By Kieran King
For the past 10 years, the learning market has seen a gradual shift away from classroom delivery toward cloud-based learning models. During this period, cloud-based learning providers have applied a tremendous amount of investment to expand their topical coverage and the features within their learning solutions. The Producer Price Index (PPI) is a helpful resource to understand the trends of pricing within the cloud-based learning industry. This index is calculated by the U.S. Bureau of Labor Statistics and measures the average change in selling prices received by domestic producers over time.
According to the PPI, the average price in the Computer Training category rose just over 12% between 2007 and 2014. Therefore, any prices you may have researched a few years ago likely won’t apply in today’s cloud-based learning market. Some cloud-based learning providers have been innovating rapidly to emerge from the global economic crisis even stronger than they were before.
While price must be part of the conversation, in a subscription economy it is typically not the conversation. Organizations normally purchase elearning to address issues with scale, speed to market, resourcing, efficiency, expertise or some other capability gap. As you review the proposals offered by your shortlisted suppliers, make sure the pricing proposed is aligned with the value related to solving these problems, not just listed at the bottom of a long list of products. Ask the provider how they measure value and if they provide a mechanism within their service offering to evaluate that value over the program’s duration. The most popular measures for cloud-based learning’s value are often associated with cost avoidance, time savings and increases in skill or capability.
While pricing has increased in this field overall, most cloud-based learning providers desire multiple-year contracts and will provide a discount to attract them. Inquire about multiple term price advantages as they often provide a significant savings that can make the purchase even more compelling. Suppliers will often tier their term discount pricing advantages to correspond with the number of years specified in the contract duration.
Before entering into multiyear term with a supplier, ensure that the supplier has the sustainability to remain in business for the long haul. It is not recommended to enter into multiyear term agreements with brand new startups or companies that have been in business less than five years. The industry has been in existence for approximately 20 years so when entering multiyear agreements, search out providers that have longevity and the financial backing to remain in business well into the future.
Kieran is Global VP, Loyalty Strategy, Skillsoft. Follow her on Twitter @kieranmking.