I occasionally have clients ask me if there are any industry standards regarding elearning development, particularly around cost. "Sean," they say, "How much should we be paying for an hour of elearning?" "It depends," I say. And honestly, they are never terribly happy with that answer. So I'm trying to come up with something a little more detailed. Obviously, there are any number of factors that come into play, but I was wondering if there were any quick and dirty estimates that you all use. Thanks! sean

Here is what I use. I took the figures that Chapman put together but tried to make some meaning out of them for myself.in a handy spreadsheet.Chapman provides some averages for three general course categories split into 3 levels of development effort across 12 development activities. While the breakdown is only provided for the average effort in each of the categories, I used the percentages derived from this to fill in the low and high effort buckets. Then, I use these numbers as a guide. For example, below you can see a course where I think my analysis will be: close to the basic course/average effort heavy on design light on storyboarding with graphics provided no video no audio Average authoring (thanks StoryLine!) Light QA Testing 0 Project management (I work alone) With a few reviews an average pilot and time for email back and forth with the client My estimated time spent for one hour of training falls between Chapman's Low and Average effort for the basic course I am developing. (Even though I chose to put in a higher degree of time and effort into design).Knowing the time you will spend is only part of the equation. You also have to know what you will charge. I've observed some make the rookie mistake of jumping out of the gate by charging what they used to make when they worked for a corporation. They forget that now they have all of the costs and overhead of their new business that they have to account for. So for example, assume a person had an annual salary of $65,000 as an ID, the hourly equivalent would be $31.25. If they charged this, lost a few weeks for vacation (unpaid now), had business expenses of $10,000, and spent 25% of their time looking for clients, their effective hourly rate drops to about $21. If they had accounted for these other assumptions up front, they would have billed at a rate of $50 to reach their same prior salary, cover their business overhead, time spent engaging new clients, and their vacation. If I am just starting, and struggling to stay engaged (managing a 50/50 split between working and looking) my hourly rate would jump all the way to $75. Once I have a reasonable rate based on my desired income (what I think my work is worth - without being too greedy) adjusted for expenses and a reasonable work -v- work search split, the rest is simple math. Attached is my spreadsheet you can use along with 3 screenrs that walk through it. My spreadsheet uses a modifier that is just a restatement of the cost per hour of training to a cost for each 5 minutes. This makes it easier for me to estimate courses that don't fit neatly into even hour buckets. Part 1: https://player.vimeo.com/video/204931345 Part2: https://player.vimeo.com/video/204931355 Part3: https://player.vimeo.com/video/204931363

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

Owen Holt said: ..... If they had accounted for these other assumptions up front, they would have billed at a rate of $50 to reach their same prior salary, cover their business overhead, time spent engaging new clients, and their vacation. If I am just starting, and struggling to stay engaged (managing a 50/50 split between working and looking) my hourly rate would jump all the way to $75. I should point out that clearly other factors need to be taken into consideration and one should set realistic expectations. For example, just because I might need to charge a much higher rate to hit my annual income goals doesn't mean that it will be the right rate to win business or be a rate that is commensurate with my current skill level & experience. I use the excel sheet for guidance only, but there is not a form or calculation that I am aware of that replaces common sense and human intellect.

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

Cost of developing 1 hour of elearning

TechDiva95
Community Member
13 years ago

Jeannette,

Thanks so much for your reference article! As a novice I really appreciate your extra effort.
ShaneRobinson
Community Member
13 years ago

I'm looking for someone with real-world boutique training company experience, to throw out some ball park figures on what their compnanies are charging small to medium size businesses for a 1 hour medium-complexity e-learning course built with Articulate Presenter, from the client's PPT deck.

Basically, I need a range. Can someone provide a price-range that works for clients in that market (small to medium size) that they have found from experience, just works. I would imagine that someone could say "don't settle for anything less than $2000 (insert real amount here) above your time and materials....but we price these courses out at no more than $15,000 (insert real amount here) per hour of seat time, because we have found that beyond that, we exceed what clients are willing to invest in the training project."

I understand the work-effort calculators. That is not exactly what I am looking for here. I am asking what the fair market price is.

Thanks,

Shane
ChantelleNash
Community Member
13 years ago

Steve Flowers said:

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

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

Does anyone know where I can find this article today? It looks like the link is no longer valid (and I've tried Googling to no avail).

Thanks!
PattiBryant
Community Member
13 years ago

Chanelle,

Is this the article you are looking for? Also, I found this survey that Jeanette mentioned to be extremely helpful. It's a study done by Chapman Alliance and includes how long it takes and how much it costs.

Hope this helps!
ChantelleNash
Community Member
13 years ago

Patti Bryant said:

Is this the article you are looking for?

Yep! Thank you. Do you happen to know if this is the 2003 or 2009 version?

Thanks for your help!
ChrisFletcher
Community Member
13 years ago

I looked at that presentation and was thinking "wow, that's really expensive" but then when you think about it, most of the eLearning I create is probably 15-20 minutes long, and the ratios are actually pretty accurate for the amount of time I spend on them.

That's some really interesting information that I think I can use to help me approximate the time it takes me to build my modules.

Thanks everyone!

C
SteveFlowers
Community Member
13 years ago

Hi, Chantelle -

Looks like ASTD has reorganized their old content. Wayback machine to the rescue:

http://web.archive.org/web/20110718215313/http://www.astd.org/LC/2009/0809_kapp.htm

Patti's RTF above looks to have additional breakdowns.

Steve
JudithBlackb538
Community Member
12 years ago

Hi John,

You are talking about contract work in the US, right?
JohnMoore2
Community Member
12 years ago

Yes, US contract work. The key is that many employers/companies are really "pushing down" on labor cost. Weather you can get those rates is a whole other issue. But those are fair rates to do eLearning development production work. This type of work often means looking over and making edits to each slide of a 100+ slide project. Reworking simulations and creating slides that ID did not create, etc... It's not easy work. Even with great tools like Storyline, its hard work (time) putting together good online learning.

http://www.kubepharm.com/JGM_2013_Resume.html
AdamMastalerz
Community Member
12 years ago

Great article.

We recently wrote an article that has a good informative info-graphic that explains the cost of developing an elearning course. Visually this may explain all the components that are involved.

http://www.scholarixsolution.com/wp/custom-e-learning-cost/