How Much Does It Cost to Build an Online Course?

We released our latest podcast episode from Online Education Across the Atlantic on the LMS and VLE market, discussing our report along with Neil Mosley’s coverage in the UK. You can listen on any podcast platform or view on YouTube.

On to the post.

If you want to capture the attention of someone working in online learning, just bring up online course costs. Everyone is eager to know how their institution compares when it comes to the expense of developing an online course.

Yet, despite its fundamental importance, there is little agreement on what to measure, how to measure it, or even how to express the cost of developing a new course. No standardized models exist for assessing the true cost of online course development. As a 2016 Florida Board of Governors report on the Cost of Online Education noted.

On some level, this variability is understandable. Institutions are at different stages in their online learning journeys, have distinct missions, and operate within diverse regulatory and budgetary environments. However, the lack of a standard measurement for course costs is holding the sector back due to the lack of benchmarking and consistent frameworks. Perhaps as importantly, a standardized approach would help address the ongoing debate over whether online courses are more or less expensive than their on-campus counterparts.

So how do institutions measure costs, and what do those costs actually look like?

While tracking down data is challenging, I have prioritized the most recent available sources, though some published data predates the pandemic and should be viewed as directional rather than fully precise. Throughout, my emphasis is on the underlying dynamics of course pricing rather than the absolute costs themselves.

The problem with trying to measure online course costs

A variety of factors influence course costs beyond just the type of institution, course level, or number of credits.

How costs are expressed - There is considerable variability in how institutions calculate and present course costs. Some determine costs on a per-course basis, adjusting for factors like graduate versus undergraduate level and credit hours. Others, particularly community colleges, calculate cost per credit hour. While this approach adds complexity, it also provides a clearer picture of return on investment. A $300,000 course, for instance, looks quite different when considering that it may be taken by hundreds or even thousands of students over its lifetime. A flat cost figure doesn’t offer that perspective.

Online approach - Is the course a one-time offering, designed to be taught only by its creator, or is it meant for long-term reuse by multiple instructors? The level of reuse significantly affects cost calculations.

Production decisions and quality - Are you aiming for a high-production values and courses with extensive video content or simulations, or something more basic? These choices have a major impact on development costs.

What is included (and excluded) - Institutions vary widely in how they calculate course costs. Most commonly, they include:

• Instructional design support

• Instructor stipends and teaching costs

• Faculty development and training for online teaching

• Videography and graphic design support

• Specialized software and hardware

• Accreditation and authorization costs

• Proctoring services

However, some institutions also factor in additional costs that others exclude, such as accessibility accommodations, physical space (more on this below), marketing and promotion, quality review, enrollment services, and student support. These differences can make cost comparisons difficult.

Where you are in the budgeting cycle - Course development budgets can vary significantly depending on where an institution is in the planning process. Early estimates may be based on assumptions, while later figures reflect actual expenditures, making direct comparisons even more challenging.

Early in the planning phase, when courses are still being proposed, budgets are often based on assumptions and may not account for all costs. As the process moves forward, budgets become more detailed, incorporating actual expenses and providing a more accurate picture of what it takes to develop and sustain a course over time.

The one consistent theme: no uniformity

When it comes to course costs, the only real consistency is their inconsistency. At some institutions, faculty receive a small stipend but little additional support, keeping costs in the low thousands, while others, like Georgia Tech, invest six figures in course development.

Community colleges generally have lower course production costs, but even within this sector, variation is significant. A report from the Minnesota State Higher Education System to the Minnesota State Legislature detailed course creation expenses across Minnesota’s 30 community and technical colleges, with per-credit-hour costs ranging from $12 to $53.

Similarly, Ivy Tech in Indiana, one of the largest providers of online community college education, reported per-credit course costs of $58 during the same period.

At the other end of a spectrum, courses in the massive Online Masters of Science in Computer Science (OMSCS) at Georgia Tech used to cost $300,000 when the program first launched with Udacity but now the cost is in the $100,000 to $200,000 range. This includes the $30,000 initial payment to faculty to design and teach the course but does not include the costs of the Teaching Assistants who assist with running the course. While the upfront costs are high, these courses have high production values, are run repeatedly and are taken by many hundreds if not thousands of students, bringing the high cost into some perspective. I imagine the per student credit hour cost is low.

