Chegg
Chegg rented a $200 textbook seven times for $40 each, earning more than the publisher. The real gold was the homework help subscription students hook on. Physical rental bootstrapped $770 million in digital recurring revenue.
A college textbook costs $200 and gets used for one semester. Chegg started by renting those textbooks for $40. Students returned them after finals. Chegg resold the same book seven times. A $200 book generated 280 in rental revenue across its life cycle. The margins were better than the publishers. Textbook rental built the customer base, but Chegg saw something more valuable. Students renting textbooks also needed homework help. In 2014, Chegg launched study, a subscription providing step-by-step solutions for $14.95 monthly. Within three years, study generated more revenue than textbook rental. The subscription stuck because students used it weekly. Textbook rental was one time. Study was recurring. By 2021, Chegg had 7.
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