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How Do I Know I'm Not Paying Too Much?
Too much is a very relative term. Obviously for any major financial outlay, a rigorous evaluation should include a comparison of various pricing options among a short list of options. But that is only the first step of the contracting dance. Most vendors, who are truly interested in partnerships and not just sales, will be responsive to creative and flexible pricing arrangements and alternatives. The best e-learning initiatives are usually the result of significant co-investment by both vendors and customers in the program success. Ultimately, business relationships where there is a onesided risk equation—all risk for the vendor and no risk for the customer—rarely result in e-learning programs that succeed and deliver business results. First, you need a clear understanding of what is included in the proposed pricing agreement.For Content and Technology acquisition, what level of customization and implementation assistance is included in the quote? What may appear to be a much less expensive alternative may in fact become much more costly if every hour of implementation assistance is billed at standard rates, rather than included as part of the due diligence of the vendor.
What kind of commitment is the vendor willing to make to ensure that their solution works in your environment? As an example, some vendors are willing to take only X% (10 to 20 percent) of their contract price up front, and the remainder on successful implementation. While this seems trivial, in reality, the truth is that with inconsistent levels of compliance with industry standards, it can easily take six to nine months to integrate new components into your existing architecture. Will your contract start at that point, or have you given up six to nine months of use/access?
In some cases, vendor proposals seem prohibitively high, but the functionality extremely attractive. Most established vendors are willing to consider and/or propose creative pricing arrangements that might be more attractive to your organization based on your current economic profile. Alternatives might include:
Scaled pricing levels for the first few years of implementation, giving your learning organization time to institutionalize e-learning.
Pilot programs to test the waters for the vendor products prior to full-scale commitment and implementation.
Availability of a sandbox environment for interim testing and integration evaluation prior to signing on the bottom line.
In reality, the truism You Get What You Pay For is typical also with vendors. High quality, dependable content and platforms do not come cheap, but the rewards of a solid partnership and long term success more than outweigh the relative cost.
Cost-Effective Vendor Relationships at The Hartford*
When buying content from an external vendor, thoroughly investigate whether it is more cost-effective to buy a large site license or use a pay-per-view approach. *See Chapter 12:The Hartford
