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Operating a profitable course

The success of a course offered by a registered training organisation (RTO) often depends on the demand for that training service in its community.

An understanding of regional employment offerings and skill needs can help an RTO identify opportunities and then provide relevant training to satisfy them.

Identifying training needs

To determine the viability of training services within its area, an RTO needs to consider:

  • What skills do business and industry clients need?
  • What skills to local individuals want?
  • What access problems could they have?
  • What training methods will best suit potential learners?

Being involved in the local community and talking to local employers will help an RTO understand the training that will be valuable to its community. For instance communities with a strong migrant base will have an intrinsic need to develop English language and literacy skills. While communities in wine-making districts across Australia will have a demand for developing skills in viticulture and wine making.

Estimating profitability

An RTO can estimate the profitability of a course and the break-even number of students required for a course’s feasibility by considering the following factors:

  • Fixed costs (rent, electricity, registration and audit cost and other overheads) proportional to the delivery of the course
  • Variable costs or cost incurred per student attending the course (course material, tools, etc.)
  • Course fee or funding obtained per student.

Calculating a break-even point

Although it may seem obvious to most, some businesses forget the simple formula of calculating a ‘break-even’ point prior to supplying a product or service.

You can calculate the minimum number of students required to cover a course cost or the break-even point by the following equation:

Break-even point = Total fixed costs / (Course fee – Variable costs)

For example when are:

  • fixed costs = $6000.00
  • course fee = $1200.00
  • variable costs = $200.00

Break-even point = 6000 / (1200 - 200) =>  6 students

Obviously, as a business,  you will need to also calculate how many additional students you need in that course to make a profit. Decide on the required profits and divide that by the course fee minus the variable cost.

Additional students required =  Required profit / (Course fee – Variable costs)

the following information is required for metadata purposes, please ignore. [title]Operating a profitable course[/title] [summary]

The success of a course offered by a registered training organisation (RTO) often depends on the demand for that training service in its community.

An understanding of regional employment offerings and skill needs can help an RTO identify opportunities and then provide relevant training to satisfy them.

Identifying training needs

To determine the viability of training services within its area, an RTO needs to consider:

  • What skills do business and industry clients need?
  • What skills to local individuals want?
  • What access problems could they have?
  • What training methods will best suit potential learners?

Being involved in the local community and talking to local employers will help an RTO understand the training that will be valuable to its community. For instance communities with a strong migrant base will have an intrinsic need to develop English language and literacy skills. While communities in wine-making districts across Australia will have a demand for developing skills in viticulture and wine making.

Estimating profitability

An RTO can estimate the profitability of a course and the break-even number of students required for a course’s feasibility by considering the following factors:

  • Fixed costs (rent, electricity, registration and audit cost and other overheads) proportional to the delivery of the course
  • Variable costs or cost incurred per student attending the course (course material, tools, etc.)
  • Course fee or funding obtained per student.

Calculating a break-even point

Although it may seem obvious to most, some businesses forget the simple formula of calculating a ‘break-even’ point prior to supplying a product or service.

You can calculate the minimum number of students required to cover a course cost or the break-even point by the following equation:

Break-even point = Total fixed costs / (Course fee – Variable costs)

For example when are:

  • fixed costs = $6000.00
  • course fee = $1200.00
  • variable costs = $200.00

Break-even point = 6000 / (1200 - 200) =>  6 students

Obviously, as a business,  you will need to also calculate how many additional students you need in that course to make a profit. Decide on the required profits and divide that by the course fee minus the variable cost.

Additional students required =  Required profit / (Course fee – Variable costs)

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