A QUESTION OF RATES. An investigation into the rates charged for training and the possible differences depending on topic and gender.

Transcription

1 A QUESTION OF RATES An investigation into the rates charged for training and the possible differences depending on topic and gender. Author: Peter Mayes Founder and Editor of TrainerBase Conducted; August 2005

2 A QUESTION OF RATES: An investigation into the rates charged for training and the possible differences depending on topic and gender. Executive summary The training sector provide services in a range of topics classified as Soft, Management and Technical Skills. The results of this research concludes that most trainers do Associate work and that the day rate for this is close to half what they would normally charge. Technical Skill training pays the least, Female trainers are the predominant providers of Soft Skills, Male trainers still get the top rates and the average turnover for an independent contractor is hovering near or just over the VAT threshold. It also suggests that some trainers are not making their business pay, whilst a few others are spending a lot of time on income generating days. Introduction There have been some significant discussion regarding the rates trainers charge both on the TrainerBase discussion forum and in the wider training community. This research does not set out to determine what is an appropriate rate for a particular day s training but to report what is currently being charged within the TrainerBase community as of mid The investigation TrainerBase is an online database for the training community with over 4,500 members and has a mix of training suppliers and training purchasers. As I was looking to determine what trainers charged, an posing the questions was sent out to only those members who are registered as Trainers; 1,760 in total. I was very pleased with the response as over 10% of the recipients responded, a total of 182 members contributed to the statistics. As someone who has an ear to the marketplace I am aware of a number issues surrounding the training sector. Some are well grounded in reading the various forums on the Internet and glancing through some of the training trade journals. On the topic of rates I had a number of unfounded preconceived ideas about what was a good or poor rate, was pretty sure that women trainers got less than men based on my research in 2004, that certain training paid more and didn t have a clue about how many days trainers trained but had a theoretical formula for charging. The information I wanted to find out was: the rate that the trainers charged for different training they did to get an overall picture of the rates scale the type of training that they did predominantly to determine if there was a trend for different type of training the number of days they expected to train per month to see if there was any correlation with rates and their gender to probe the conclusion from the 2004 TrainerBase research that there was a gender gap in overall rates charged by men and women. 2

3 The questions posed in the to members were: 1. What is a good daily rate for what you do (the most of), a rate that you actually get, not one you would like to get, for doing; a) Associate work where you work on behalf of another training company and/or b) Direct work where you have marketed and secured the client yourself? 2. Could you state whether this is for more; a) Technical(T), b) Managerial(G), c) Soft(S) skills (I leave the interpretation of these to you) or a d) Combination of T/G/S (please specify)? 3) How many delivery days do you reckon to undertake on average per month; a) 1 5, b) 6 10, c) 11 15, d) 16 20, e) More (you poor/lucky person:))? 4) Could you also state whether you are; a) Male(M) or b) Female(F)? The training sector is populated with a range of providers from independent contractors, through small training providers to very large corporate type companies. Given the nature of training and the range of requirements, dependant on changing needs of both private and public organisations, it is likely that a provider would be asked by a client to provide a service outside their capacity (insufficient time) or capability (insufficient expertise). The result would be a significant market for sub contracting or associate work. The results are as expected. Only 9 of the 183 (5%) respondents indicated that they did not or at least have not yet done associate work. The rates for associate work are also as expected, lower than for direct work. The average rate for associate is 433. This I admit is higher than I had anticipated, the range for all trainers was from 125 to 1,000. The average based on gender difference was very small; Female average being 430 and Male average being 437. Interestingly Female trainers polled the higher Minimum; 125/ 150 and the higher Maximum 900/ 1,000. I and many colleagues within the training sector have an assumption that Direct training; the training contracts that are won by the trainer via their own marketing activities and provided to the client direct return a higher day rate. The converse to this is that they are likely to cost more to provide. The results back up this assumption. The average Direct day rate for all trainers is 761. Female trainers rate is 721 and the Male rate is 804. The greater divide may be for a number of reasons. Firstly the highest reported rate was for a Male trainer 2,000/ 3,750 and the lowest was for a Female 220/ 200. This will be the result of perceived value of the training, the type of training being an influence here and the trainer s ability and confidence to negotiate. 3

