How much does it cost to create e-learning? As you can imagine, this is a question we get quite often in our line of work.

Like so many questions that consultants receive, the most accurate answer to how much it cost to create e-learning 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.

Cost to Create E-learning: 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 the cost to create e-learning?

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 the final cost to create e-learning.

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 Upwork, 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 these types of questions have significant implications for the cost to create e-learning.

Naturally, a course that is primarily text driven will be much less costly, but it may also be less likely to achieve the target learning objectives and meet (ever increasing!) learner expectations for quality.  And, of course, I haven't mentioned interactivity yet...

4. Interactivity/Instructional Complexity

How much interactivity is required to support achievement of the target learning objectives and keep learners engaged? Does the course need to provide for practice? Will you make use of scenarios or branching story line? How many assessments will their be? Will the experience be personalized in any way on a learner-by-learner basis?

Along with preparing the source content, dealing with interactivity and instructional complexity is the other major are of cost to create e-learning. While many organizations don't make the connection, it is also the one where it really pays to invest in good upfront design talent. A good instructional designer can help you understand the types of interactivity that are truly required to support your instructional goals, and he or she can also give you options that can help you stay on budget. There are nearly always multiple ways to achieve a particular learning objectives, and often there are elegant, low-cost alternatives to creating complex simulations, scenarios, or other costlier forms of interactivity.

5. Process Discipline

At an e-learning company I worked at many years ago the head of production had an illustration of our course development process that covered nearly an entire wall in his office. As he discussed the process with new clients he always made sure to emphasize that movement within the process always needed to flow to the right - i.e., forward.  "Every time we move to the left," he would say, "the price goes up. And the later in the process, the more that rule applies." Bottom line: the more you are able to make decisions and stick to them, the better you will be able to control the cost to create e-learning. Every time you have to go back and make changes, the price goes up. (This is yet another reason, by the way, to involve capable designers up front.)

One final factor that may, for some, qualify as a sixth point, is the relationship between your content and your delivery platform. Traditionally, most e-learning experts have strongly advocated separation of content and platform to help make content as portable as possible. This was key reason for the rise of standards like SCORM. In recent years, however, we've seen a surge in Software as a Service (SaaS) platform that combine content authoring and delivery, usually with little of any compliance to major e-learning standards. Most of the platforms in the list at 15 Platforms to Publish and Sell Online Courses fall in this camp. For many organizations - particularly smaller one, or those just aiming to offer a handful of courses - this can be a viable and very cost-effective approach.

So, It Really Does Depend (On You)

In the end, "it depends" remains the only valid answer to the question "How much does it cost to create e-learning?" You have quite a bit of control over the factors above, and there is absolutely nothing to say that high quality online education experiences can't be created on a relatively low budget. When weighing the factors and making decisions about e-learning, it is critical that you have:

a clear understanding of your overall education strategy and the role that e-learning can play. Ask yourself with as much discipline as you can muster: what e-learning products might best support our strategy, and at what level does it make financial sense to invest in those products? Do this with an eye on your value ramp and really think through how e-learning fits into the portfolio of value your organization is striving to create.

a solid understanding of how specific media and interactivity options can support various types of learning outcomes. Even if you have no hands-on involvement in designing and developing e-learning, you need this knowledge to make strategic decisions and to guide others (like, ahem, your board) who may be inclined toward "featuritus" or too ready to latch on to the latest trends. One of the best references you can leverage in this regard is Ruth Clark and Richard Mayer's e-Learning and the Science of Instruction: Proven Guidelines for Consumers and Designers of Multimedia Learning.

Armed with those perspectives and clarity about the factors outlines above, you will be able to lead your organization to an investment in e-learning that balances strategic objectives, desired learning outcomes, and available budget.

Jeff

* The suggested $65 per hour an average of rates paid across the total number of hours and tasks required for creating a course. It is based on a combination of (a) the rates that Harold Jarche suggests in the chart referenced above, (b) a review of hourly rates posted by highly rated, U.S.-based instructional designer/developers on Upwork (which tend to be well under $65 - even more so if you go off shore), and (c) my own experience. Feel free to argue with it.

You can, of course, find many individuals and organizations happy to charge you more. You may also find that you are able to find the necessary resources at substantially lower rates - particularly if you are dealing with salaried employees - but make sure the people involved really have the qualifications and experience you need. Naturally, you can also multiply whatever average rate seems realistic to you by the number of labor hours indicated. Or, use the table provided in The Chapman Alliance table and fill in your own rates for specific tasks.