While I do sometimes see course costs similar to those at Georgia Tech, they are on the higher end of the spectrum. A more typical example from a mature online institution is the University of Florida, where, during the first six years of its online program, course development costs averaged just over $50,000 at launch. A more recent number from the University of Washington Continuum College quotes a full course build for internal units at $46,350 and a redesign at $25,482.

Different approaches to stipends and maintenance

Two areas where institutions vary considerably in their approach—significantly influencing overall costs—are faculty stipends and course maintenance expenses.

Faculty stipends are the payments made to faculty for developing online courses, even when they receive support from an instructional design team, videographers, and other staff.

At some institutions, online course development is considered part of a faculty member’s regular workload and is not compensated separately. A commenter on a Reddit faculty thread about course stipends captured this reality in a lighthearted way.

A survey of community college faculty found that most were expected to develop online courses as part of their regular course preparation, with no additional compensation. Just under a quarter received stipends between $1,000 and $1,500, while about a third were paid between $1,500 and $2,000.

At universities, stipends tend to be larger. For example, Oregon State Ecampus offers faculty stipends ranging from $1,000 to $5,000 for developing a new online course, in addition to providing instructional design support. Similarly, the University of Kansas compensates faculty $4,250 for a three-credit course and $7,100 for a five-credit course, with lower payments for course redesigns.

Some institutions use more complex formulas. For instance, the Purdue University Pharmacy School calculates stipends for new course development and teaching based on both faculty salary and course credit hours. Given this level of variability, it’s no surprise that determining a standard cost for online course development remains a challenge.

Course maintenance is an often-overlooked factor in calculating course costs is maintenance. High-quality online programs require regular updates and ongoing upkeep, which can add significant expenses over time.

For example, in the University of Florida Online model cited earlier, the estimated annual maintenance cost for a course was $7,500. Similarly, Western Governors University found that for every dollar spent on course development, the institution would need to invest an additional 20 to 35 cents per year for the next three years to maintain the course. Even within their system, these costs varied.

Another trend emerging in online education is the introduction of additional fees to cover course costs beyond an institution’s baseline funding. For example, Arizona State University’s recent online Graduate Certificate in Medical Nutrition included an extra $2,000 fee to help offset development and delivery expenses including.

The folly, yet inevitability of comparisons

The variability in online course costs is understandable given the diversity of the higher education sector and the range of approaches to online learning. However, the absence of even a basic model for understanding course costs is problematic for several reasons—chief among them being the persistent push to compare online course costs with on-campus costs.

This is a flawed approach for several reasons.

First, institutions often have little clarity on what on-campus courses actually cost. While online course costs vary widely, at least we have a better grasp of the inputs and financial figures involved. In contrast, on-campus course costs are rarely calculated in a systematic way.

Second, these comparisons frequently assume that online programs avoid facilities costs, making them appear cheaper to develop. While classroom expenses can be significant, campus buildings are typically treated as sunk costs. Outside of fully or heavily online institutions, most colleges and universities lack the data to prove that online programs have truly offset construction or facilities expenses.

Finally, online and on-campus courses are fundamentally different products. While they share some similarities, the processes and resources required to create and support them differ significantly.

Yet, the urge to compare costs across modalities remains strong. Whether the goal is to argue that online learning should be cheaper or to question why it’s costs are different, comparisons are likely to persist in the EdTech landscape.

Without an agreed-upon cost model or even a standardized way to measure expenses, these comparisons become problematic. It becomes easy to manipulate the numbers to support a particular argument, which in turn creates unrealistic expectations for institutions trying to launch or expand online programs.

The start of a model

There are some existing models, both within and outside of higher education, that can help establish a baseline approach to measuring course costs. In the two examples I share below, the focus is on the models themselves rather than the specific numbers.

The Florida Board of Governors Report provides a good and still relevant high level overview of the kinds of cost categories involved in online learning, a version of which I have adapted, below.

Digging deeper into course specific costs, in the corporate world there is much greater agreement on what a calculation of costs should look like. An example from the Raccoon Gang agency illustrates one approach, focusing on the labor involved in building a course.

Parting thoughts

As a sector, we need to develop a baseline model for online course costs. Yes, I understand the argument—we don’t have a standardized model for on-campus course costs, so why should online learning be held to a higher standard? But, as with the issue of quality, online education is subject to greater scrutiny.

A well-defined cost model would help institutions accurately capture the resources required to develop courses, advocate for funding, build sustainable online programs, and better navigate the inevitable comparisons between online and on-campus education.

Even then, the answer will likely still begin with “It depends.”

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