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Thought Leadership

A Step-By-Step Guide to
Planning Your 2023 Training Budget

Executive summary

Training is expensive.

And succeeding at training budget planning is the only way to achieve your training-dependent business goals in the coming year. Failing to prepare for 2023’s training needs properly can result in dissatisfied customers, missed opportunities, and loss of potential business growth.

If you’re a software training professional, dig into this detailed guide for the exact steps you need to calculate your 2023 customer training budget. This guide will help you weigh training needs with existing capabilities to ensure an optimized spending strategy.

The steps we will cover are:

  1. Define your customer training needs
  2. Evaluate your existing and required capabilities
  3. Consider the world we now live in and the trends shaping it
  4. Invest in meeting your customers’ needs (and your future scaling)
  5. How to calculate your training budget and ROI

An increase in remote and hybrid work means organizations have had to fundamentally rethink how training is conducted — and how budgets are spent. This is new territory, with a lot of potential for missteps.

But, planning your training correctly sets the foundation for an evolving budget that can be expected to grow year on year. You’ll only need to gain the necessary internal buy-in each time and deliver predicted ROI — whatever the future brings.

Let’s get started with the key steps.

Step 1: Define your customer training needs

Work out what you need to deliver an efficient customer training/onboarding process and the business value of customer training.

Take a top-line view of your goals

Understand how customer training supports your business goals now and how it’ll be next year. This is an important first step.

Goals can include:

  • Reducing customer churn
  • Strengthening customer relationships
  • Boosting customer satisfaction/loyalty
  • Increase in product renewals
  • Growing profit

Along with your goals, remember to look at your sales teams as well.

Consider your sales success

Talk to your customer success teams to understand what to expect in the coming year.

Are your customers’ training needs expected to expand? If so, your training department may need to grow to provide rapid onboarding.

Analyze how your training has performed so far

Ask: is the training you currently provide effective?

Investigate whether your training processes met your KPIs for 2022.

These KPIs can be:

  • % increase in customer engagement
  • Time to competency
  • Time to value
  • From trial to paying customer

You should know the customer churn rates and the level of competency of students who have completed the training.
Pro tip: from pre-sales engagement with prospects to onboarding to ongoing education, you should approach these in a way that delivers a unified experience.

Where will your training take place?

How much of your training will need to be conducted in-person/on-premises, virtually, or hybrid?

This will tell you how much you need to invest.

During the COVID-19 pandemic, the move towards virtual training reached a new peak.

In 2017, 77% of companies leveraged virtual training. By 2020, this increased to 98%. And virtual training looks like it might be a permanent change. Reports suggest virtual training can reduce instruction time by up to 60% and cost 50% less than classroom training.

Companies leveraged virtual training

Self-led or VILT

How much of your training is conducted via self-led methodology, and how much will be an instructor or virtual instructor-led training (VILT)?

According to a report from Ken Blanchard Companies, over the course of the pandemic, the prevalence of in-person classroom training dropped from 63% to 9%, while virtual instructor-led training increased from 10% to 53%.

This is a good time to analyze how close your training setup is to meeting your needs

  • It already completely meets our needs
  • Close to ready – we may need to tighten a few screws
  • Okay – we will need a little investment
  • Not close at all – we will need to invest heavily

Step 2: Evaluate your existing and required capabilities

Once you have a pulse on your training requirements, you can start reviewing your existing training or onboarding capabilities.

Consider our quick-fire evaluation of your current capabilities:

  • Can your current training capabilities scale to meet your expected needs/growth across all your business locations/regions?
  • What is your existing technology infrastructure? Is it primarily on-premises or cloud-based? How well will it cater to your needs in 2023 and beyond?
  • If you need to deliver software training to users across multiple sites, do you have a cloud-based training platform to do that? And will this platform support the cloud service(s) you need to use?
  • Does your platform facilitate all the learning modes you need? Do these include instructor-led learning and self-guided learning?

Based on the answers, you will have a better idea of the investment needed for your customer training and you can calculate it into your budget.

Go to step 4 to understand your customers’ needs in the new virtual norm.

Step 3: Consider the world we live in, and the trends shaping it

The technology industry is never static, and new trends will keep affecting business operations.

Undoubtedly, the COVID-19 pandemic has greatly impacted how software companies deliver training. Training platforms and where these platforms are hosted (public or private clouds) must become a part of your budget discussions.

