You are here


Putting cost calculations in perspective

The right MOOC business model will vary by institution, experts say
University Business, December 2013

Online education providers say university and college clients considering developing MOOCs as a long-term strategy need to think about the economies of scale gained and how long courses can last before the content gets out of date.

“That happens for a course on the latest techniques in artificial intelligence more often than a course in ancient Greek heroes,” says Rebecca Whitehead, product manager of academics at Campus Management. A school could develop a singular course, invest $50,000 or $100,000 for an online deliverable, and then deliver it to 30,000 or 40,000 students for two or three years.

The right MOOC business model will vary by institution, she says. A few of Campus Management’s clients have experimented with MOOCs, primarily junior colleges and private institutions, and their investment has been moderate, she says—as opposed to the $400,000 investment that MIT has reportedly made. Still, the schools Campus Management is aware of have invested “upward of $100,000, primarily in relief time for faculty,” she says. “It hasn’t been in technology.”

Costs for clients of SAS have varied widely, says Emily Baranello, senior director of the education practice. The initial infrastructure investment can be pricey, although it varies by factors such as bandwidth. “Is it going to be a positive experience for students if they try to get on and don’t have the connectivity? If this crashes the first time they offer one, the reputation of the MOOC and the reputation of the university [are] at stake,” she says.

If a school is planning on having 10,000 students take a MOOC, administrators should ensure the “pipe” is big enough and that there is enough infrastructure to support the students, Baranello says. In addition, as students quickly sign in, the school must have enough servers and IT staff to support the large number of students and their help desk requests.

The main focus in terms of ROI seems to be students enrolling in paid courses afterward, but schools are also concerned about completion rates, Baranello says.

“At the end of the day, do universities want to take $6,000 from a student who makes it through two classes, and that’s it?” she says. “We want to make sure we get the right types of students in the right programs. Universities are being very cognizant of that.”

Jenzabar hasn’t had any clients setting up full-blown MOOCs. Some, however, have gone live with what Rick Tomlinson, head of academic solutions, calls “mini-MOOCs” that serve as introductory courses and are used as a recruiting tool to engage students.

In calculating costs, Tomlinson says schools should add up professors’ time and/or remuneration, subscription costs for the MOOC platform, marketing and advertising, and any additional staff time.

Hard-dollar ROI isn’t easy to calculate at this point, says Sam Burgio, vice president and general manager at Jenzabar. “From a ‘soft’ point of view, it’s about general advertising and exposure.” He suggests asking: Does it help with our alumni? Does it bring interest from a donor? Do the promotions bring more exposure for our brand? “So much effort right now is still going into pushing the value and the accessibility versus really evaluating the costs and the success rate,” Burgio says.