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

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
JohnMoore2
Community Member
13 years ago

$30/hr to $50/hr is the range (level 1-3).

$40/hr is the mean.

The mean range is $35 -$45/hr.

Again, $40/hr is the mean.

You should charge a least $38 to $45/hr to do anything in

eLearning. The low end is if you can get a 12 month+ contract.

Shorter contract = higher hourly rate ($45+/hr).

To do higher level 3 work (lots of simulations, etc...),

the fair rate is $45 -$60/hr.

This is for doing eLearning production (development) work.

If you have to do everything (clean-up storyboards, develop

simulations, track QA, tight deadline, etc...) the range is $50 -$70/hr.

These are for freelancer eLearning developers.

But, it's capitalism, so YMMV. Any thoughts? Comments, etc...?

http://goo.gl/Dlu5R
JudithBlackb538
Community Member
13 years ago

Hi John,

You are talking about contract work in the US, right?
JohnMoore2
Community Member
13 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
13 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/
Tara-Metcalfe
Community Member
13 years ago

Check out this article -- I use this quite often

http://www.chapmanalliance.com/howlong/
AdamMastalerz
Community Member
13 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.
AdamMastalerz
Community Member
12 years ago

We also posted an interesting article that is helpful in defining one hour of e-learning.

Please take a look here.

http://www.scholarixsolution.com/wp/cost-of-developing-1-hour-of-e-learning-a-better-definition/
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