As a buyer of learning have you ever had sticker shock? As a provider of eLearning have you every been insulted by price expectations? The reason probably wasn’t due to some dramatic difference in underlying costs between different providers. The difference was probably due to wildly different expectations about effort and outcomes. I’ve created this learning & development pricing calculator to help move the conversation from dollars & hours to effort and outcomes to create win-win partnerships.
Introduction
How much should you pay for a learning solution? Why does one vendor quote $5,000 and another $20,000? At its core, the price of a learning solution is a very simple equation – Rate x Effort = Price.
Rate is the amount you pay per hour or day. Effort on the other hand is how many hours or days it will take to create the promised deliverable. Many vendors quote by the job, but as someone who has been pricing learning projects for the last thirteen years, I can assure you that behind the scenes someone is breaking that quote down into days and hours.
Seems straight-forward, right? Unfortunately, as most of us can attest it’s often anything but straightforward when the change requests come rolling in. So where does it all go wrong? I used to say the most important part of a vendor-client relationship is expectations, and more specifically aligning on expectations. You wouldn’t tell someone to build you a house then wait for the quote. You’d be much more specific. You may want a Victorian style home with 4 bedrooms and 3 baths, a gourmet kitchen, and a home theater. That’s a lot different from a ranch house with 2 bedrooms and one bath. The same is true with learning solutions. What follow is learning & development pricing calculator that breaks down the steps in the design and development of a learning solution along with associated effort. These are intended to reflect an average solution, so think of it as your middle of the road 3 bedroom / 2 bath house in suburbia. Some of you may want the Victorian and other the Ranch so you’ll need to adjust the days up or down accordingly.
I’ve also included a calculator for solutions of varying lengths, 20 minutes, one hour and three-hour solutions. This is because costs and efforts don’t always go up or down exponentially along with the length of a training experience. Some efforts are relatively fixed regardless of the length of the solution while others scale more efficiently. While the data in this article reflect the effort for ILT or VILT training, the pricing calculator includes estimates for eLearning as well. Please keep in mind that these estimates aren’t intended to be set in stone, rather they should be used as a starting point for discussions with any partner. To make it easy, we’ve put all of this in an Excel Workbook so all you need to do is adjust effort, add in Rates and you’ll see an estimate.
Download the Pricing Calculator
Step 1: Learning and Development Pricing Calculator – Performance Consulting or Needs Analysis
Whether you engage a vendor or contractor to conduct a needs analysis or run performance consulting workshops internally may be up for debate, but this is the critical first step in any learning solution. This step is about defining the problem to be solved, the audience, and the performance gap you intend to address with your learning solution. Below is a graphic from an organization called Performance Consulting UK who I used to upskill my sales team in my last role that provides a nice visual of the outcomes of performance consulting.
Estimating the time for performance consulting can be difficult because your internal client or you may or may not have already put a lot of thought into this. As a side note, this is the time to raise concerns you have about a content-driven solutions that aren’t human-centered and destine to fail. This is about putting the human in human-centered design. Here’s a task model for this step that provides the inputs for the learning & development pricing calculator.
| Performance Consulting Tasks | 20-Minutes | 1 Hour | 3 Hours |
| Kick-Off Prep:
· Review any existing material. · Meet with project sponsor(s) to understand their goals and perspective. · Pull together any pre-reading, slides, or supporting material. · Send out agenda and pre-reading. |
2 hours | 2.5 hours | 5 hours |
| Kick-Off
· Review the process you’re going to follow. · Confirm team roles & responsibilities (you’ll get this from the project sponsor). · Share sample deliverables. · Answer any questions. · Agree next steps to prepare for Workshop 1. |
1 Hour | 1 Hour | 1 Hour |
| Workshop 1: Problem Definition
· Workshop the problem until group aligns on problem statement. · Identify the target audience(s) who will be included in the training solution. |
2 hours | 2 hours | 2 hours |
| Workshop 2: Audience Gap Analysis
· Discuss each group within the target audience and draft current vs future statements. · I’d recommend you focus one primary audience but if you have more than one, this may take longer. |
Likely not necessary and covered above | 3 hours | 5 Hours |
| Workshop 3: Final Review & Sign-Off
· Pull together the problem statement and audience gap analysis into a presentation. · Present to the group and make any final edits before finalizing. |
.5 | 2 hours | 3 hours |
| Total | 5.5 hours | 10.5 hours | 15 hours |
Step 2: Learning and Development Pricing Calculator – Design
Now that you have the output of your performance consulting, you’re ready to architect your learning solution. I’m using the term architect to mean that you are, at a high level, defining the elements of your solution based on the needs of the audience. My personal favorite method for this step is Cathy Moore’s Action Mapping.