Trending toward digital experiences

Virtual software training plays a significant role in providing the exceptional user experiences that customers now expect. 80% of customers said experiences are as important as products and services.

Your training technology investments need to be focused on creating personalized, engaging, and real experiences. They should support self-paced training, virtual instructor-led training, or a mixture of both, to meet customer demands.

Don’t get distracted by shiny things

If you’re considering investing in AR/VR, think about your short-term, medium-term and, long-term goals.

Is it likely these technologies will actually have the required impact on your customer education outcomes today or in the near future?

When it comes to excellent customer training experiences, you need to prioritize consistent content and valuable outcomes.

Ride the digital transformation boom

Businesses of all sizes had to accelerate their digitization for survival.

It means that the opportunities for software companies have never been higher. It also means that customers may need to spend more time getting familiar with new technologies and ways of working.

The bottom line: customer training requirements are going up. You must make sure you are ready to manage the influx.

Take advantage of data-driven training

Instructors and administrators can benefit massively from analytics that deliver insights into trainees’ progress.

Not only does it give them firsthand knowledge of progress, but it also provides a roadmap to improving their programs.

Provide unified training experiences for customers

Technology integration has long been a weak spot for training organizations.

80% of training organizations use more than four different technologies. Over a third use more than eight!

But only 10% say they’re confident in training technology integrations. Clearly, this is a problem.

Better integration offers the ability to scale operations, provide access to learners regardless of location, and continuously improve outcomes.

A good example of this would be the IMG Global Learning Consortium. The consortium has developed a Learning Tools Interoperability (LTI) specification. The LTI hopes to ensure integration capabilities are built into training technologies, including single sign-on, instant integration with learning management systems (LMS), and shared analytics. It’s a standard for training technology providers to follow – and for training organizations to look out for.

Step 4: Invest in meeting your customers’ needs (and your future scaling)

By now you’ve considered your training needs and evaluated your capabilities. You also understand the trends across the software customer training space which should inform your training budget calculations.

Now let’s look at your customers’ training needs in the context of the new virtual norm.

Multi-cloud integration enables better flexibility

You need cloud spending in different places to meet remote work challenges.

But, many training platforms lack multi-cloud integration. If your customers’ IT environments are multi-cloud, you must invest in technology that accommodates their needs.

Provide hybrid learning

The goal of hybrid learning is to find a flexible balance between online and offline. People want to work from home, and this means training there too.

Hybrid learning helps you offer this, but it also opens opportunities for growth because it’s scalable. You can cater to trainees worldwide, all taking the same program, wherever they are.

Self-paced learning is on the up

The use of self-paced training rose from 14% to 24% in 2020.

It’s also taking up more space in training organizations’ budgets. Technavio reports that between 2020-2024, the self-paced learning industry will grow by $6.71 billion.

Self-paced learning helps customers in different time zones and those who can’t make it because of scheduling conflicts.

Have the numbers but not the patience for manual calculations? Use our automated calculator.

Mobile learning is a must-have

According to CNBC, 72% of people will only access the internet via their phones by 2025. Also, mobile learners tend to study an additional 40 minutes per week.

When training technologies are mobile, users can complete training can anytime, anywhere. Mobile-first solutions are essential if your organization is keen to deliver exceptional experiences.

Getting personal is everything

You need to build a personalized learning experience to provide exceptional customer service. Tailoring training journeys will boost engagement. You can use engagement statistics to demonstrate specific ROI from your training/onboarding programs.

Let your data drive

You need to leverage your training data to predict training engagement and forecasting for your budgets. The data you collect from the training today can help you immensely tomorrow. You can peer into the data to see what is and isn’t working to reduce costs and improve outcomes.

Step 5: How to calculate your customer training budget

How much to spend on your training and customer support will vary. But we’re here to help with numbers, methods, and calculations.

Essentially, any budget should balance money coming in versus the money going out.

So, an excellent place to start is by knowing your average revenue per customer and creating a revenue forecast to see what income you can expect in 2023. Then you should look at costs.

Here are some pre-budget parameters to factor in:

  • Select the period for the budget (2023, for the year)
  • Know your sales prices per unit
  • Have access to historical data
  • Keep an eye on industry benchmarks
  • Factor in market trends
  • Take the size of your training team into account
  • Consider changes to your business model
  • Talk to your trainers/team and your customers

Calculate revenue forecast

For a cohesive training budget, you need to forecast the number of users based on customer training, acquisition and retention assumptions. Multiplying that number by your average revenue per customer (ARPU) for a revenue forecast.

