Apprenticeship providers generally use the maximum funding band to set their apprenticeship price to employers, then assign costs to the five eligible cost categories: initial assessment; off-the-job training; materials and consumables; peripheral costs (including on-programme assessment); and programme governance, management and administration – plus adding in End Point Assessment (EPA) fees charged.
However, this ‘value-based’ approach to apprenticeship pricing is risky in an economy with high inflation and reduced margins, particularly if you lack control and authority over the price of end point assessment. A ‘cost-plus’ model, where you truly understand your costs of delivery will – subject to the sector you operate in – allow you to set prices more effectively, agree to additional costs with employers if required, assess where you have room to adapt your provision for particular clients and understand where you are making a profit or even if it’s viable to continue running a particular standard / delivery model.
Here are some of the common mistakes we see where providers do not have a robust pricing strategy:
End-Point Assessment price
It’s important to consider that an end-point assessment price you benchmark 3 years ago when an apprentice started, is unlikely to be the same price as the apprentice comes to completion, due to the increase in inflation in this period. Contracting with EPAOs early, or allowing for inflation in your pricing, is essential.
Average length of the apprenticeship
If you expect apprentices to complete a programme within 18 months, but the average is more like 21, then you’re likely to be raking up additional costs per apprentice. Even when there isn’t more teaching time, there will be increased costs for learners, tutor time and administrative costs.
Awareness of costs of non-off the job activity
Providers often do not understand the time and costs of events that are within the programme. Progress review, gateway review, support and maintenance of the apprentice during gateway and EPA, they carry cost and some standards require more time and quantity of events than others. This is even more critical for employer-providers where you can only claim for cost of delivery.
So how do you calculate these costs accurately?
Join SDN Strategic Associate, David Lockhart-Hawkins, for his next webinar series to better understand apprenticeship pricing and costing compliance.
In the webinar series, we’ll help you to:
- Be clear on eligible and ineligible costs and how to identify these
- Measure and take the apprentice’s prior learning into account
- Establish a clear rationale for your costs – in particular, the training price and assessment price
- Explore different costing models and options
You’ll also get access to an Apprenticeship Costing Tool!
For more information, dates and to book, visit Understanding Apprenticeship Pricing and Your Costs