University of California, Davis's research examines the cost-effectiveness of an online delivery model that links student learning outcomes with development and delivery costs.
Cost effective aspects of online environment: This study compared how much it cost the university to offer a large undergraduate course in online versus traditional classroom format. Using an instructor time log, costs were measured by the time spent: 1) working with project staff, 2) planning the course, 3) preparing the course for online delivery, 4) delivering the course, 5) interacting with students, 6) evaluating student performance, and 7) training and supervising TA's. The findings from this study revealed that the instructor spent more time on the traditional course than the online (112 hours compared to 107 hours, respectively) and that the overall cost per student who passes the course is less for online courses ($99) than those face-to-face ($105).
The research examined a general education course with 430 student enrollments that was taught by an experienced and effective instructor. A comparable number of students enrolled in the online (N = 411) and traditional versions of the course (N = 429). Using activity-based costing methodology (similar to the "ingredients" method of Levin & McEwan, 2001), the research attempted to capture all of the real costs associated with the two delivery modes.
The start-up costs for the online delivery of the course were around $21K. These costs were amortized over 10 courses (the projected lifecycle of the course based upon the number of offerings per year). The annual maintenance cost of the server was determined to be around $6,600, which also was amortized over the anticipated number of courses offered). While the initial startup costs would remain the same regardless of the number of students enrolled, the findings show that the incremental costs of online courses increase at a much slower rate than traditional course costs.