eLearning Developer

So how much does it cost to hire an outside eLearning company? It depends. There are many different kinds of eLearning companies. There are large content development companies that have substantial staffing and associated overhead to cover, a panoply of “one-man-band” eLearning companies run out of garages around the world, and mid-range “boutique” companies that offer competitive pricing due to low overhead, but that have adequate resources and experience to tackle a wide range of projects. The hourly rates a company may charge is largely dictated based on several key factors:

• Fixed Bid vs. Hourly Costs
• Large brick and mortar vs. Virtual companies
• US-based vs. India or “off-shore”

Fixed Bid vs. Hourly Costs

Many companies will not disclose the actual time and tasks that make up an eLearning development project (fixed bid). While a fixed bid ensures that the vendor cannot go over budget, a conflict is created whereby the vendor’s goal is to keep costs and scope as low as possible, even though the client may discover down the line that it wishes to increase the project complexity. The answer to evolving client needs is often “That’s out of scope so it will cost you more”. This can be frustrating. Whenever possible, work with vendors that offer development programs based on actual work effort. Estimates should be given based on a solid understanding of client expectations, and every effort should be made to come in on time and budget.

Large brick and mortar vs. Virtual companies

There are several large US-based eLearning companies that charge higher hourly or fixed bid project rates because they have a large full-time staff overhead to cover. If a company is not working at 100% capacity, they have to charge hire hourly rates to cover their ongoing costs. For example, even though they may have costs of $40 per hour for an instructional designer, this designer may not be working at 100% efficiency on paid projects. Therefore, the firm may have to charge and extra 15% or more on this person’s time. On the other hand, many one-man-band or small companies essentially hire freelance talent to work on projects on an as-needed basis. While they may charge lower rates, their quality and ability to meet deadlines is suspect.

US-based vs. India or “off-shore”

Many off-shore companies will claim rates of $18-$25 dollars US for eLearning development. Many India-based eLearning development companies are actually quite talented, but low hourly rates do not tell the whole story. While the hourly rates may be low, the actual project costs can end up being much larger as a result of several factors:

• It is not uncommon for any firm that has a signficant time and cultural difference from you to take 3-4 times the number of hours to produce the work you desire. This is not an India-specific issue, but a global fact of doing business.
• Significant time, cultural, and language differences should not be under estimated. These factors remain considerable impedances to eLearning project management including time, cost, and quality.

When comparing eLearning companies, check their portfolio of work and confirm with satisfied clients that the project came in on-time, on-budget, and with minimal frustration.

So how much should it cost to create eLearning, and how much should you budget? The answer is – it depends.

There are three primary competing interests when it comes to the eLearning development process: Time – Budget – Complexity (or some would say “quality”). Generally you can sacrifice one of these interests in order to enjoy the benefits of the other two.

For example, if you find that you wish to increase the complexity of your program but do not have more time to allow for completion, you will have to spend more money to bring in additional resources. If you find that the cost is fixed (you cannot obtain more funding), then you must allow more time or reduce the complexity of the project.

Let’s take a look at how the above variables impact each other. “Time” is a variable that is easily understood. The old adage of “haste makes waste” holds true in eLearning development. The more hurried the process, the less efficient and therefore more costly the process. You should set realistic time-lines based upon the kind of eLearning project you are development, and not based upon an arbitrary deadline set for internal political or other factors.

The eLearning budget simply refers to the amount of money you have set aside for a given eLearning project. The budget should be based upon a solid understanding of the various roles and tasks required to complete a project and their hourly associated costs. As your budget decreases, so does the amount of money you can pay for highly skilled labor (Complexity/Quality) and/or the amount of time/hours you can work upon this project.

Generally organizations find that business demands require that projects be completed in a timely fashion and that they adhere to budgets fixed in advance. Therefore, the complexity (or quality) of the eLearning project is the only variable that is easily controlled or changed by the eLearning project manager. If you start a highly complex project without the necessary time and budget required, and you are not likely to receive additional time or funding, then your only option is to reduce the complexity or quality of the work.