass of sellers who have been working on Teachers Pay Teachers and haven't made much of anything, what do you have to lose from releasing your work as open content? Make your work available on a blog, or on OER Commons. Go to an EdCamp and talk about your work, and find other people with whom to collaborate. The benefits of sharing and collaboration are real, and are a form of professional development that can translate into greater professional opportunities, including the real and tangible benefit of greater job security and better pay.