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

JohnMoore2
Community Member
11 years ago
$45 to $95 per hour. Simple.
JohnMoore2
Community Member
11 years ago

Great info Owen.
Nickna
Community Member
11 years ago

John Moore said:

$45 to $95 per hour. Simple.

That applies across the planet to developers and IDs then?
OwenHolt
Super Hero
11 years ago
Well said, Bruce. As stated before, when you are free lancing, you are running a business. But this isn't a business where you just sell "products" out a catalog with a list of set prices. You are selling solutions and solutions can be simple or complex... and the effort to execute the solution may be minimal or take a lot of effort... and the future implications of doing it well and building a relationship may be great or small... and... and... and....
Nickna
Community Member
11 years ago
So we end up back at 'It depends....'
HollyMacDonald
Super Hero
11 years ago

Yes, unfortunately it depends.

My usual answer is to share a range. Really I think clients/prospective clients are looking for orders of magnitude. "Are we talking $10,000 or $100,000?" But, some people don't want to talk price too early, so would counsel you to not state a price.

I think it's more important that you are serving a market and individual customers who value products and services that you offer. If you are worth what you charge, then there's no problem. I don't compete on price and if a prospective client feels I'm too expensive, then that's what's important to them. I'll encourage them to seek out someone that falls within their budget. Pricing is not just about matching competitors' prices, but involves many other factors.

I would also say that you might COST your project on an hourly effort, it doesn't mean you have to BILL on an hourly rate.

Hope that adds something to the conversation.

PS - Owen, really nice spreadsheet and set of screenrs.
OwenHolt
Super Hero
11 years ago

@Nicholas - Yes, of course, it always depends. Life is not simple and every client's needs are different. That being said, using some standard tools, or rates, or having a set approach to pricing is almost always a great place to start. But the place you start is not always where you end - it really does depend on your knowledge of the client and their needs balanced by your own long & short term business goals.

@ Holly - Thanks. Hope someone can find it useful as they start their journey.
SteveGraupner
Community Member
11 years ago
Thanks for the really great info. It looks like this is all for original development though. I wonder about the cost for RE development of e-learning. With the everything else changing: user/org needs, technology (on both user and Org side), e-learning isn't static. I understand there are variables, esp in re the availability of original materials, SMEs, etc. If nothing is available, then a redevelopment can be priced as original work. But there are a lot of parameters out there that can render previously working e-learning not suitable. E.g. an org wanting e-learning previously designed for a workstation to work on a mobile platform like a tablet or smart phone. Or the constantly changing security parameters e-learning has to contend with to reach to end user.
PhilMayor
Super Hero
11 years ago

Steve Graupner said:

Thanks for the really great info. It looks like this is all for original development though. I wonder about the cost for RE development of e-learning. With the everything else changing: user/org needs, technology (on both user and Org side), e-learning isn't static. I understand there are variables, esp in re the availability of original materials, SMEs, etc. If nothing is available, then a redevelopment can be priced as original work. But there are a lot of parameters out there that can render previously working e-learning not suitable. E.g. an org wanting e-learning previously designed for a workstation to work on a mobile platform like a tablet or smart phone. Or the constantly changing security parameters e-learning has to contend with to reach to end user.

In my experience sometimes rework in another program takes at least as long as the original development time.
AshleyChiasson
Community Member
11 years ago

Phil Mayor said:

Steve Graupner said:

Thanks for the really great info. It looks like this is all for original development though. I wonder about the cost for RE development of e-learning. With the everything else changing: user/org needs, technology (on both user and Org side), e-learning isn't static. I understand there are variables, esp in re the availability of original materials, SMEs, etc. If nothing is available, then a redevelopment can be priced as original work. But there are a lot of parameters out there that can render previously working e-learning not suitable. E.g. an org wanting e-learning previously designed for a workstation to work on a mobile platform like a tablet or smart phone. Or the constantly changing security parameters e-learning has to contend with to reach to end user.

In my experience sometimes rework in another program takes at least as long as the original development time.

Good point Steve; I agree with Phil here - while lengthy revision cycles are rare, they exist, and this may be one thing you want to stipulate in your contract (the amount of revision cycles you'll allow before the price goes up).