How to Price your Training Deal

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Working for Free

I’ll never forget my first training deal. At the time I was running a tutoring center and a large area school asked if my business would be willing to offer training for its entire student body. I was thrilled.

I thought running a large program like this would surely mean massive exposure for my business. I had a background in instructional design and was actively working in education, so this felt like a huge opportunity to shine. Before we even began discussing price, I volunteered, “I’ll do it for free”! The school’s administrator was surprised but happy.

Unfortunately, I had made a grave mistake. It became known quickly amongst the students, parents, and administrators that I was “there as a volunteer”. My hope of gaining new clients from the engagement was all but lost. I had cheapened my offerings and the value of my training was correspondingly atrophied.

While this was undoubtedly not my “big chance at fame”, it was an incredible opportunity for me to begin formalizing the significance of price. I did not yet know what pricing strategy I would use in the future, but I knew it certainly would not be zero dollars.

Hourly Training

As my business's reputation grew, the influx of RFPs (requests for proposals) grew also. A training RFP is an inquiry made by an organization regarding your training programs. It is usually a very simple request for your service:

“Hi, does your firm do professional development training? What would it cost to get an 8 week program?”

Or

“Hello, does your firm offer SAT test prep training, we have 100 students we need trained, how much would it be for a summer long program?”

Having a background in tutoring and educational consulting, I would quickly default to hourly rate calculations. Typically we would charge $200/hour for a tutor. If the business wanted 3 sessions per week for a month. That would be 12 hours X $200/hour, or $2,400.

For years, I kept my training pricing model this simple. How many hours do you need? This is our hourly rate. End of story.

Then something changed…

Hybrid Billing

On top of my background in training, I am also a software engineer. As the frequency of my organization’s training deals increased, I wanted to figure out how I could leverage the benefits of software in my training programs.

I deployed an LMS and co-authored all of our courses with my team of instructional designers. We had courses for all of our most popular trainings: test prep (for K-12), professional development (for educators) and more.

Now, our trainees had access to on demand mobile friendly courses as part of the training. Our clients were thrilled. They were used to purchasing curriculum or exercises separately. Now we could offer a “one-stop-shop”.

Our pricing changed, we preserved our hourly rate but started tacking on a software licensing fee per trainee. Deals that used to be $2,400 for 12 hours became $2,400 for 12 hours + $10/trainee * (100 trainees) = $3,400. Needless to say, our digital infrastructure was quickly paying for itself.

Then something changed again…

Per Seat Billing

We were working with the Boys and Girls Club on a large deal and they said “we need data”. I was confused at first. I loved data, I used it to improve our trainings and demonstrate efficacy; I did not, however, understand a large NGO’s goal with trainee data.

I soon learned, NGOs need data to write grants. The better they can demonstrate the success and impact of their work, the more money they could ask for in their grants.

I then realized that to truly connect the motivation of our clients with our offering we needed to change our pricing strategy again.

Ultimately, what our clients truly wanted was for each of their trainees to receive rigorous training and for their organization to receive overwhelmingly clear evidence (in the form of data) that the trainees did in fact learn.

So we changed the model again. Now, it would be a per head per month price. Our promise was simple: “we can get your people trained just tell us how many there will be”.

This new model was amazing. In our old days of hourly billing, our clients would pack our in-person breakout groups with dozens of learners and no one would learn anything.

Now, we knew we would charge something like $95/trainee per month and with 100 trainees we would have a $9,500 budget to work with. This would give me the flexibility to send many trainers to the site and make sure everyone received world class instruction.

Conversely for small organizations who wanted to demo training for just one month with 8 learners we could easily do a small deal of $800 and send a newer member of our staff.

Finally this per-head model also gave us the time to rigorously assess our trainees performance on the digital portion of the training and craft rich reports and white papers for our clients.

By properly aligning the price of our offering with the desired outcome of our clients, we were able to create the most value for everyone.

If you are interested in exploring the best-in-class tool for building, hosting, and running enterprise trainings learn more about KnowQo.