4 As to the type of training undertaken I am aware that many trainers offer a variety of services and that classification especially between soft skills and management can be difficult determine. Perhaps research into where topics are placed could be part of next years exercise. For simplicity I classified three types of training; Soft Skills (S) Management Skills (G) and Technical Skills (T) There are of course times when a trainer will provide a combination of these and this has been accounted for in the research. The results are close to what I expected; T S G TS TG GS TSG 6% 12% 10% 2% 3% 55% 10% There were a number of variations between Male and Female trainers: T S G TS TG GS TSG F 5% 21% 9% 1% 1% 55% 9% M 7% 5% 12% 3% 5% 56% 12% Most significant is the higher number of Female trainers who offer Soft Skills training with a less marked higher proportion of Male trainers who provide Technical and Managerial. An aspect of some of the discussion on the TrainerBase forum has been the different rates for the different types of Training. A general consensus is that Management and Soft skills training pays a much higher rate than Technical (IT) training. Separating out the rates for trainers that provide these different types confirms this understanding. Technical training rates: Soft Skills training rates: Assoc Direct Gender AV Total 11 HI M 7 LO F 4 Assoc Direct Gender AV Total 22 HI M 5 LO F 17 Management Skills training rates: Assoc Direct Gender AV Total 19 HI M 12 LO F 7 The above figures are taken from the respondents who indicated they trained in a single topic. I have omitted the combinations but can confirm that those with a technical element 4

5 are similar for associate work at an average of 445 and the direct work for Technical is lower that the average of 748 at 615. Other topics that have been part of the discussion forum are the number of training days available in a year. I would urge anyone interested in this and how it impacts on calculating your rates to download and read the article in the Useful Stuff page under the Business Development category of the TrainerBase web site ( As to the number of days per month spent training, the results have been enlightening. The total of all respondents is: % 47% 25% 7% Close to half of all trainers generate income on between 6 and 10 days per month. Only a few generate income on 16 and over. As an exercise in extrapolation to determine annual turnover within the three topic classifications, the number of trainers that worked the following days per month were reported Technical Soft Skills Managerial Skills Assuming that the number of training days is an average within each group, I am basing the calculations on a trainer doing 3, 8, 13, or 18 days training per month. If you want a different figure then you can do the math. Taking the average daily rate as a combination of both Associate work and Direct work; Technical = 252 Soft = 632 and Management = 691. This translates in to an annual turnover of: Technical Skills: 9,000 to 54,500 Soft Skills: 22,750 to 98,500 One trainer could be turning over 136,000 The majority likely to be in the region of 60,500 Management Skills: 24,750 to 107,750 The majority likely to be in the region of 66,250 5

6 Following on from the assumption made regarding the number of day worked per month it should be noted that a trainer working 18 day per month for 12 months will be on their feet for 216 days in the year. It is generally accepted that this is exceptional. The figures above suggesting that most trainers do between 6 and 10 are more realistic, resulting in days on feet of between 72 and 120 and a few managing up to 156. Finally Working as an independent training contractor is a fluid occupation, populated by people who command far too little a rate to survive at one end of the scale to others who command healthy rates that many would like to aspire to. Few other sectors I would hazard have such a similar range of rates. The reason for the differences in rates have not been investigated here but discussions on various digests suggest that this is down to the perceived value of the training given and the likely impact a training day will have on the organisation. Geography is a factor as well; certain regions are able to command higher rates for the same training, in some regions training is only undertaken if it is subsidised. Market forces will of course always prevail and those trainers that cannot pay their way on the lower rates will either bow out as independent contractors perhaps returning to full time employment or they will have to put their rates up. Training is seen as a cost centre and the idea of calculating a Return on Investment is a regular topic of discussion on many forums, conferences and digests. For those fortunate to command the high rates ( 2,000+ per day), one must presume that their clients perceive a value, however I would suspect that these clients are few and far between. As for market forces, when the training department does not have any money to spend, all training providers will find it hard to secure contracts regardless of the espoused benefits to the organisation. And just to make a point as one business consultant commented, the first two things to go in an economic down turn are advertising and training, he went on when the economic situation improves, no one knows who you are which is handy as you haven t got the skills even if they did! My intention is to periodically review this research, perhaps once per year, the next time round it may be worthwhile including the geographic indicator. I hope this research is useful, it has been undertaken because it is a question I see asked many times, especially by newcomers to independent contracting. A review of rates should be something that all contractors undertake as it could be construed from the above figures that some may be missing out and could be running a more lucrative business. About TrainerBase is an online database and marketing channel for training suppliers to promote themselves to training purchasers. Primarily aimed at the independent contractors, small training provider, it offers an extensive range of facilities for trainers to place necessary information about themselves and their services, in front of potential purchasers, deemed essential to build trust in a virtual world (Researched article by TrainerBase published in the British Journal of Occupational Learning). From a recruitment aspect the site is free, offering both search engine capabilities and a more formal tendering facility. In recognition of the innovative ranking system and the capabilities of the site, TrainerBase was Highly Commented in the 2004 Ecommerce Awards. The site was devised by and is run by its founder and editor, Peter Mayes. 6