Virtual training

Understanding Software Training Pricing: What You Need to Know

The CloudShare Team

Aug 01, 2023 - 5 min read
Understanding Software Training Pricing: What You Need to Know

Whether you’re offering premium training to customers, planning a series of workshops, or working on employee onboarding, you need to know how to calculate your software training costs.

Unfortunately, that’s often easier said than done. Confusing cloud pricing models and complex contracts tend to make corporate training costs nearly impossible to estimate. There’s also enough jargon floating around the SaaS industry to fill a whole encyclopedia, and that’s not even touching on how challenging it can be to plan a virtual training program in the first place.

How do you know where to focus costs? How do you predict the impact a pricing model will have on your training? Most importantly, how can you ensure you achieve your training objectives?

Understanding (and Establishing) the Value of Software Training

There are three questions that lie at the core of every successful training program:

  • What value does your training provide?
  • What KPIs will you use to measure success?
  • How will you communicate your training program’s ROI to leadership?

The first two questions trace back to the core objective of your training. Examples include:

  • Increasing revenue
  • Reducing employee turnover
  • Improving customer service
  • Professional development
  • Eliminating internal skill gaps
  • Improving customer retention
  • Team building
  • Employee onboarding
  • Customer onboarding

Easy enough, right? The last one is where things start to get complicated. You need to calculate both the value and the cost of your training goals in concrete numbers.

There’s a lot more to consider here than just your objective, as well:

  • Are you able to use off-the-shelf content, or will you need to deliver highly customized training?
  • Who is your target audience? Leaders and managers or employees? Beginners or experts? Small organizations or large enterprises? Commercial, non-profit, or public sector?
  • How engaged do you expect participants to be? Are you able to provide hands-on training?
  • If you’re providing training services to a third party, are they handling administrative work such as registration and feedback, or is that something you’re expected to do?
  • Does this training represent a revenue stream for your business, or is it focused on a different purpose?

That’s a lot of stuff to consider right out of the gate. And we haven’t even gotten to the hard part. You also need to determine how you’ll deliver your training.

Why It’s So Hard to Calculate the Cost of Virtual Training Classes

We’re going to assume for the sake of brevity that you’ve chosen virtual training over in-person learning. Though there are a few outliers and exceptions, digital environments and platforms have more or less become the norm. It’s not difficult to understand why, either — compared to traditional classrooms, they’ve some considerable advantages:

  • No travel expenses
  • Fewer IT resources
  • Lower maintenance overhead
  • Easier scheduling and scaling
  • Broader accessibility

Unfortunately, they also have one noteworthy drawback. It tends to be incredibly difficult to accurately calculate how much they cost. There are two main reasons for this.

The first is that many people are still relatively unfamiliar with cloud computing and the SaaS industry. As a result, businesses frequently underestimate the time, effort and resources required to migrate to the cloud, or even to adopt cloud technology. The second is that there is an overwhelming number of variables that may impact pricing.

Key Factors Influencing Virtual Training Prices

Most costs associated with cloud usage have to do with the memory and disk space required to run and maintain the environment. Virtual labs may also charge based on a number of different metrics, including:

  • Training sessions per month
  • Program length
  • Active user lab hours in each session
  • Number of learners in each session
  • Individual users per month
  • Estimated environment runtime per user or training session
  • Environment lifespan
  • Customer support

Vendors typically allocate a certain number of monthly resources to a client. This contract allowance is usually based on the client’s estimates. Going out of your contract allowance typically results in an overage fee.

For instance, let’s say you’re allotted 200 user hours per month, and you go over that number by thirty. You could either be charged for the overage itself or have to pay for each additional hour. Some vendors might even expect you to do both.

Not exactly ideal, especially if you’re a high usage client.

How to Control Your Training Budget

We already touched on what you need to define as you build your software training program. Next, we’re going to focus on how. Because as you’ve probably guessed, the more accurately you define and plan your training in the beginning, the easier it becomes to accurately predict costs.

To that end, we recommend the following:

  • Ensure your training goals and your business goals are properly aligned.
  • Communicate and collaborate with key stakeholders at every stage of planning.
  • Create a strategic roadmap that’s both well-defined and flexible.
  • Put a deep analytics system in place, both to provide you with training insights and to convey ROI.
  • Build your training program with scalability in mind, and select your training tools accordingly.
  • Define and standardize your training use cases.

Aside from planning, there’s one other option for cost control — working with CloudShare.

Why a Fixed Software Training Pricing Model is the Right Choice

Most software vendors bill using a mix of usage-based pricing and additional add-on fees. You typically pay for the CPU, memory, and other resources you need to consume to support your software training.

Originally, we used a pricing model like this too — one that combined some degree of usage-based pricing and customer support fees.

But we knew there had to be a better way. After all, quantifying cost was challenging for both us and our clients. It also meant that our clients ran the same risk as they would working with other vendors — sticker shock from overage fees and unexpected charges.

We realized that wasn’t how we wanted to do business. We wanted to enable our customers, not frustrate them. We wanted to prioritize transparency and user empowerment.

That’s why we introduced a flat rate inclusive of all our services and technologies, based on a combination of average resource consumption and user hour allotment. That way, clients no longer have to worry about the size of their deployment, and can simply focus on software training delivery. We also shifted towards a SaaS pricing model, billing customers annually.

In addition to the CloudShare platform, our clients have access to a dedicated customer success team, analytics, and full usage visibility. They’re also given multiple tools to help gauge and control pricing, including controls for policy management, environment lifespan, and allocated run time and auto suspension.

Let’s say you’re running a self-paced training program. To control costs, you could:

  • Set a policy that automatically expires access or spins down the environment after two weeks.
  • Limit the amount of time a user can spend in the environment to ten hours.
  • Set the environment to automatically suspend itself after a few days of inactivity.

This pricing model allows for flexibility in your usage by averaging out total usage over an annual period.

What if a customer goes above the average annual consumption estimate? We simply reach out to them rather than increasing their rate or penalizing them for simply using their environment.

Why? Because we believe this should become the software training industry standard.

Unlock the Key to Success in Your Software Training

Predicting and controlling software costs is one of the most important aspects of virtual training.
Unfortunately, it’s also one of the most challenging. As a client, failure to establish an accurate baseline and choose the right vendor can result in enormous overage charges — potentially enough to completely drain your budget. As a SaaS vendor, meanwhile, a bad pricing model can wreak havoc on your retention efforts, creating a level of churn that far outstrips anything you might be making with overages.
Either way, effective software pricing is the key to success. And you now know everything you need to incorporate it into your own training plan, no matter what side of the subscription you’re on.

Book a demo with us today, and we’ll show you what that means.