As your college and university moves to increase its online learning offerings, you ask yourself the inevitable question \u201cHow do we assess the costs as part of our planning\u201d? \u00a0Once you have reached the point of answering this question, a number of other questions naturally follow:<\/p>\n
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Every case is different, and you need to develop a proper business model based on the unique needs and requirements of your institution, but there is enough experience and research now to be able to provide you a rough guide on what drives the costs of online learning, and how these differ from the costs of face-to-face teaching.<\/p>\n
Factors Influencing the Costs of Online Learning<\/strong><\/p>\n The standard answer to how much does online learning cost is: it all depends!<\/p>\n We don’t ask how much driving a car costs, because we know it depends on the size and type of car, the kinds of trips we take, the price of gas and insurance, etc. \u00a0Online learning similarly can come in many forms and many variables drive cost.<\/p>\n Nevertheless, we do know the factors that drive the costs of online learning. \u00a0Here are top ten factors:<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n \n<\/ul>\n With these ten factors, you have the framework to develop a business model for your institution.<\/p>\n Types of Cost<\/strong><\/p>\n Most of the factors above also apply to the costs of traditional campus-based teaching. \u00a0Where online learning differs though is that it disaggregates activities that are integrated into traditional teaching (classroom, labs, field work, tutorials, etc.). \u00a0This allows for some economies of scale under certain circumstances.<\/p>\n Online learning also avoids some costs that are imbedded in traditional campus-based teaching, such as buildings, heating and lighting, although it also adds some new costs, such as increased IT infrastructure and extra bandwidth.<\/p>\n There are five main costs in online learning:<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n \n<\/ul>\n Let\u2019s explore each main cost in more details.<\/p>\n Planning<\/u><\/p>\n This is no in the planning costs of online learning compared to campus-based teaching. \u00a0Your new programs have to go through a whole set of processes to be approved, whether they are online or not. You can expect online programs or courses to take more time, because they tend to be more controversial, at least initially.<\/p>\n In practice, though, we never really consider these costs in the development of most credit courses and programs, although in terms of faculty time, this is in fact an expensive process. \u00a0We consider these costs as ‘sunk’ or uncalculated costs. However if your aim is to develop a full cost-recovery or for-profit online program, you need to estimate and include these specific costs, whether it is a campus-based or online.<\/p>\n Design and Development<\/u><\/p>\n You choose and develop content materials, student activities, assessment questions, etc. \u00a0This is where the big difference occurs between the cost of campus-based teaching and online learning.\u00a0 Although in both types of teaching, you need to choose and develop content, online learning content is permanently stored and easily reproduced. \u00a0More and more you can access it for free, in the form of open content, i.e. content freely available over the web, or as specially designed open educational resources.<\/p>\n This means that with online learning, you get opportunities for economies of scale. Once you develop an online course, you can offer the content to an unlimited number of students without increases in the cost of content development. \u00a0<\/p>\n For instance, this means you can easily share the same content and course structure across a number of sister institutions (or academic departments, e.g. statistics), and avoid duplication of activity. \u00a0Thus in online courses, content costs are ‘fixed’ and independent of the number of students. \u00a0This of course is the attraction of MOOCs (massive open online courses).<\/p>\n Delivery<\/u><\/p>\n You need to deliver content to students. \u00a0Teaching involves more than just delivering content. \u00a0You need to facilitate learning needs and assess student learning outcomes.\u00a0 Modern pedagogical theory suggests that students learn best when they are active learners, engaged in discussion and receive prompt and regular feedback. Research has indicated that for online learners, the instructor online ‘presence’ is critical for success.<\/p>\n These factors effectively limit the number of students one instructor can handle (MOOCs have tried to get around this by automating assessment and feedback, with to date mixed results). \u00a0As a result, online delivery costs are variable, i.e. influenced by the number of students taking a course.<\/p>\n You can reduce these costs in a number of ways:<\/p>\n <\/p>\n \n<\/ul>\n The extent to which these measures will be acceptable will depend on the philosophy of teaching, views of what constitutes quality in teaching and learning, and the ability of students to work independently.<\/p>\n Nevertheless, there are certainly opportunities for increasing productivity in the delivery of online learning. \u00a0In particular, the marginal cost (i.e. the extra cost) per additional online student in a course starts to drop as numbers increase, if courses are well designed, and adjuncts are hired and trained to teach well online.