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

Tara-Metcalfe
Community Member
12 years ago

Check out this article -- I use this quite often

http://www.chapmanalliance.com/howlong/
AdamMastalerz
Community Member
12 years ago

@Bruce.

I appreciate your input, to be honest there is clients that want e-Learning and may not even know what an LMS system is. For professional like us, sure this is old news.

I agree it doesn't really say how much 1 hour costs, but then again what does 1 hour really mean? (We attempted to show some of the components, that would go into determining the cost) that may be helpful to determine the length.

The link posted by @Tara is great, I use that quite often as well. But one hour can be really skewed at times, is it 1 hour for an average learner to complete? (everyone has a different way of learning).

Thanks for the input Bruce.

No offence taken.

--Adam.
AlexSantos
Community Member
12 years ago

Great article Adam, and great conversation thread in general with some very fine points made.

After analyzing a project, I quote a price for a project based on a very high production standard employing instructional strategies we feel would be ideal for the skills to be taught. That said, just because my team would like to shoot a custom-video segment of the target skills being performed doesn't mean the client has that kind of budget. I am very straightforward with my clients and point out to them where major cost drivers for a project are, and working with the client to show where reductions could be made to fall within their budget.

Hope this helps,

AS
AdamMastalerz
Community Member
12 years ago

@Alex great point, we even took it further.

We developed a tool which helps clients determine how much it will cost. We are very honest with our clients as well and tell them right away what their dream course could cost based on their requirements.

Take a look when you have a moment and let me know your thoughts and if you think we missed anything.

http://www.scholarixsolution.com/pricing

Adam
PhilMayor
Super Hero
12 years ago
I love the tool, but the prices are pretty unrealistic based on what i would charge, by my worse case scenario you are a factor of ten times more expensive.
SheilaCole-Bult
Community Member
12 years ago

@Adam - what a great tool, really nice interface and ease of use, although I'm uncertain how realistic clients might be in assessing some of those factors. I'd also be interested to know how the ID components are priced out; in my experience, this is one area where "cheap" bids differ most from "expensive" bids - when I was in a corporate position selecting vendors, the cheapest options usually did no/little actual instructional design.

While the calculation outcome wasn't in line with my own pricing, it certainly wasn't off by a factor of ten. And of course in the end it doesn't matter if it's accurate for estimating my pricing, it just matters if it's accurate in pricing for Scholarix!
SeanSpeake
Community Member
12 years ago

I found that the prices weren't terribly off in some places, but were wildly off in others. As long as it works for you though. =)

I guess the biggest question I would ask (and that I ask clients) is - are you asking me to build what you already have without any instructional design or input (order taker approach) or are we working together to get this project to completion (partnered approach).

I prefer the latter - and often clients who feel that their content is ready to be cut and pasted into a tool are the furthest off.
SteveFlowers
Community Member
12 years ago

I dig the tool.

Pricing really depends on the market. For government, in the middle of the range, it seems pretty close. Deviates a bit at the top and the bottom for gov't work. But this could be right on the money for Scholarix's market.

It's higher than I'd charge on all accounts but 1) undercharging for work is one of my greatest weaknesses and 2) I'm not a firm of folks with a ton of overhead. A different set of calculations apply to a firm that can handle a large scope / scale on a shorter timeline than a solo outfit can take on.
johnmaidza
Community Member
12 years ago

I just wanted to know what level 1 to level 3 type of elearning involve.Maybe a guideline that entails and describe level 1,level 2 and level 3

thanks
SheilaCole-Bult
Community Member
12 years ago
John, if you're referring to the different levels in the Scholarix tool, just hover on any of them and you should see a description.