I’m often asked, ‘What’s the value of the UK exam sector?’, or ‘What’s the Total Addressable Market?’, Suppliers, investors, and keen exam owners want a data-driven eye to scout opportunities and growth. They also like to peer over the competitor’s garden fence!
Why track the sector’s growth? Now that 2023 accounts are filed for exam owners, we can show change, growth, and see a vibrant, internationally respected sector to be proud of.
So, where are the exams? The UK has two major groups: universities and everything else UK-originated. UK universities rarely disclose their exam spend. The pandemic saw them outsource exam delivery, mostly via remote proctoring. But universities still struggle to codify exam tech in procurement. I must have missed the memo about classifying VLE/ LMS systems as ‘Summative eAssessment tools’!
How are the Exam Owner numbers calculated? Every single UK organisation owning an high-stakes exam programme is included. It may surprise those in the higher education and schools sectors, but the number of UK exam owners is in mid-three figures. Higher Education regulators in England, Northern Ireland, Scotland, and Wales provide their own numbers.
The number of UK universities is clearly defined - but there are hundreds of other UK exam owners.
What do universities spend on exams? Typical UK university annual reports have categories such as ‘Academic Administration’ and ‘Teaching and Learning'. Buildings and rooms for exams are sunk costs. IT hardware isn’t classified as exam expenditure. Bodies such as UCISA have started to show usage stats, but not budgets. Incredibly, for institutions so invested in assessment, nobody benchmarks or records exam spend.
What’s the income and Total Addressable Market? In 2013, UK universities had £30.7bn income. In 2023, it had increased by 55% to £51.6bn. A 5% compound (CAGR) rate. Don’t worry, that’s not all exam income! For the same period, UK Exam Owners outside of higher education had £5bn income. 10 years later, it had increased by 48% to £7.4bn. Or 4.5% CAGR. Again – it’s not all from exam fees! But collectively, these UK exam owners have income of £59bn.
The exam sector is growing between 4.5% and 5% CAGR.
How much realistically is from exams? Few disclose in the public domain, so it’s never precise. Some exam owners have greater income from streams such as running conferences, membership, and publishing. But some are more dependant on exam income than others. Here's a short look at two anonymised examples.
Exam Owner #1 £12.5M income from exams in 2023, about 57% of their overall income. Their exam expenditure is £10.9M – a surplus or profit.
Exam Owner #2 £510k exam income, or 47% of their overall income. But their exam expenditure is £900k – a deficit or loss.
So while they're both equally exposed to exam income, #1 appears to be more efficient in exam delivery than #2.
How does this help? As a supplier, knowing how exposed your exam owner client is to exam income, evidences your mission-criticality to their business. As an investor, you must know the recurring revenue and growth ceilings for the market. And as a competing exam owner, how much market share do my competitors have, are they growing, and are they great at exam delivery?
What’s your Total Addressable Market? Get in touch: geoff@geoffchapman.com.