Reducing Your Costs
Traditional classroom training has four principal cost components:

  1. Course development (developer time)
  2. Course delivery (instructor salary, manuals, and facilities)
  3. Student salaries
  4. Travel and living expenses (airplanes, cars, hotels, meals, etc.)

For this example we used the following assumptions for the classroom course:

    Course Length:   2  days
    Travel Time:   1  day per student
    Students per class:   20
    Classes per year:   10
    Ave. Student salary:   $50K  fully burdened
    Instructor salary:   $1K  per day of class
    Geographic Scope:   U.S. only

Cost Item Unit Cost Total
  - Course Development:   $2K/classroom hr. $32K
        Subtotal:   $32K
  - Instructor Salary: $1K/day $20K
  - Course Materials: $100/student $20K
  - Facility Costs: $200/day $4K
        Subtotal:   $44K
Student Salaries:  
  - Student Salaries: $200/day   $120K
        Subtotal:   $120K
Travel and Living:  
  - Air travel: $500/student $100K
  - Hotel costs: $140/student $28K
  - Meals: $60/student $12K
        Subtotal:   $140K
        Grand Total - Classroom:   $336K

Table 1: Classroom Cost Breakdown

A breakdown of these components for the subject course for one year is shown below in Table 1.

Using a Blended Learning Approach

A blended course can be composed of learning modules that use many different delivery methods. For this example we assumed that the learning objectives of the two-day (16-hour) classroom course could be achieved by using:

  1. a 2-hour virtual class experience for student orientation followed by
  2. an 8-hour online self-study training program followed by
  3. a 2-hour virtual class for discussion, interactive exercises, goal setting and wrap-up.

In this scenario the cost of course development rises sharply ($32K to $80K) since the cost per hour of online instruction is much higher than for classroom instruction. This is due to the additional, diverse skills required for online courses, e.g., graphic arts, user interface design, technical integration, etc.

At the same time, since students are able to access the course from their regular offices (or even in their homes) the significant costs of travel and living expenses go away. Also, since we calculated one day lost to travel and that the total time the student spends on the course is reduced from 16 to 12 hours, there is also a significant saving in student salaries.

Cost Item Unit Cost Total
  - Course Development:   $10K/self-study hr. $80K
        Subtotal:   $80K
  - Instructor Salary: $1K/day $10K
  - Course Materials: Online $0K
  - Facility Costs: Intranet $0K
        Subtotal:   $10K
Student Salaries:  
  - Student Salaries: $200/day   $60K
        Subtotal:   $60K
Travel and Living:  
  - Air travel: None $0K
  - Hotel costs: None $0K
  - Meals: None $0K
        Subtotal:   $0K
        Grand Total - Blended:   $150K

Table 2: Blended Course Cost Breakdown

A breakdown of the cost components to develop and deliver the blended course over one year is shown in Table 2.

This analysis indicates that due to the higher cost of course development there is a breakeven point in the use of a blended learning approach. If only one or two classes are taught, the higher cost of online course development causes the blended approach to cost more than the classroom, but every time the class is taught beyond the second time, the savings increase as shown in Table 3 below. If ten courses are taught per year the savings in the fifth year would exceed $1 million!

Opportunity Cost

The analysis we have shown here omits one very important, but controverial cost - the cost of lost business opportunities when your people are in class and out of the field. In the worst case, when it's your senior executives and your top salespeople, these costs can dwarf some of the other costs cited above.

For example, what if the class in our example were a sales class that kept some of your top salespeople tied up for three days (including travel). If a salesperson has a quote of $500K, dividing that by the number of working days in a year (250) suggests that every day out of the field could have a $2K adverse impact. For three days that's $6K and for the 200 salespeople who would attend the 10 classes in a year that could be $1.2 million out of your top line!

Now, of course, good salespeople don't gain or lose business on a linear, incremental basis every day. And while they are in class they will undoubtedly be making and taking calls from their prospects and customers to keep their opportunities moving forward.

This problem of quantifying opportunity cost is why we have kept it out of our basic analysis, but even if the numbers we suggest above are discounted by 50% (to $600K) or even 80% (to $240K) they still can have a negative impact on your business. Which makes it even more attractive to use a blended learning approach to minimize the time your people are away from their work.

If you would like to have us help you save money for training in your business, please let us know.

No. of



1 class      $ 62.4K   $ 87.0K   $ (24.6K)  
2 classes   $ 92.8K   $ 94.0K   $ (1.2K)  

3 classes   $ 123.2K   $ 101.0K   $ 22.2K  
4 classes   $ 153.6K   $ 108.0K   $ 45.6K  
5 classes   $ 184.0K   $ 115.0K   $ 69.0K  
10 classes   $ 336.0K   $ 150.0K   $ 186.0K  
20 classes   $ 640.0K   $ 220.0K   $ 420.0K  
30 classes   $ 944.0K   $ 290.0K   $ 654.0K  
40 classes   $ 1,248.0K   $ 360.0K   $ 888.0K  
50 classes   $ 1,552.0K   $ 430.0K   $ 1,122.0K  

Table 3: Breakeven Analysis of Classroom vs. Blended Course

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