When students talk about online homework help, Chegg almost always comes up. For years, it was the go-to platform for step-by-step solutions, textbook rentals, and late-night assignment help. Then AI tools like ChatGPT, Google’s AI Overviews, and other free assistants exploded – and suddenly everyone started asking: is Chegg still a good business model? To ... Read more

When students talk about online homework help, Chegg almost always comes up. For years, it was the go-to platform for step-by-step solutions, textbook rentals, and late-night assignment help. Then AI tools like ChatGPT, Google’s AI Overviews, and other free assistants exploded – and suddenly everyone started asking: is Chegg still a good business model?

To answer that, you can’t just look at one quarter’s revenue or a viral headline. A “good business model” is a mix of:

• Clear value for users
  
• Sustainable, profitable revenue
  
• Ability to adapt when the market shifts
  

Chegg has nailed some of these and struggled badly with others, especially after AI disrupted its core value proposition. Let’s unpack how the Chegg business model works, where its money comes from, how AI has hit it, and whether it still makes sense in 2025 and beyond.

What Is Chegg? A Quick Snapshot

Origins and Evolution of Chegg

Chegg started in 2006 as a textbook rental company, helping U.S. college students save money on expensive physical books. Over time, it realized renting books was a low-margin, operationally heavy game. So Chegg pivoted into what it is today: a digital-first, education technology platform focused on homework support, study tools, and skills.

Today, Chegg:

• Is based in Santa Clara, California
  
• Operates globally as an online learning platform
  
• Serves millions of subscribers across Study, Writing, Math, language learning, and skills training
  

From Textbook Rentals to a Full Learning Platform

The big strategic shift for Chegg was moving from one-off textbook rentals to recurring subscription-based digital services. Instead of making money once per semester, Chegg began charging monthly fees for access to:

• Step-by-step textbook solutions
  
• Expert Q&A
  
• Writing assistance and plagiarism checks
  
• Math solvers and practice tools
  
• Language learning (via Busuu)
  
• Skills courses and certificates
  

This pivot turned Chegg into a high-margin SaaS-like business rather than a logistics-heavy bookstore.

How the Chegg Business Model Works

Student-First Digital Platform

At its core, Chegg’s business model is simple:

1. Attract students who are under time pressure and grade pressure
   
2. Offer them quick, convenient, and relatively affordable academic support
   
3. Lock that value into a monthly or annual subscription
   

Everything Chegg does – from content to UI to marketing – is optimized around the student who’s juggling classes, part-time work, and exams.

Recurring Subscription as the Engine of Growth

The engine of the Chegg business model is recurring subscription revenue. Instead of relying on one-time textbook orders, Chegg now makes most of its money from subscription services like Chegg Study and Chegg Study Pack.

In recent years, Subscription Services have contributed close to 88–89% of total net revenues, making Chegg heavily dependent on its subscription base.

This is classic SaaS logic: acquire a student user, keep them paying month after month, and maximize their lifetime value through bundles and upsells.

Chegg’s Core Services – What Exactly Does It Sell?

Subscription Services (Chegg Study Pack, Study, Writing, Math, Busuu)

According to company filings, Chegg splits its offerings into two main buckets: Subscription Services and Skills and Other

Chegg Study & Chegg Study Pack – The Homework Help Hub

Chegg Study is the flagship product. It provides:

• Step-by-step textbook and homework solutions
  
• Millions of problem explanations
  
• 24/7 expert Q&A
  

Chegg Study Pack bundles multiple services into one subscription:

• Chegg Study
  
• Advanced practice tools
  
• Writing support
  
• Math tools and more
  

This bundle strategy is key to the Chegg business model. It pushes students toward higher-value packages, increasing average revenue per user (ARPU).

Chegg Writing & Chegg Math – Tools, Not Just Answers

Chegg Writing offers:

• Grammar and spelling checks
  
• Plagiarism detection
  
• Citation and referencing tools
  

Chegg Math includes:

• Step-by-step math problem solving
  
• Equation solvers and practice questions
  

These tools fit neatly into Chegg’s pitch: “We’re not just giving you answers, we’re helping you learn.” From a business-model angle, they also deepen engagement and justify the subscription price.