In simple terms, you are workshopping how to close the gap between what your audience is doing today vs what you need them to solve the problems you identified in the performance consulting phase. In other words, you are going through a series of questions:
- Q1: What does the audience need to start, stop or do more of to solve the problem?
- Q2: What is stopping them from taking this action today? (Gap Analysis)
- Q3: What intervention(s) can we provide that will help them overcome what is stopping them?
What’s the Gap?
The reason for a gap (Q2) can typically be attributed to one or more of four types of gaps and for each of those gaps, there is a toolbox of potential solutions. I’ve included some examples of solutions below but in no way are intended to be inclusive.
| Gap Type | Potential Solution |
| Knowledge Gaps: The difference between what the employees knows vs what the organization wants them to know. | eLearning Tutorials, Expert Presentations, Documents, Books, etc. |
| Skills Gaps: This is a gap in the things an employee is doing vs what the organization wants them to do. (Note: filling a knowledge gap maybe a pre-requisite for closing a skills gap). | Role-Plays, Simulations, On-the-Job Learning, Action Learning, etc. |
| Motivation Gaps: The employee doesn’t think the desired actions for behaviors are in their personal and / or the company’s best interest. | Executive talk or video, storytelling through animation or video, posters or swag, new incentives. |
| Environmental Gap: This one is a bit of a catch-all for things that don’t fall into the above but can include access to tools, culture, logistical constraints and often need to be addressed outside of a training solution. | Updating a system, buying new hardware or equipment, changing policy, etc. |
Here are the inputs for the learning & development pricing calculator.
| Design Tasks | 20-Minutes | 1 Hour | 3 Hours |
| Workshop 1: Surface Gaps
· Facilitate discussion about each audience to surface all the gaps stopping them from achieving the desired state. · Findings are captured and circulated for any comments for edits to the group.
|
2 Hours | 4 Hours | |
| Solutioning
· Draft v1 of the Design Document including: o Overall learning journey o Description of each element / experience including: § Learning objectives / Outcomes § Key interaction type e.g. tutorial vs simulation § Delivery method e.g. ILT, eLearning, OTJ § Duration o Any content gaps moving forward e.g. we need some great stories on xxx for this module. · Conduct initial review with project sponsor and make any revisions. · Distribute Design-Document to Team |
3 Hours | 8 Hours | |
| Workshop 2
· Present Design-Document and take on any feedback. · Revise and finalize Design-Document. |
1.5 Hour | 3 Hours | |
| Total | 6.5 Hours | 15 Hours |
Step 3: Learning and Development Pricing Calculator – Script & Build
With our Design Document complete, we have a blueprint for our learning solution in-hand and are ready to flesh out the details, write our materials, develop supporting assets like animations and finally build out the resources. As I noted above, there are many ways to address a training need and some, like an executive presentation, may take very little formal preparation while others like eLearning require a significant upfront investment. For the purposes of this learning and development calculator, I’ve included two of the most common formats that organizations look for outside support to create: eLearning and ILT/ VILT.
Content Gathering
The first step in this process is to gather all the input needed to create the resource. In our previous steps, we’ve reviewed all the source content and identified any content gaps. Filling these gaps usually requires some combination of conducting research or interviewing subject matter experts. I’m sure ChatGPT will change all of this shortly, but that’s a conversation for a different blog! This is one of those phases in project that will vary significantly, so while we’ve shared some estimates, we would expect the actuals to be quite different project to project.
| Task | 20-Minutes | 1 Hour | 3 Hours |
| Content Workshops
· Prepare discussion guide. · Conduct workshop. · Review and write-up notes. · Share notes with stakeholders for review and feedback. |
3 Hours
(1 Workshop) |
5 Hours
(2 Workshops) |
12 hours
(3 Workshops) |
| Research
· Identify relevant resources. · Consolidate and summarize content to be included. · Share content with stakeholders for review feedback. |
1-2 hours | 3-4 hours | 4-6 hours |
| Total | 5 Hours | 9 Hours | 18 Hours |
Writing
Now that we have all the content, the next step is to turn that content into a learning experience. For ILT/VILT this involves writing Leader Manuals, Learner Materials and Presentations. For eLearning, this means drafting a script.
