Cost of developing 1 hour of elearning

Hi Sean, have you seen this resource already? Despite the title, it does contain info about both time and cost.

Thanks Jeanette, that's awesome.

sean

I'd like to see the link you referred to but it is blocked on my companies network.  Any other way to view it?  Thanks You,

Eric

Hi there Eric, and welcome! Since the site allows downloads, I downloaded the presentation and attached it to this post. Hope that helps.

Thank You Jeanette, this is a great presentation!  I really appreciate your extra effort to help me out.

Thanks again,

Eric

I've referenced Karl Kapp's article on estimation.

http://www.astd.org/LC/2009/0809_kapp.htm

In my experience "it depends" is a big x-factor. But you should be able to get a rough order of magnitude that you can line up against an expectation of quality on delivery.

I've attached a document to this post - will attach another to a follow-on post. The first document is a quick estimator based on this chart and my experience in the industry. This is based on GSA schedules (government) which may be significantly higher than what you might experience in your industry. These are also rough estimates for proportions of distribution between labor categories. Your mileage may vary. The second is a definition of some factors commonly associated with interactivity rubrics (one factor in the calculation of cost / value).

I've found the best things for maximizing value and minimizing risk are:

1. Complete a good pre-design analysis. If you go into a statement of work with a weak description of the delivery, or leave your expectations to interpretation... you are going to pay more for that risk.
2. Separate the expensive and special outputs into separate deliverables. Need a 3D model or a complex animation? Make that a separate delivery. The risk is that if you define one type of output, the vendor may tend to paint the entire deliverable with the same level of effort brush - handily masking more simple tasks under this level of complexity. They are, of course, a business. Maximizing profits is the name of the game. Particularly if you can do this while wowing the customer.
3. Be aware of labor categories. Instructional media design and development takes all kinds of team talents. If your contract is not firm fixed price, you'll end up racking up expensive hours if you don't have stratification of those hours specifically spelled out in the contract (an ISD is more expensive than a graphic artist, and typically less efficient at those tasks).
4. Stick with known quantities. A trusted partner is worth it. The best way to remove risk is to know who and what you're dealing with (this point and number 1 can lift huge weights of worry off your very own shoulders).

~Steve

Here's the second document - interactivity factors. For the record... I don't like the LOI models like this one. They tend reduce interaction to a generalization when interaction is intentional and by design. A tool is just a tool unless it's used by a *tool*.

@Jeanette - Thanks- as always - for your timely help in providing a helpful resource.  

@ Steve- Really interesting resources ... an actual "estimator"?  Golly.  Excellent practical business advice by the way.  Appreciate your insights. 

So - if I'm understanding Chapman's presentation - the average development cost is a little over $100 per hour.  I appreciate that different people, contributing different elements to the team effort may have an hourly rate above or below that, so...

everyone - Is USD$100/hour fairly consistent with your experience of usual and  customary billing rates?

Please say: "It depends."  ....

Thinking about Sean's original query here - when asked: "How much should we be paying for an hour of elearning?" - would folks generally feel comfortable saying something like this?:  

"Industry research suggests that a basic, but professionally produced, hour of eLearning requires about 185 hours of effort at an average cost of about USD $19,000.  But the reality is that price varies a lot.  Costs can be lower if the hour doesn't involve any interactive learning exercises or higher if it includes higher-end elements like simulations or games."

Yes, I think that "it depends" statement captures fairly accurately. It comes down to expectations. Complex media requires complex design specialization and specialized development labor. That's expensive no matter which way you slice it.

I think the problem is in packaging expectations and the lack of granularity to most statements of work. In many cases you can spend a little on some highlights and get a lot of mileage out of those AND the rest of your design package. Too often projects are scoped in one hour increments. I always say "part task is powerful", focus on the elements that will give you the greatest gains first. If everything else falls away you still have the powerful stuff.

I work for government so I have that expectation framing. But I also work independently as a consultant. The price range difference is staggering, in my opinion. My rates are significantly lower and my work quality is generally higher than many of the contract providers I've worked with. But I also bite off smaller pieces. Usually much smaller and normally specialized outputs. My point is I don't think the value is often there for many of the deliveries that people pay for (this isn't always true, I've seen some really kick ass stuff do some really kick ass stuff).

I tend to view my independent work rates sort of like an auto mechanic would. I have an hourly rate that flexes a little based on the complexity of the output. I know how long it will take to do X. So I can quote a firm fixed bracket based on a set of assumptions. I like to keep the modules small and tuned around a measurable skill change. A 15-20 minute module could cost between 2k and 4.5k depending on the types, quality, and quantity of media. I'll usually build Level II IMI with some Level 3 highlights, content chains, or assessment chains. This is on the low side of my industry estimator. But I don't really have much overhead.