Busuu & Language Learning Inside the Chegg Ecosystem

Busuu, a language-learning app acquired by Chegg, brings in another digital subscription line. Students can learn languages through structured lessons, practice, and community features.

This expands Chegg beyond pure “homework help” into broader lifelong learning – a direction that becomes more important as AI commoditizes basic question-answering.

Skills and Other (Chegg Skills, Advertising, Licensing, Textbooks)

The Skills and Other segment includes:

• Chegg Skills – bootcamp-style programs and micro-credentials focused on job-ready skills
  
• Advertising and sponsorships on Chegg’s platform
  
• Content licensing deals
  
• Remaining revenue from print textbooks and eTextbooks
  

While this segment is smaller than Subscription Services, it’s strategically vital. As the classic homework-help model gets squeezed by AI, Chegg is leaning harder into skills and employability programs, which can be sold directly to individuals or to employers and institutions.

Chegg’s Revenue Model and Financial Performance

Revenue Streams and Mix – Where the Money Comes From

Broadly, Chegg makes money via:

• Monthly/annual recurring subscriptions (Study, Study Pack, Writing, Math, Busuu, Skills)
  
• Course and program fees (Chegg Skills)
  
• Advertising and content licensing
  
• Residual textbook rentals/sales
  

In 2023, Chegg reported full-year revenue of about $716 million, with roughly 89% coming from Subscription Services.

By 2024, total revenue dropped to around $616 million, and subscription still made up the overwhelming majority of that figure.

High-Margin Digital Subscriptions

One of the strengths of the Chegg business model is margin profile. In 2023, Chegg’s non-GAAP gross margin was around 76–78%, driven largely by the digital nature of its subscription services.

The cost to serve one more subscriber is relatively low once content, platform, and expert networks are in place. That’s why Chegg could:

• Generate strong adjusted EBITDA
  
• Maintain healthy free cash flow
  
• Invest in AI tools like CheggMate and acquisitions like Busuu
  

From a pure unit-economics perspective, Chegg looked like a textbook (pun intended) example of a good digital business model.

Recent Numbers (2022–2025): Growth, Plateau, and Decline

The story changes sharply once generative AI arrives:

• 2022: Total revenue about $766 million (Chegg Services and textbooks), 5 million services subscribers, and growing subscription revenues.
  
• 2023: Total net revenues about $716 million, down 7% year-over-year, with subscription revenues down 5% and subscribers falling 9%.
  
• 2024: Revenue falls further to ~ $616 million, down about 14% vs 2023.
  
• Early 2025: Q1 2025 revenues fall roughly 30% year-over-year to around $121 million, with subscribers dropping 31% to about 3.2 million.
  

By late 2025, Chegg is still profitable on some non-GAAP metrics but clearly in a shrinking phase, with management openly acknowledging “new realities of AI” and reduced traffic from Google.

The AI Shock – How ChatGPT and Google Hit Chegg

Subscriber and Revenue Declines

When ChatGPT and other AI tools became freely available, many students realized they could:

• Paste questions directly into an AI
  
• Get instant, detailed answers
  
• Avoid paying monthly for Chegg
  

By 2023, Chegg itself publicly cited ChatGPT as a key reason for slowing subscriber growth and guidance cuts.

The result? A business model that had once been praised for recurring revenue suddenly faced:

• Declining subscriber counts
  
• Falling revenues
  
• Investor skepticism and stock price collapse

Layoffs, Restructuring, and Leadership Changes

In 2025, Chegg responded with aggressive cost-cutting and restructuring:

• Around 22% of the workforce (about 248 employees) laid off in May 2025
  
• Offices in the U.S. and Canada slated for closure
  
• A further 45% workforce cut (about 388 employees) announced in October 2025
  

Leadership also shifted, with the company reshuffling its CEO role and exploring “strategic alternatives.”

From a business-model perspective, this is what happens when your core value (paid homework answers) collides with a cheaper, widely-available alternative (free AI).

