I plan to open test prep company in Austin, TX. What could be the best top 5 tests to start with (from market size prospective) ? (GMAT, LSAT, SAT or smth else?

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I plan to open test prep company in Austin, TX. What could be the best top 5 tests to start with (from market size prospective) ? (GMAT, LSAT, SAT or smth else?

Pre-existing data indicating the most popular tests with the greatest number of clients for Texas could not be found, therefore, the following information needed to be calculated to generate applicable results. Aside from the number of GED takers for Texas, which was the only statistic available, calculations were made for ACT, SAT, GRE, and GMAT test prep users by using the corresponding number of U.S. test prep takers and the 2018 population of Texas (8.69% of the U.S. population) to find approximate amounts.

Furthermore, there was no available data involving the percentage of students who would potentially use online-only test prep. SAT and ACT customers are more likely to be parents and therefore more willing to pay and usually prefer in-person tutoring. GRE, GMAT, LSAT, and MCAT customers are the students themselves meaning they are more likely to be comfortable with online-only courses. The market for these types of online test prep sites will likely grow more quickly than online SAT/ACT test prep.

Please find the specific calculations used below to determine the test prep audience for Texas, as well as the estimated potential market size per test.

2.03Million U.S. students took the ACT test in 2017
2.03Million * 8.69% (Texas population percentage) = 176,407 ACT takers in Texas
While there are free online test prep locations to practice for ACT, some pricing was found around $400 per self-paced online package. If all ACT students paid for their test prep, potential market size reach $70,562,800 (176,407 Texas test prep users * $400 prep fee), however, as mentioned, there are many free online websites for this test prep.

1.8Million U.S. students took the SAT test at least once during high school in 2017, and 25% of those used fee waivers.
1.8Million * 8.69% (Texas population percentage) = 156,420 SAT takers in Texas
SAT test prep can be found for free at many sites with Kahn Academy and Kaplan University as the largest resources. A few online locations are charging fees between $600 for self-paced courses to $3,000 with tutors included, with the most popular packages settling around $1000. The marketing size for SAT could potentially be greatly affected by the amount of free courses and materials online. If we look at the lowest price at $699 per user, calculations can be made to estimate a potential market size for Texas.
$699 * 156,420 Texas SAT takers = $109,377,580

From July 2015-June 2016 there were 584,677 GRE test takers nationwide.
584,677 * 8.69% (Texas population percentage) = 50,808 GRE test prep users
There are free GRE test prep sites, however, prices also range from $699 at a self-paced level to $1299 for a live online package. Using the $699 self-paced practice amount multiplied by the number of GRE test takers in Texas, $35,514,792 would be within the market size if all test prep users paid for the service.

There were 39,797 GED test takers in Texas in 2016. There are numerous free courses and practice tests for the GED and the market size is not as significant as with the other tests mentioned. The only paid examples for the GED test were universities such as Penn Foster, although creating contact information and requesting course information is the only way to access tuition rates.
Between 2012 and 2016, the number of GED takers in Texas declined by 21% due to high GED test prices ($145) and more difficult exams.

In 2016, there were 261, 248 GMAT tests were taken in the United States.
261,248 * 8.69% (Texas population percentage) = 22,702 GMAT test takers
GMAT test prep can also be found free of charge, but as with the other tests, some institutions require payment for test prep courses. Magoosh, a leader in GMAT test preparations, charges $99 per user, but some self-paced versions run at $799 and the live online version can cost $1249. At the $99 level, market size has the potential of reaching $2,247,498.
Considering this same calculation with the 11,000 known GMAT students in Texas (client-based knowledge), a market size of $1,089,000 would be attainable.


In conclusion, the most popular tests with the highest client numbers was not available for Texas, nor was information pertaining to the percentage of students who use online-only versus offline-only classes, however, calculations could be made to establish estimates to assist in planning a test prep company. The five tests covered were; SAT, GRE, GED, and GMAT, all of which free test prep courses and materials could be found. Calculations were made assuming all test prep users would pay for their courses, therefore, the market sizes should be viewed as best-case-scenarios. More growth and revenue potential is possible through student-paid versus parent or institution-paid test prep.