For the purposes of the ILT/VILT estimates below, I’m assuming that the course will be delivered by an expert facilitator and not a subject matter expert, so any leader materials will need to include details about the content that the facilitator will need to prepare to deliver it.
ILT/VILT Scripting
| Task | 20-Minutes | 1 Hour | 3 Hours |
| Draft Facilitator Manual
· Draft manual including: content background, outline of slide content, description and instructions for any activities, sample questions / prompts for discussions, · Share manual with stakeholders for review and feedback. · Update draft. |
8 Hours | 12 Hours | 24 hours |
| Draft Learner Materials & Presentations
· Draft materials including handouts, presentation slides with speaker notes and pre-reading. · Share materials with stakeholders for review and feedback. · Update draft. |
8 Hours | 12 Hours | 24 hours |
| Pilot
· This is the ideal place, if time allows to pilot the materials and take on any feedback from learners. |
|||
| Totals | 16 Hours | 24 Hours | 48 Hours |
eLearning Scripting
| Task | 20-Minutes | 1 Hour | 3 Hours |
| Draft Script
· Draft v1 of script including on-screen text, description of graphic, screen layout, audio, and any movement. · Share script with stakeholders for review and feedback. · Update draft – plan on 2-3 iterations. * |
20 Hours | 40 Hours | 90 hours |
| *Consider Going Agile – While a script is a necessary step in the eLearning development process, it’s not always the most productive to have a large group of stakeholders review it. The analogy about this that always resonates with me is asking an audience member to review the screenplay of a movie. The average audience member wouldn’t have a clue if a screenplay is good or not. They need to see the movie. Same goes for eLearning. Most people need to see a working course to truly assess it. So one way to approach scripting is to limit review to a very small group then share a MVP with your larger group of stakeholders. This may result in more changes to the built course, but it will also save you a lot of time going back and forth reviewing a script that your stakeholders are struggling to understand. | |||
| Totals | 20 Hours | 40 Hours | 90 Hours |
Production
The final step in the development process is the actual production of the resources. For ILT/VILT, this simply means laying out manuals and handouts and creating presentations. For eLearning, this is more involved and includes finding and treating graphics, adding text, graphics and animation to the authoring environment, and testing.
ILT/VILT Build
| Task | 20-Minutes | 1 Hour | 3 Hours |
| Graphics & Layout
· For learner materials, layout and format documents. · For presentations, add graphics (15/30/60 slides respectively). · Share materials with stakeholders for review and feedback. · Update draft. |
10 Hours | 15 Hours | 30 Hours |
| Pilot
· This is the ideal place, if time allows to pilot the materials and take on any feedback from learners. |
|||
| Totals | 10 Hours | 15 Hours | 30 Hours |
eLearning Build
| Task | 20-Minutes | 1 Hour | 3 Hours |
| Graphics & Layout
· Selecting, treating, and combining graphics as needed. (Assumes stock photos as the starting point) · Capturing / purchasing audio · Adding text, graphics and audio to authoring tool. · Functional, quality and LMS testing. · 20 min = 20 screens, 1 Hour = 60 screens, 3 Hours = 180 screens *Assumes three iterations of the course. |
40 Hours | 90 Hours | 250 Hours |
| Pilot
· This is the ideal place, if time allows to pilot the materials and take on any feedback from learners. |
|||
| Totals | 30 Hours | 90 Hours | 250 Hours |
Hopefully, that’s a comprehensive look at the tasks that go into the design and development of a learning solution and should provide a good starting point for an in-depth conversation with a potential partner about pricing. For those organizations that buy learning from third-party vendors these prices may seem quite low, and they are. The $65 rate is commensurate with what one of those companies would pay an employee but does not include all of the overheads, cost of sale, and profit that company would typically account for in the price. As a rule of thumb, a custom learning company will price at about 60% gross margin, which in short-hand means you multiple direct costs by 2.5.
In addition to the additional cost of doing business, these companies will use a lot of specialized resources. This will likely result in a higher quality solution, but also add cost for onboarding and internal meetings. Finally, whether you are outsourcing or not, you will need to build in time for Project Management and QA. In the Calculator, I’ve included a line that adds 20% of total budget for Project Management and 5% for QA. Again, these are just estimates based on my experience, but it’s important to allow for time for these tasks.
Let us know if you have any questions about the learning and development pricing calculator and we’re happy to help.