Lawsuit Against Google and the Fight Over Traffic

In February 2025, Chegg sued Google, arguing that AI Overviews in search results were:

• Reducing traffic to sites like Chegg
  
• Using publishers’ content to generate AI answers without proper compensation
  
• Damaging its revenue and business prospects
  

The lawsuit shows just how dependent the Chegg business model had become on organic search and how vulnerable that is when platforms change the rules.

Strengths of the Chegg Business Model

Despite everything, Chegg still has real strengths that any business analyst should note.

Sticky Subscription Products and Strong Brand

For more than a decade, Chegg has been synonymous with homework help. That brand recognition:

• Lowers acquisition costs (students hear about Chegg from friends, not just ads)
  
• Builds trust in exam-intense moments
  
• Makes cross-selling Study Pack, Writing, and Math easier
  

Even in a world of AI, many students still want structured, curriculum-aligned solutions and verified answers – something Chegg can arguably deliver better than a generic chatbot.

Massive Content Library and Expert Network

Chegg’s content moat is substantial:

• Millions of textbook solutions and Q&A archives
  
• Over 150,000 subject matter experts historically contributing solutions and explanations
  

This library:

• Helps AI models inside Chegg learn from high-quality, domain-specific content
  
• Provides structured, step-by-step solutions aligned with actual textbooks and syllabi
  
• Can be repurposed into skills courses, quizzes, and adaptive learning journeys
  

In other words, the Chegg business model still sits on top of a valuable pile of proprietary educational data.

AI Integration with CheggMate and Adaptive Learning

Rather than ignoring AI, Chegg launched CheggMate, an AI learning assistant built with GPT-4 and Chegg’s own content.

The idea:

• Use generative AI, but constrain it with Chegg’s vetted content
  
• Provide tailored explanations, not just raw answers
  
• Deliver personalized recommendations and adaptive practice
  

If executed well, this could refresh the Chegg business model by making it more than “a paid version of what free AI already does.”

Weaknesses and Risks in Chegg’s Model

Reliance on Homework-Style Help in the Age of Free AI

The biggest weakness is structural: Chegg built its model around homework-style question answering. But generative AI is really good at exactly that.

When a free or cheaper substitute appears that:

• Is available 24/7
  
• Feels “good enough” for many tasks
  
• Doesn’t lock answers behind a paywall
  

…a large chunk of Chegg’s value proposition erodes.

The economics of Chegg are still solid, but the demand side has become fragile.

Academic Integrity Issues and Institutional Pressure

Chegg has long faced criticism that its services can be used for cheating.

That brings several risks:

• Universities pushing students away from Chegg
  
• Honor-code policies banning use of certain tools
  
• Reputational damage that makes institutions reluctant to partner
  

While AI tools can be misused in the same ways, Chegg is a more visible, centralized target, which complicates its business model, especially for institutional or B2B deals.

Dependence on Search Traffic and Platform Gatekeepers

The lawsuit against Google highlights another risk: Chegg depended heavily on search traffic and discovery.

When Google and other platforms:

• Roll out AI summaries
  
• Push more answers into the SERP without clicks
  
• Promote their own learning tools
  

…traffic to Chegg can drop sharply, regardless of how good the underlying product is. This “platform risk” is a big red flag for any digital business model.

Market Impact – How Chegg Changed (and Got Changed by) EdTech

Impact on Student Behavior and Study Culture

Love it or hate it, Chegg changed how students study:

• It normalized on-demand, subscription-based academic help
  
• It made step-by-step solutions and archived Q&A mainstream
  
• It blurred the line between “help” and “getting the answer”
  

Now AI is pushing this trend even further, but Chegg helped build the appetite for instant academic assistance.

Effects on Tutors, Publishers, and Universities

Because Chegg could scale digital content much faster than traditional tutoring or office hours:

• Many students shifted from in-person tutors to online platforms
  
• Publishers faced pressures around textbook piracy, answer keys, and content usage
  
• Universities had to rethink exam and assignment design to guard against solution banks and answer-sharing
  

The Chegg business model has effectively forced educators to design more authentic assessments that rely less on easily searchable questions.

