Skilljar Blog

3 Business Models when Charging for Training

Posted by Sandi Lin on May 3, 2016

charging-for-training.jpegThe decision of whether to charge for customer training is a strategic choice often made at the company level. Some companies choose to offer training for free, as a way to enable industries and customers for success with the product. Other companies think of training as a standalone profit & loss (P&L) center. Still others take a hybrid approach, where training is expected to be cost-neutral (customers are charged just enough to cover direct expenses, typically classroom instructors and facilities).

At Skilljar, about one-third of our customers choose to charge customers for training. In this blog post, we walk through the 3 most common business models for revenue-generating customer training organizations - a-la-carte, subscription, and bundled.

1. A-la-carte training

In this model, customers pay for training on an a-la-carte, or per-class, basis. For example, a 2 hour administrator training might cost $300 per attendee.

This is probably the most common pricing model, especially for organizations that are relatively new to offering customer training. Characteristics of these organizations and training courses often include:

  • The product can theoretically be implemented and used without requiring training - thus, training is considered an optional expense for customers.
  • The training course has clear variable fees, such as a live instructor, classroom facilities, and/or proctored certification exams.
  • Attendees are expected to take training only once - for example, as required continuing education credit.
  • The organization has a limited number of training courses, often fewer than 5.

In all of these cases, organizations can choose to take payment via invoice, via web (e-commerce), or both. Some organizations also use a "training credits" model where a purchase corresponds to a designated number of seats or units based on the classes offered.

2. Subscription training pass

In this model, customers pay for access to an entire library of training content. Usually this is for 1 year in duration, either a fixed time calendar (e.g. expiring Dec 31) or a rolling window (e.g. 12 months from the date of registration).

Characteristics often include:

  • A well-stocked training library where many courses are relevant to any particular student over a long period of time. Usually this is eLearning-based (also known as on-demand, or self-paced).
  • Products tend to be more complex, or have a logical time progression from beginner to intermediate to advanced.
  • Companies commit to a continuous release of new and refreshed content in order to keep subscribers engaged month after month.
  • Companies have a well-resourced training and content development team.
  • Customers often pay for the core product on an annual subscription basis via a sales team.
  • The subject naturally lends itself to a variety of self-paced content, such as designing different types of jewelry (bracelets, rings, necklaces, etc.) using custom CAD design software.
We typically see the training subscription business model in organizations with more mature training organizations, as well companies and products that target enterprise-level end users that expect (and can afford) comprehensive training.

3. Bundled training into onboarding, services, or support fees

The final business model we'll discuss is wrapping training fees into an onboarding package or premium support plan. For example, customers might pay a flat implementation fee that includes a mix of services, training, and other customizations. Or, customers might opt into support SLAs that also provide access into certain training options.

We see this business model in organizations with a heavy professional services component, such as on-premise software or implementations that require extensive configuration and process change. In these scenarios, customer success calls for a high-touch implementation process where launch success is critical. It doesn't make sense to offer training as a separate product when it is very much tied to implementation success in conjunction with a number of other services. This also gives organizations more flexibility in allocating costs across the entire client project.

Conclusion

Charging for training is a strategic decision that depends on your customer philosophy, product types, and the evolution of your training team. This analysis will point you to the appropriate business model, whether that's a-la-carte, subscription, or bundled.

For more information and tips, download our free eBook - How to Measure the ROI of Customer Training.

how-to-measure-the-roi-of-customer-training-cta

Topics: Training, Customer Success

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