In the early years, web-based distance education was looked at as a magic bullet. A relatively quick and easy way to increase revenue without a lot of additional work or expense. Like so many things in life, however, turning a profit in online distance education is easier said than done.
In an online seminar, Is Distance Education Worth the Cost?, Dr. Barry Willis, professor and associate dean for outreach for the University of Idaho’s College of Engineering provides guidelines for creating a cost-benefits analysis for distance learning programs. Using a case study of a successful outreach program, he also delivers a detailed breakdown of expenses in five major areas, and the budget percentage for each: Technology/Production Support (24%), Administrative Support (18%), Academic and Student Support Services (17%), Marketing (5%), and Research and Development (4%).
From a cost-benefits perspective, Willis urges institutions to look at both cost efficiency (how expensive distance education is in comparison to other forms of instruction) and cost effectiveness (are the educational outcomes resulting from distance education worth the cost?).
In terms of cost efficiency, distance education often is considered cost efficient because of its enormous potential to benefit from the economies of scale, says Willis, author of Distance Education: Strategies and Tools and Distance Education: A Practical Guide. Because distance education courses are not restricted by classroom size, per student costs decrease as enrollments increases. Reaching this potential, however, is not always easy, and even more difficult to maintain as the number of competing programs continues to grow each year.
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For cost-effectiveness, Willis looks at student performance and finds that student performance in distance education courses is similar to students in traditional classes when quantitatively measured.
Creating a Distance Education Program – Fixed vs. Variable Costs
One of the reasons why it’s both expensive and challenging to create profitable distance education programs is because institutions too often focus on initial, fixed costs without factoring variable costs, Willis says. Initial costs include designing, developing and producing instructional materials for the first offering, and one-time technological infrastructure costs.
In reality, there are also a number of significant continuing costs that can vary over time. Willis says some of these variable cost drivers include: number of students per course and location, use of site facilitators, cost of distributing materials, course updating and revising, student services’ costs, research and development of delivery systems, and the ever-changing technological infrastructure.
Benefits of Distance Education Programs
Although covering costs and the potential for profitability are important, Willis believes the best reason to launch a distance education initiative is to increase access to your courses and programs, particularly when you are meeting the needs of an underserved population. If you have the money to invest in a program that provides a unique value to students, the potential benefits of distance education include:
- Increased access
- Improved learning
- Increased interaction
- Speed
- Ease of use
- Novelty
- Revenue