Cost and Financing in Open Schooling/How Student Numbers Affect Costs/Costs of ODL versus Conventional Education

The cost-effectiveness of open and distance learning relative to conventional systems of delivering education relies heavily upon its potential to achieve economies of scale.

Conventional, classroom-based education is characterised by relatively low fixed costs. Even though considerable amounts are spent on providing school buildings, the relative importance of these costs is reduced if they are depreciated over the useful life of the structure. However, large numbers of teachers are needed to provide conventional education, and their salaries represent a high variable cost.

By way of contrast, ODL institutions incur high fixed costs in developing self-instructional materials. However, the variable costs of reproducing and distributing these materials, as well as providing face-to-face tutorials and academic support, can be considerably lower than for conventional education. If the ODL institution manages to increase the number of students registered for a particular course, the average costs per student declines more rapidly than those for conventional education. This situation is illustrated in Figure 2e below.

Whether it is cheaper to deliver a course through ODL methods than in a conventional classroom depends upon the average costs of the two modes, which are themselves dependent on student numbers. Zone A in Figure 2e shows where the average cost per student for conventional education is lower than for ODL. As student numbers increase, however, the relative position changes so that the average cost per student is lower for the ODL institution, as is the case in Zone B. The point at which the graph lines showing the average costs for the two modes of delivery cross over corresponds with a specific number of students. If the ODL institution can enrol more than this number for its course, then both average and total costs of delivering the service will be lower than for classroom-based education.