What Chegg’s Struggles Signal to the Whole EdTech Market

The recent struggles of Chegg are not just a “Chegg problem.” They send a loud message to the whole edtech industry:

• If your product is mainly Q&A, AI will undercut you
  
• Content alone is not a moat – context and coaching matter
  
• Platform risk (Google, app stores, AI search) can crush a model that looks healthy on paper
  

In that sense, Chegg has become a case study on both the potential and fragility of digital education businesses.

Is Chegg Still a Good Business Model in 2025?

Short-Term Reality Check

In the short term, you can’t ignore the numbers:

• Revenues shrinking year-over-year since 2023
  
• Subscribers down by over 30% versus pre-AI highs
  
• Two major rounds of layoffs in 2025 (about 22% + 45% of staff)
  
• A stock price that has fallen dramatically from its pandemic peak
  

In that context, asking “Is Chegg a good business model?” has a nuanced answer:

• As a pure homework-help subscription model?
  Not really – that niche has been structurally disrupted by free AI tools.
  
• As a digital learning platform with diversified services?
  There is still a path, but it’s narrower, and execution risk is high.
  

Long-Term Potential: Skills, AI, and B2B Opportunities

Long term, Chegg is trying to reposition its business model around:

• Skills and employability: Chegg Skills, workplace skilling, AI-related courses, language learning via Busuu
  
• AI-enhanced learning: CheggMate and other tools that use AI but layer in pedagogy, guardrails, and structured content
  
• B2B and partnerships: Potential collaborations with employers, universities, and governments focused on skills and job readiness
  

If Chegg pulls this off, the business model could evolve from “homework answers for students” to “AI-powered skills and learning infrastructure” – a more defensible, higher-value position.

So, is Chegg a good business model in 2025?

• Historically: Yes – high-margin, recurring, scalable, and student-centric.
  
• Right now: Under severe pressure, partially broken in its original form.
  
• Future: Potentially good again if the pivot to skills + AI + B2B succeeds.

Lessons Entrepreneurs and Investors Can Learn from Chegg

The Power – And Danger – of Product–Channel Fit

Chegg mastered product–channel fit:

• Product: homework help, textbook solutions
  
• Channel: Google search + word of mouth
  

For years, that combination minted money. But when the channel changed (AI Overviews, chatbots, traffic shifts), the model suddenly looked fragile.

Lesson: if your business model relies heavily on one discovery channel, build backups early – email lists, communities, direct institutional deals, mobile-first experiences, etc.

Why Defensibility Matters More Than Growth Charts

On paper, Chegg looked extremely strong in the late 2010s and early 2020s:

• Growing subscriber base
  
• High margins
  
• Strong cash flow
  

What was missing was defensibility against a general-purpose AI that could answer similar questions for free.

The big takeaway:

A “good business model” isn’t just about current profit. It’s about how hard it is for technology or competitors to erase your value in a few years.

For Chegg, the next chapter will be all about building that defensibility around skills, proprietary content, and AI-powered learning experiences that are meaningfully better than generic chatbots.

Conclusion

Chegg is one of the clearest examples of a digital business model that was brilliant for its time – and then got blindsided by a massive technological shift.

• It nailed student pain points: expensive textbooks, confusing homework, lack of on-demand help.
  
• It built a recurring, high-margin subscription engine that investors loved.
  
• It accumulated a huge content and expert moat that still has real value.
  

But:

• Free and cheap AI cracked the core of the Chegg value proposition – homework-style Q&A.
  
• Search platforms reduced traffic to sites like Chegg, hitting acquisition and engagement.
  
• The company has been forced into heavy restructuring, layoffs, and strategic pivots.
  

So, is Chegg a good business model today?

• As a pure homework-help subscription, the model is structurally weakened.
  
• As a broader learning, AI, and skills platform, the model can still work – but only if Chegg executes its pivot aggressively, moves up the value chain, and builds defensible offerings that AI alone can’t easily replicate.
  

In short: Chegg used to be a textbook example of a great business model. Now it’s a textbook example of why even great models must keep evolving – or risk getting solved like one of the practice problems in their own library.

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