<\/p>\n Maintenance<\/u><\/p>\n Although once created, digital materials are permanent and recoverable, all online courses will require some annual maintenance. \u00a0Readings may no longer be available, URLs can change and, above all, content is often dynamic. \u00a0Also feedback from students and\/or analysis of data from assessments may require changes to course materials. \u00a0Depending on the course, it is wise to set aside between 10% -25% of the original cost of development each year for maintenance activities (mainly instructor and support costs).<\/p>\n Overheads<\/u><\/p>\n These cover costs not directly related to the teaching of an online course, but costs that need to be recovered by the institution as a whole. \u00a0For many online credit courses, these costs may be ignored in the same way that campus-based courses are not charged overheads.\u00a0 \u00a0However, if the online course or program is to be full cost-recovery or to make a profit, then overheads need to be calculated.<\/p>\n More importantly, it is in ‘overheads’ that the main cost savings to an institution may occur. \u00a0In many campus-based institutions, non-teaching costs, such as buildings and ground maintenance, heating, lighting and other services, marketing, public relations, alumni services, financial services, etc. constitute almost half the operating cost. Some overheads, such as the President’s office, IT infrastructure, telecommunications, etc., will apply to online programs; others, such as building and grounds maintenance, will not.<\/p>\n In particular, if an institution needs to expand enrollments, the cost of new capital projects, such as extra classrooms or labs, should be compared to the costs of absorbing extra enrollments through an increase in online learning. \u00a0This may mean some shuffling, with some programs increasing online enrollment or hybrid courses to free up extra space for new enrollments. \u00a0\u00a0Also the use of online simulations or even remote labs may be another way to handle increased enrollments in science or engineering, by reducing but not eliminating time spent in labs.<\/p>\n How to Achieve Productivity Gains<\/strong><\/p>\n One difficulty in assessing whether online learning is less expensive than campus-based teaching is that we rarely know the cost of campus-based teaching on a course by course or program by program basis (cost-recovery or for-profit programs are an exception). \u00a0Generally public institutions do not track in detail the cost of different kinds of teaching, such as lectures versus lab classes.<\/p>\n However, this kind of analysis is essential if we are to look for increased productivity from online learning. \u00a0This means moving to activity-based rather than expenditure-driven accounting (see Bates and Sangr\u00e0, 2011) so that the costs of different forms of teaching can be properly tracked and compared.<\/p>\n Second, whether there is room for productivity gains through online learning will also depend on how online courses are developed and delivered. \u00a0While it is always possible to reduce costs, this is often at the expense of quality. \u00a0This applies equally to online learning as to campus-based teaching.<\/p>\n Nevertheless, there are three areas where online teaching offers possible productivity gains:<\/p>\n <\/p>\n <\/p>\n \n<\/ul>\n Further Information\/Questions?<\/strong><\/p>\n If you require further information or have additional questions, please contact Dr. Tony Bates, Online Learning Associate, Contact North | Contact Nord at tony@contactnorth.ca<\/a>. Dr. Bates will be pleased to respond to your e-mail.<\/p>\n References and Further Reading<\/strong><\/p>\n There is little published on the costs of online learning in university or college settings, and even less hard research. \u00a0The main study is:<\/p>\n Bates, A. and Sangr\u00e0, A. (2011) Managing Technology in Higher Education: Strategies for Transforming Teaching and Learning<\/em> San Francisco: Jossey-Bass, particularly Chapter 7: ‘Resources, money and decision making.’<\/p>\n Other publications that discuss costs of online learning include:<\/p>\n Bakia, M., Shear, L. Toyama, Y. and Lasseter, A. (2012)\u00a0Understanding the implications of online learning for educational productivity<\/em><\/a>\u00a0Washington DC: Department of Education Office of Educational Technology<\/p>\n Bates, A. (2011) Is online learning a waste of space?<\/em> Online Learning and Distance Education Resources<\/a>, November 18<\/p>\n Bates, A. (2011) The cost of online learning: $12.50 an hour?<\/em> Online learning and distance education resources<\/a>, March 22<\/p>\n Bates, A. (2010) Open content and the costs of online learning<\/em> Online learning and distance education resources<\/a>, October 25<\/p>\n Bates, A. (2010) Where do the resources for technology-based teaching come from?<\/em> Online learning and Distance Education Resources<\/a>, May 2<\/p>\n Laurillard, D. (2007) Modelling bene\ufb01ts-oriented costs for technology enhanced learning\u00a0Higher Education<\/em><\/a>,<\/a> Vol. 54, No. 1, pp. 21-39<\/p>\n Rumble, G. (2001) The Cost and Costing of Networked Learning\u00a0Journal of Asynchronous Learning Networks<\/em>,<\/em> Volume 5, Issue 2<\/p>\n Seybert, J. and Rossol, P. (2010) What drives instructional costs in two year colleges\u00a0Planning for Higher Education<\/em><\/a>\u00a0Vol. 38, No. 3, pp. 38-44<\/p>\n<\/p>\n
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