Here’s how:

(1)  First, calculate your ARPU:

This is the total revenue in a specific time period divided by the number of users in that time period.

For example:
If your revenue for July 2022 was $100,000 and you had 1,000 users that month, your ARPU would be: $100

(2) To find your revenue forecast, multiply by your acquisition or retention assumptions:

For example, if you assume you will acquire/retain 2,000 users for October 2023 your revenue forecast will be:

ARPU ($100) x 2,000 users = $200,000

Expand this for the year to get more accurate figures for your revenue forecast in 2023. You can also look back at previous years to see trends in customer spending.

Remember, spending on SaaS products is going up.

Don’t have the time for manual (or even excel) calculations? We’ve got you! Use our instant calculator to calculate your training cost in seconds.

Calculate expenditure

Consider the costs of running a customer training program. Most software organizations use Customer Success Managers and implement customer retention programs as a model. You also likely use an administrator for customer comms and other necessary support. Depending on your company size this team could be quite large.

Calculate your expenses based on the size of this team.

Are there other teams that are related to your customer training program?

Add their expenses here too.


  • Salary
  • Benefits
  • Training (internal)
  • Expenses
  • Wellness

Remember to factor in the technology (and its cost) that you intend to use for your training program. They usually fall under three categories:

  • One, Learning Management Systems.
  • Two, Learning Experience Platforms (LXP), data analytics, and training activity.
  • Three, microlearning platforms, gamification, and immersive tech.

All of these technologies have a place in the new virtual norm.

Add these costs for a baseline cost for running your training program.

Calculating training costs per user

It’s hard to pinpoint the exact cost per training per user as it depends on various factors. However, according to a report led by Forrester, the research consultancy:

  • The maximum cost for onboarding a new customer can reach up to $25,000/client
  • Average customer training costs range around $6,000/client

That includes your baseline cost for running the training team, plus additional expenses from:

  • Marketing to increase client engagement
  • Customer service to address buyer issues
  • Technical support: Offering advanced documentation, customer training, and product/service knowledge
  • Sales and account management to guide clients through onboarding
  • Analysis & metrics to identify at-risk customers, pinpoint problem areas, and rectify existing issues

Factoring in the LMS cost

You may be considering investing in a learning management system (LMS) – either through a third-party solution or by building your own. Regardless of your route, your training budget plays a crucial role.

Get information on:

  • How the licensing fee will be paid: annually (i.e. a lump sum) or monthly
  • Installation fees and/or data migration
  • A charge per user/learner
  • Ease of use: should also be factored in as time spent by employees

Calculate your expected ROI

Adding costs and comparing them to your revenue forecast can give you a good, rough idea of your expected return on investment. Expected ROI can be used to determine if a project, in this case a customer training program, is worth pursuing.

Anticipated ROI uses estimated costs and revenues to determine the potential levels of profit.

Take the estimated income from your revenue forecast and subtract the estimated costs. Take that number and divide it by the costs and multiply by 100.

(Expected revenue – estimated costs) / costs x 100 = ROI


An accurate training budget is key for growth

The numbers and calculations used above are examples and will vary depending on your organization.

However, they will give you a sense of where you currently are when it comes to your customer training and where you hope to be in 2023.

Organizations should prioritize customer training investments that

  1. Deliver flexibility
  2. Cater to multiple training scenarios
  3. Provide a unified platform experience
  4. Deliver maximum ROI
  5. Enable organizations to meet their KPIs.

The best way to ensure your investments meet these criteria is using the steps in this guide, invest in real-time with the right stakeholders, and contemplate the key outcomes for customer training and onboarding in 2023.

About CloudShare

CloudShare is a leading software experience platform that helps software companies increase customer acquisition and retention by creating highly engaging hands-on virtual training, POCs, demos, and testing environments in minutes.

Our virtual environments are easily replicated in the cloud and purpose-built to generate user engagement that ultimately impacts key business metrics such as customer retention, repeat purchase rates, lower support costs, higher win rates, faster sales cycle, and more.

To learn more about how we can help you improve customer acquisition and retention in your organization, get in touch with our expert team today.