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24 April 2006

Training courses and prices. Because you're worth it?

The cost of courses - Over priced or justified?

Back in 1997 I did a Higher via evening classes of about 2 hours each. The cost of about 100 hours training over a year? Around £50.

50p an hour. This was in a language which took the teacher about 6 years to become fluent.

Earlier this year, I signed up for an advanced management diploma. The cost of 4 hours training a week for a year at a college? Around £1500.

Around £7.50 an hour.

I looked into doing an MBA. The cost of this for a year? About £3,500. Around £20 an hour.

I'm looking around at the moment at doing the PRINCE2 practitioner exam. The cost of doing this ?

According to the training index at Underoak, about the cheapest I can find is £1,390 + VAT for 5 days.

Around £50 an hour. More than twice the price of a university education.

The cost of doing a non certified course, say in advanced Java? Around £1,600+VAT for 4 days.

Around £67 an hour

There's quite a difference between £7.50 an hour and £67 an hour.

Assuming a mere 6 people attend a course, the maths works out as

£1,600+VAT * 5 = £9,400

Trainer's actual salary = £40,000
Scale up on the assumption they only work 1 week in 3 to prepare the course = £120,000
Add on a factor for their overheads and training = £150,000
So cost to employ a trainer = £3,000 a week
Cost to hire a conference room £ 110.00/day or about £700 a week including VAT and refreshments.

Total cost rounded up, around £4,000.
Total income = £9,400
Total profit = £5,400 a week, around 57%.

Just for comparison, the gross profit of Learning Tree is around 50%. Not much different to the profit percentage above.

Am I just imagining it or have course prices reached a settling point?

Back to economics. In an unregulated free market, the main beneficiary is usually not the consumer, it is the providers. They are free to set prices, potentially form cartels and importantly there is usually insufficient incentive for them to reduce prices once the market has stabilised (until someone like EasyJet comes along).

In a free market with constraints, the consumer can benefit if cartels are broken, price fixing ends and there is genuine competition.

I'm not suggesting any cartels here but isn't it odd how training courses have all settled around the £1500+VAT mark per week.

Especially when back to the PRINCE2 example you can get a PRINCE2 practitioner and
hire them as a contractor for about £400 a day.

Including their overheads that can't be any more than about £600 a day or £100 a day per course attendee.

Why are courses £1500+VAT a week per attendee when you could hire someone to teach the course for only £100 a day to do a roughly equivalent job?

Am I missing something here or does the prosumer need to speak out and start setting course prices?

That would be an education for all.

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