This is a fantastic article, and really hit home with our project. The rules of deflationary economics has become common knowledge in most product and service i

This is a fantastic article, and really hit home with our project. The rules of deflationary economics has become common knowledge in most product and service industries, but in my industry (higher education), the opposite seems to be true. Every single legitimate competitor raises prices year after year, much faster than the rate of inflation. The few that don't (Khan, MITx, Stanford, Udemy, etc...) do so by scaling back the user experience, reducing difficulty and removing credentialing. This means the value proposition to the student, even at no cost, will not match the entrenched system. There is a market for this new class of product, but it is defining a new market rather than competing in the existing one. I actually think the reason more companies don't follow the strategy he outlines is that it is just too damn tempting to take the quick cash. For example, the current market value of our product is in the $500-$2500 per credit hour ($2,000-$10,000 per class) range. We could charge in this range and be extremely profitable. Instead, we price our classes at $100 per credit hour, pay our professors a much higher percentage and choose to take a slimmer margin. In classical "next quarter" business terms, this is a very bad business decision. Doing so, however, opens up a number of opportunities that our competitors can't exploit. For instance: We had to develop technology and workflow that dropped the cost of high quality interactive content down from $10,000 per hour (or more) to around $120 per hour. Now that we have that option, we can scale our course offerings extremely rapidly while keeping costs at a minimum. Being able to offer a bachelors degree for less than $10k (masters less than half that) gives us options for creative financing of education that again, our much higher priced competition just don't have. Student loans no longer become necessary, even without subsidies. State and federal subsidies could easily cover the entire cost of tuition (California currently spends more than $12,000 per student per year just at the community college level). Also, as our first program is CS/SE, there are many companies with a vested interest in increasing the number of graduates and having access after they graduate. The point is, we expect to be able to offer most of our programs at no cost to the student within a few years. Since our largest cost saving was in not having any buildings, we are not limited by a physical infrastructure when it comes to scaling. We also designed our system to benefit from having more students, which means the quality of our program will increase as we grow...something that can't be said about many physical campuses. TL:DR; Higher education is about to enter the tornado.