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What Training Costs Part I: Converting Content from ILT to WBT

The pricing of training development often involves a lot of mystery and a little bit of smoke and mirrors, especially for web based training. There is plenty of research available on pricing, but it’s typically hard to find, quickly out-dated, and often too general to be helpful. And if you ask three different vendors for a quote, you’re likely to get three different (often very different) price points. So how do you figure out what something should cost? How do vendors get from industry benchmarks to actual bids? Is there an easy way to evaluate whether or not a quote is reasonable? And how can you ensure that you’re comparing apples to apples?

When I was on the buy side, managing corporate training, I really wished there was a cheat sheet of some kind that I could reference to help me with budgeting projects and evaluating bids. Now that I’ve spent the last 4+ years on the sell side with consulting companies, I deeply appreciate that the correct answer to the question “what will it cost me” really is “it depends.” (For a discussion on some of the factors that enter into this, see my earlier post on transcending constraints.) Still, “it depends” is frustratingly unhelpful. So I thought I’d do a series on how I approach pricing, offering perspective from the inside of the sausage factory, as it were. I have gotten pretty good at back of the envelope estimates, and figured other folks might find it helpful to have a working model. Note that some of the benchmarking research I draw from may be a bit dated, so feel free to replace any baseline numbers offered here with your own benchmarks. Better yet, please use the comments to point me to more recent findings, or to describe your approach. I’d love to hear how others think through this. Meanwhile, let’s dive into the first topic.

How to price content conversion from ILT to WBT

A top-down pricing model for converting ILT content to self-paced WBT content involves three factors:

1. Compression ratio: What would the length of the course be if it were online vs. classroom based? There's been a lot of research on this, and answers vary anywhere from 20% to 80% of the original length, but there's general agreement that an average compression ratio is typically about 50%, or a four hour course in the classroom should take the student 2 hours to complete online.

2. Development costs: What would it cost to convert the materials into web based training? This is usually expressed as cost per hour of completed WBT. Varies wildly, depending on how sophisticated you want that online training to be, though these costs have been trending downward for some time. Best research I’ve found is from a 2007 Bersin article which indicated average price points based on level of interactivity:

  • Level 1: $15,000 per finished hour
  • Level 2: $23,000 per finished hour
  • Level 3: $30,000 per finished hour
  • Level 4: Undefined. What level 4 actually offers in terms of level of interactivity can be all over the board, for example, from branching sales scenarios to a full-fledged flight simulator. No real way to estimate cost per hour of Level 4 WBT without clear design parameters.

Sidebar: “Level of interactivity” is something that can be defined very differently from vendor to vendor. While there are some general guidelines, such as level 2 includes audio but not video, there is still a lot of room for variance. For example, how much audio does it include in terms of total recorded minutes? Is the audio professionally scripted, recorded, and edited, or just a talking SME with a ppt deck? Is the audio the same or different from on-screen text? Is it timed to play with each changing “screen” or are there smaller audio clips that play upon click? And so on.) As you can see, you’re going to need vendors to very clearly define what it is they propose to build. Otherwise you’ll be comparing apples to oranges, or potentially even apples to an entire fruit basket.

3. Reusability savings: How much effort can be saved in development since you have existing source materials from the ILT course? Varies wildly based on how stable the content is, and how easily it translates to the web (which largely maps back to level of interactivity desired). My best guess, based on my experience,  is that you could reduce LOE by:

  • 50-75% for level 1
  • 25-50% for level 2
  • No more than 25% for level 3
  • No more than 10% for level 4

So, the formula would be:

Length of course in hours x compression ratio x (cost per finished hour based on level of interactivity x reusability savings)

For example, if you wanted to convert an 8 hour ILT (with completely stable content) into a Level 2 WBT, the math would be:

8 x .5 x ($23,000 × 50%) = $46,000.

~ posted by Beth Chmielowski on 30 Jul 09
   tagged as: , , ,

 

11 Responses so far. Add Your Own.

nice- I wish I had this years ago... this formula should be the gospel for the industry


posted by glenn
July 31st, 2009
 

one way to expand this is removing the assumption of an existing ILT course. I've seen the quality of the original material affect the cost. Some factoring that took into account the continuum from just a set of bad PPTs and PDFs and no SME accesss, to your already-developed ILT course, would prove a useful extension to address many of the questions I get.


posted by Clark Quinn
July 31st, 2009
 

Clark, that's an excellent suggestion. The ranges provided for reusability savings were meant to imply a variance in terms of quality and quantity of existing materials, but I agree that a more detailed break down would be even more helpful. Do you have a secret formula that you use?


posted by Beth Chmielowski
July 31st, 2009
 

As a WBT vendor, I can appreciate those numbers. It's fair and straightforward. Nice article!


posted by Katie Stroud
July 31st, 2009
 

Awesome post! Thanks for sharing with us what has obviously taken you a some time to figure out. I eagerly look forward to the next post in this series.


posted by Ani
August 4th, 2009
 

[...] What Training Costs Part I: Converting Content from ILT to WBT – Velocity Made Good [...]


posted by reBlog: What Training Costs Part I: Converting Content from ILT to WBT – Velocity Made Good « lrnr
August 4th, 2009
 

Very helpful -- thanks! But I noticed you mentioned "Is the audio the same or different from on-screen text?" and I know reading verbatim onscreen text has been shown to be very distracting and poor instructional design. Would you have suggestions as to how to compare the ID approaches of vendors?


posted by Alycia
August 26th, 2009
 

Thanks, Alycia. I agree that reading verbatim onscreen text is distracting, and in most cases, not a recommended best practice. Typically it is used when a course needs to be section 508 compliant (that is, consumable by people with disabilities). Regarding comparing ID approaches, the short answer is, ask them what informs their design choices. There should be some reasoning behind the deisgn that they've suggested, and hopefully that reasoning will be well-aligned with the business goals associated with the course.


posted by Beth Chmielowski
August 27th, 2009
 

[...] What training costs: Converting content from ILT to WBT [...]


posted by 25 Top Learning & Development Posts of 2009 | BRYANT NIELSON'S BLOG ON TRAINING
February 8th, 2010
 

[...] What training costs: Converting content from ILT to WBT [...]


posted by 25 Top Learning & Development Posts of 2009 | Your Training Edge ®
February 8th, 2010
 

[...] What Train­ing Costs Part I: Con­vert­ing Con­tent from ILT to WBT- Lever­ag­ing Learn­ing, July 30, 2009 [...]


posted by Top 125 Workplace eLearning Posts of 2009 | TechTotal Technical Writing, Instructional Designing - ID Training Blog
February 19th, 2010
 

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