Cost Comparison: Instructor-Led Vs. E-Learning

To help managers better understand the relationship between cost and delivery methodology, Caterpillar University has constructed a mathematical model to better calculate the key cost components.

Of the many factors that come into play when determining the proper training delivery approach—efficiency, timeliness, consistency, and appropriateness of delivery method—the key driver is typically program cost. Program cost, which includes among other factors, the cost of initial development, instructor’s time, material, travel, and opportunity cost of the learner, can vary widely for similar programs depending on the delivery method.

To help its managers better understand the relationship between cost and delivery methodology, Caterpillar University constructed a mathematical model to better calculate the key cost components. Its key finding: even when similar programs are compared, e-learning is less expensive to deliver almost regardless of learner population.

For example, in all cases where there is a learner population larger than 100, e-learning has a clear cost advantage. As the population increases, this difference becomes more pronounced. Even with a population as small as 100 and a class as short as one hour, e-learning was still more than 40 percent less expensive than instructor-led training ($9,500 vs. $17,062 or $76/learner). When large populations are modeled (40,000+), the cost advantage of online learning is even greater, with savings as high as 78 percent ($1.1 million vs. $5 million or $99/learner).