5 Cost drivers of E-learning projects

One of the questions we hear almost daily from customers is―How much should I budget for the development of my custom e-learning project?  Our answer remains the same every time.  We're not trying to be elusive with how we price our services mind you, but honestly it simply depends.  Anyone who tells you otherwise, I’d sprint away in the direction!  So, it depends on what you may be asking yourself?  And hence, we decided to write this post.


There are five key cost drivers the building custom e-learning and they are:








1. Project Management



Building e-learning generally involves some moving parts, and at any given time you want to know how far along in your course development you are.  When working on a course or building out a large curriculum, you’ll also be involving a variety of players such as graphic designers, animators, writers, subject matter experts, voice over talent, video editors,  or other specialists.  In order for your project to stay on time and on budget, you’ll want to budget time for the development of a project plan as well as weekly update calls or meetings.  In our experience we have found these activities to consume roughly 5 to 10% of your budget. As the old adage goes fail to plan and you’re planning to fail.

2. Instructional Design


Many clients who approach us at some point during our conversation will say something to the effect of “we already have the content; we just need someone to put it online for us”.  Experience has taught us to reviewing the content before providing a quote. Often what is referred to as content is often a PowerPoint deck or Microsoft Word Outline of the bullet points used by a previous instructor-led initiative. This “content” was designed to jog a facilitator’s memory that was going to stand in front of a classroom and dive deeper into these points. Without the luxury of the content inside of the instructor’s brain, the bullet points are can rarely be repurposed. More than likely the content must be rewritten from the ground up (beginning with a quick needs analysis) to meet the needs of an audience that will be experiencing this training online, without the aid of a facilitator or instructor, and at their own pace. 


This is where an instructional designer adds value to your project. While e-learning authoring tools are indeed simple to use, designing and building an engaging and immersive experience for your learners requires a degree of creativity, writing ability, and most importantly knowledge of instructional strategies that many subject-matter experts lack.  In our experience, you’ll want to budget roughly 25% of your e-learning project budget on quality instructional design.


3. Multimedia Design and Development


After the instructional design is complete and appropriate instructional strategies selected for all of the objectives that you’re teaching, it’s time to develop any multimedia assets you may need. This includes any navigational elements, custom graphic design, and video or audio that needs to be recorded and edited for use in the course.  If you’ve got a limited budget for the development of multimedia assets you want to let your instructional designer know so that they can leverage the use of lower-cost methods such as stock photography and or even assets currently existing in the public domain in your course.  A general principle is the more customized you need your course to be, the more you will need to spend to build these assets from scratch.  Again, generally speaking we have found it safe to budget roughly 25% of your budget to the design and development of multimedia assets.  This varies greatly of course; it is much more inexpensive to record software demonstrations on your PC then it is to hire acting talent and a camera crew in order to stage live role-plays and scenarios in a studio.

4. Interactivity

Training involves practice.  The effectiveness of your e-learning course depends on how well you allow the learner to engage with your content and practice new skills and behaviors (as opposed to having someone sit there reading or listening to a narrated PowerPoint show).  This secret sauce is truly what sets e-learning a part from what we call e-listening― a lecture delivered by a PC as opposed to a talking head in front of a classroom.  Luckily, a quality instructional designer can bake interactivity right into a course with the right multimedia assets, so there is no additional human resource to throw in.  The expense comes in the authoring of the activities, and in their testing in whichever software platform you are using to build the e-learning.  While anyone can insert static images onto slides, it takes a little more time, knowledge of your tools’ capabilities, and creativity to engage your learners in an online environment.  We’ve found throughout our years of building e-learning programs that you can reasonably expect designing interactivity into a course to consume about 25% of your projected budget.


5. Subject-matter expert (SME) availability

Last but not least, it is important to remember that no e-learning is designed in a vacuum.  One often overlooked expense is the time it takes for your designer or developer to acquire the content from subject-matter experts in order to build e-learning.  Even in smaller projects where a subject-matter expert is leveraging an authoring tool to build a course without the benefit of a designer, you must budget for the time it takes to gather all of the content, even when it’s just screen recordings or screen captures; it will take time.  Once your e-learning course is in its 1st draft or in a very rough state, you’ll want to budget in time for a SME who is also a member of your target audience to go through it and provide you with feedback on how you can improve the training experience.  A very general assumption is to budget for 10 – 20% of your costs to SME time. 

Though every project is different and we're not very big fans of generalizations, these cost estimates are born out of our experiences and yours may be different. 


Quality of e-learning development is a subjective thing, and budgetary and other resource constraints may limit the instructional strategies you can employ.  Coupled with the fact that- as this image points out “there is always someone who will do it cheaper”.   If we left out a cost driver, or you’d like to share with us how your projects for different please do so in the comments section below. We'd love to hear from you!



Alex Santos

Alex is a co-founder and Managing Member of Collabor8 Learning, LLC, an instructional design and performance management consultancy. His firm collaborates with organizations to enhance the way they develop  and train their people. To learn more about Collabor8 Learning, click here.

Alex can be reached at 786-512-1069, alex@collabor8learning.com or via Twitter@collabor8alex.