For Immediate Release:

Tuesday, September 2, 2014

As you can imagine, this is a question we get quite often in our line of work. And like so many questions that consultants receive, the most accurate answer is usually the frustrating old stand-by “It depends.” Still, there is a long enough history of e-learning development at this point that we have a pretty good idea of the cost to create e-learning on average. We also know the major factors that impact those costs (i.e., the “It depends” factors). In this post, we’ll take a look at both.

What the Research Says

We’ve written before here about research that Karl Kapp and Robyn Defelice conducted to determine the time required to develop one hour of training. I highly recommend reading the Learning Circuits article on this research in its entirety, not just for the data it contains but also for the insights it offers about how to develop training of all types more efficiently.
According the table of time estimates in the article, an hour of e-learning featuring moderate interactivity and limited animations requires anywhere from 90 to 240 hours to develop. If you were to assume an average hourly labor cost of $65,* you wind up with a cost of $5,850 to $15,600. My own experience with costs on this type of content is that the truth tends to be squarely in the middle – around $10,000 per produced hour for “moderate” level content.
My experience jibes with research conducted more recently by The Chapman Alliance. Chapman found that it requires an average of 79 hours to produce one hour of “Level 1″ e-learning content, with Level 1 defined as  ?Content pages, text, graphics, perhaps simple audio, perhaps simple video, test question.? I believe that average Level 1 content, as Chapman describes it, is probably on the low end of the  “moderate interactivity” content described in the ASTD research, though the broad definitions used in both the Chapman and Kapp/Defelice research make it impossible to know for certain. The average cost per finished hour of this type of content is $10,054.

Here’s the Chapman Alliance presentation on results from its research:

5 Key Factors That Impact the Cost to Create E-learning

As you may have noticed, the number of hours and the corresponding costs to create an hour of e-learning is quite wide – and this is just within one level of content. The gap widens significantly between Level 1 or “moderate interactivity” content and higher level content. So what are the factors that drive costs?
1. Resources and Rates
Who will you use to create e-learning and what will you pay them on an hourly, project, or salaried basis?  The Chapman  Alliance presentation details the roles that can typically be involved in creating an e-learning course. Harold Jarche also provides a useful table of typical consulting roles and prices in an article he did for eLearn Magazine a while back. Whether you actually use all of these roles (most associations, in my experience, don’t) and how much you actually pay them will, of course, have a major impact on your final price tag.
Controlling resources and rates is, by the way, one of the areas in which I think eSMEs have an advantage. They are often in a position to do much of the higher cost front-end analysis work themselves, and they also tend to be more open to dealing with lower cost – often perceived as riskier – resources. It doesn’t tend to be in the culture of most organizations, for example, to contract with people on ODesk or Elance, even though this can get you rates significantly below the $65 per hour average suggested above.
2. State of the Source Content
What will be the starting point for the substance of your e-learning course? Is it just an outline? If it is a PowerPoint presentation, does it have detailed notes to go along with it? Or a recording of a qualified subject matter expert presenting the materials? Will you be starting from or leveraging elements of a text book? Are there existing tests and assessments that can be used?
Organizations often underestimate the amount of work involved in moving from source content to an effective story board that can serve as the basis for a course, but is usually one of the more costly parts of e-learning development. Starting from content that is detailed, well-organized, and that already has some visual elements to support it can make a significant difference in the budget required for creating a course.
3. Content Elements
What types of content will your e-learning course contain? Just text and a few images? Do the images need to be custom developed, or can you make use of stock illustrations and photography? Do you need to shoot high-quality video to include in the course? Do you need animations, and do these need to be custom programmed, or can you use off-the-shelf tools to create them? The answer to whese types of qtestioMs havUYgnif9 $t coc GmpliË??#ons.l¡?jË~Lauu~a÷ox, a course that is primarily text drivbn will be much mess cOstly,cý it =¢ñLalso°bíLless???!el