Fixed costs include all one-off expenses, which therefore have a relative impact on training costs. Example of Fixed costs are:
- Licenses for the purchase and maintenance of software and other tools
- Travel expenses generated by the trainer
- Training materials – pens, paper, colors
- Telecommunication fees
- Training and development for trainers themselves
- Renting rooms and equipment
All these costs have something in common: they are amortized over time. In this case, the number of training hours that were carried out during the year should be taken as a point of reference. The annual expenses are divided by the number of training hours that were carried out, thus obtaining a lump-sum which is the cost per hour of that particular category.
Here is an example: In 2019, 2000 hours of training were carried out in total.
The travel expenses for this year were 15.000,00 €. The measurement unit, or the price/hour that we will get is 15.000,00/2.000 = 7,5 €
7,5 € will go into our rate table, under: travel expenses/hour – and for the moment we will leave it there.
Our rates are not complete, we need variable costs. Variable costs are all those items that have an hourly price and that can be calculated according to the time and resources invested in creating and carrying out a training unit.
Thus, each hour of training will include the trainer’s fee, for example 35 euros per hour. If a trainer needs 400 hours to complete a training program, the cost of this resource will be:
35,00 € * 400 = 14.000 €: this is a unique variable that can be specifically identified.
So, to summarize:
Fixed costs are monetized in a sum per hour and calculated according to the overall amount of the actual training hours in a certain historical basis (e.g. the total amount of last year’s costs). Variable costs are calculated according to the hours invested for the training conception, creation and execution.
Sounds complicated? It is definitely complicated 🙂 In the next paragraph, we will combine all the information, and our rate table will begin to take shape!