Have you ever wondered whether a learning agency might be able to help you achieve your priorities but weren’t sure whether you could fit it into your budget?
If so, then you probably know that reliable pricing information is difficult to find. No credible learning agency that I know of publishes pricing (nor should they as I’ll explain in a moment). There are price estimators out there, but I’ve yet to see one that comes anywhere near to reflecting reality.
The lack of pricing information can be extraordinarily frustrating. Yes, you can always ask for a quote from various agencies. But this requires that you have your project sufficiently scoped for them. When you’re early in the budgeting process, you may not have much in the way of scope to provide them. You could ask for a standard pricing table, but most agencies will not have one and for those that do, you should regard any standard pricing table very lightly.
What, then, are you to do if you’re trying to figure out whether working with an agency is right for you? The bad news is that there isn’t a standard pricing mechanism you will be able to use to get an accurate and reliable estimate. That’s why the most honest answer is the least satisfying one: it depends. The good news is that if you are aware of the things that price depends upon, it gives you some levers you can pull to adjust a price up or down. These levers could also potentially help you solicit pricing from potential vendors even if you have not yet scoped out your project. So, what are the primary factors that elearning pricing is dependent on?
Factor 1: Quantity of content
It goes without saying that the more content you will need, the more it will cost. Content quantity is usually expressed as seat time, meaning how much time it will take for a learner to go through the experience. Knowing how much content you need usually requires a bit of a guess. The reality is that for most learning goals, you will not have all of the time you would need to get everyone to mastery, so choosing a time frame is often, at least to some degree, arbitrary. That’s why many clients and agencies just draw a line in the sand and pick a time frame that they feel is sufficient to get the job done. Using your judgment like this is a perfectly valid approach.
Factor 2: The nature of the content
As I mentioned before, what goes into any unit of elearning can vary so widely that it can be impossible to do any kind of apples-to-apples comparison. Qualitative factors that drive price fall into two categories:
1. The media being used (rich versus static media)
Media choice is a big driver of cost. Media exist on a continuum with static media on one end and rich media on the other. Text is the ultimate static media. It is the easiest to make and it doesn’t move. Adding visuals moves you further up the continuum, as illustrations and photos cost more to produce (which is true even when you use them from stock). On the far end of the spectrum are video and animation, which, in general, cost the most to produce. So, to sum it up, unformatted text will cost you the least, and the more graphical and dynamic you want the media to be, the more it will cost.
2. How interactive the course is (passive versus interactive)
Some courses are passive, with learners largely either reading, listening to, or watching something happening on screen. Other courses have lots of interactivity, with a fully immersive simulation being the most extreme example of this. As with media, interactivity exists on a continuum. How interactive would you like your course to be? The more interactive a course is, the more it will cost to produce.
Factor 3: Your beginning point
One of the most overlooked factors that can have a big impact on cost is where the agency is expected to begin. This factor most affects you, the sponsor, because it speaks directly to the amount of work you have to do before you engage with an agency. How can you figure out where you’re asking the agency to start? Consider these two factors:
1. How clearly defined the problem is
If your starting point is “we need to make sure our sales reps know how to handle customer objections”, someone will need to do the work of translating that need into something more operational. If you are going to do this, fine – it won’t affect costs. If you want the agency to work with you from this starting point, it will cost more. There are two reasons for this: one is that it requires more work. The other is that it requires a much higher level of skill. Few agencies are capable of doing this kind of work because it often requires consultative skill that goes beyond what is traditionally prescribed in instructional design models. Further, the nature of this sort of discovery is harder to accomplish across cultures and time zones, which makes offshoring less of a viable option. As with most of these factors, problem definition exists on a spectrum, with your problem either expressed as a desired behavior (or even a business goal) on one end or a fully formed behavioral objective on the other.
2. How organized the source material is
When you hire an agency, you have to supply them with the subject matter. Is this subject matter written down somewhere? How complete and organized is it? Does it exist in the heads of a bunch of experts? If so, do all of those experts agree? Amongst them, do they have all of the expertise or are there gaps? One of the biggest sources of value you can get from a learning agency is pulling together disparate content into a coherent whole (though again, not all agencies are built to do this, since most instructional design models start with the assumption that the subject matter is all present). But it takes time and effort. If your subject matter is written down, well-organized, and without gaps, expect the process to go much more quickly. If the subject matter is scattered about in different places, expect it to take more time and cost more.
Factor 4: Who is doing the work
On any project, work is going to be distributed to a variety of people in various places. How the work is organized and who is doing what will affect your costs. While some of this may be outside of your control, a lot of it isn’t.
1. You versus the agency
Some elearning agencies don’t do the writing or even the storyboarding on a course. Their expectation is that you will have done this before hiring them (personally, I don’t consider these to be elearning agencies since they make no decisions affecting the learning approach). In other cases, an agency has a process where they come up with a format for a script – a custom template if you will – and expect you or your subject matter experts to do all of the writing. Other agencies, like ours, handle everything from end to end. Naturally, the more work you do, the less the agency should cost.
2. An individual versus a team
Most agencies that I’m aware of run their projects in teams. But there are agencies that will assign a single person to your project to do everything, from upfront consultation, through scripting, to development. Using a single resource can reduce the cost significantly. The trade-off is the overall level of quality. Most courses will require scripting/storyboarding, graphic design, and development. When you work with a team, you get a specialist doing each task, which increases your chances of getting “A” quality work across each task. There may be rare individuals out there who can give you “A+” quality work in each area – but I’ve never met one.
3. Onshore versus offshore
Where is the agency located? Agencies in India, Singapore, South America, Ukraine, and other countries with lower costs of living can usually produce work for much cheaper than those in the U.S. or Europe. In my experience, this works best when your problem is well defined, your content is fully built out and well organized, the topic is highly structured (e.g. teaching software skills), and there is minimal discovery and consultative process. Can you work with an offshore agency?
Using this information to come up with a budget
Here’s how you can use this information to help with budgeting: using the factors we just discussed, come up with a general description of the elearning you think may suit your needs. In other words, decide how rich you think the media should be, how interactive you think it should be, how much seat time you anticipate, etc. Better yet, come up with two or three options, one for the high end and one for the low end. Then provide these options to a couple of agencies and ask them to give you quotes.
Don’t worry about taking the time of these agencies despite your not being anywhere near the point at which you would buy their services. Most agencies will be glad to know you are considering them and eager to have a new contact in their list. Furthermore, it shouldn’t be unusual given that they often complete far more extensive RFI’s for potential clients just so that those organizations can have the information on file.
I realize this process may take a little time and is far from perfect. However, it’s the most practical way that I’m aware of to get yourself the data you’ll need to come up with a budget that is in the ballpark of realistic.
