Determining the cost of training and the corresponding return on investment requires an understanding of the factors that can increase the cost of training and which factors produce a return once the training is complete.
Factors that Influence the Cost of Training
Fees or costs for training events can vary greatly depending on a number of factors. Per person costs can range from less than 100 dollars to more than a thousand for a day. Less than $100 for a full day event is usually a training event that is subsidized in some way or is taught/led by a volunteer, the number of participants is high and the fee is to cover venue expenses only. More than $500 a day is usually training designed for a small group, needing expensive supplies or equipment and taught by someone with credentials that can demand a high teaching fee.
- Number of participants (min and max) – the more participants that attend the less the individual price tag on the training.
- Caliber or status of the trainer/speaker – some trainers can request top dollar if they have celebrity status. For example, Olympic athletes, internationally renowned authors or major award or prize winners can charge fees in the thousands.
- Venue – Five star hotels or conference centers add cost to training as often there are higher staffing costs (security, audio visual, cleaning etc.) that increase the room rental costs, catering costs cab also have a huge impact on the cost of training in a five star venue.
- Technology requirements – if the presentation(s) require high tech audio visuals, the cost of the training can skyrocket. For example, if a session must be taught in a computer lab, the room rental costs can double or triple. Projectors and computers, Smart boards, microphones etc. can all add significant costs to training especially if technical support is also required.
- Manuals, books or supplies – another added cost can be supplies that are required such as text books, expendable supplies, special equipment or tools.
- Promotional costs – advertising costs including printing brochures or placing advertisements can greatly impact the cost of training
Determining Return on Investment or ROI for Training
To determine ROI for training, ask the following question: will the training increase productivity so that it will result in a tangible (quantifiable) savings of:
- time required to complete projects
- resources required to complete projects
If the answer is “yes” to the above question, estimate the cost savings by calculating the:
- hourly wages multiplied by the hours saved
- reduction to operating budgets due to less resources required
Justifying the cost of training to upper management involves an understanding of the factors that increase training costs. Keeping training costs down but targeting the training to build important core competencies of staff can ensure that management continues to fund training initiatives.
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