Q: The CE School Director, Geoff Gathercole just recently retired and has been replaced by a new gentleman, Charles McGinnis.  As with all new/change, he is having us explore all facets of the program and my job is to look at instructor rates and class fees for our classes to ascertain if these are high/low or just right.  Rather than start from scratch and do a whole market research thing, I thought LERN may have this type of info at their fingertips!

A: These are the right question to be asking. You may be familiar with the LERN financial format. These are benchmarks for financial performance we have developed for financially self-sufficient programs. If you are meeting these benchmark goals, you are likely in good financial health.

The way that LERN recommends looking at instructor compensation is as part of the overall financial format for courses. Basically there are two categories of expense related to providing a course, promotion and production. Promotion is, of course, the cost of printing and mailing a brochure or other costs related to getting the word out. Production costs are the actual costs of providing the course. Production costs are made up primarily of instructor compensation. You would also include any costs for facilities you have to pay for or supplies you provide in production costs, but typically this is minimal if there are any at all.

Promotion costs should range between 10% and 15% of income. For contract training, where there is little or no promotion, the promotion cost would be negligible. Production costs for courses should range between 35% and 40% of income. This means that promotion and production costs (which are essentially instructor compensation) should not exceed 50% of your income for open enrollment courses or 40% of income for contract training events.

Allocating 35% to 40% of income for instructor pay is the benchmark LERN recommends for financially self-sufficient programs