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Training Budget Guide: How to Create & Allocate a Training Budget
Training is necessary within any company, but it comes with a price tag. To prevent overspending, it’s important to set aside a reasonable dollar amount for training purposes. But how do you create this number? And how much should you really be spending? Use this training budget guide to learn how to create and allocate a training budget that works for your needs.
HRDQ offers a fully customizable virtual training library, so you can provide specialized training content to your team no matter where they are. Explore the Reproducible Training Library.
Choose your Training Method
Before you start budgeting, you should be aware of the costs of in-person training versus online training:
Here are some costs that in-person training usually includes:
- Training material costs. All training requires you to purchase materials to help you design and guide the session.
- Classroom costs. If you don’t have room in your office for training, you’ll have to pay for a classroom venue.
- Travel costs. You likely will have to pay for participants to fly, drive, or be transported to your training location.
- Accommodations cost. If employees are traveling to your classroom venue from far away, you may have to pay for their accommodations.
- Catering costs. Whether you’re hosting training over the course of one or a few days, you’ll need to provide meals or snacks for your participants.
- Printing costs. Printing out your training materials for a large number of people can add up quickly.
The cost of online training requires a one-time purchase fee for your training materials. How much that fee will be depends on the type of training you’re delivering, how much content you need, and if you require a professional trainer. However, as long as your employees are already set up with their company computers, this is the only cost associated with online training.
You can also include more people in virtual training sessions, because there’s no size restriction, room limitation, or other physical factors that would affect how many people can join a class. Because of that, you can typically lower price-per person rate. There are so many benefits to virtual classroom training, especially cost savings.
How to Calculate Your Training Budget
Here are three ways to help you determine how much money your company should allocate towards training per year:
Budget Based on Total Dollar Amount Spent on Salaries
Take the following steps to create a training budget based on total money spent on salaries:
- Identify how much money is spent on total salaries per year.
- Multiply that amount by 1% to 3%. This percentage represents the size of your company or industry. However, if you know that your company successfully dedicated 2% of salary costs on training the previous year, you can use that same percentage.
- This calculation will provide you with your total training budget. Calculating your budget this way will ensure you’re investing a strategic amount back into your employees and company.
Budget Based on Industry-Specific Employee Salaries
Another way to create your training budget is by basing your calculation on industry-specific employee salaries. If you’d like to use this method, take the following steps:
- Research the average salary per employee for your specific industry. Get this information from a reputable report within your industry to gather data from companies of similar size.
- Multiply that amount by Full-Time Equivalents (FTEs). FTEs represent the hours worked by a single full-time employee.
- This calculation will provide you with your total training budget. Calculating your budget this way will ensure your training strategies are aligned with industry trends and competitive enough to keep up with the talent market.
There isn’t a set formula for calculating your budget on a needs-basis. Instead, you simply need to think through how much each line item for training will cost. For in-person training, this includes the above-mentioned items, such as training materials, venue, transportation, and more. For online training, this only includes the training materials.
The best situation to create a budget based on needs is when your company has identified their needs ahead of time, such as before the start of a new year. These needs should also already be backed by a strategic approach. This is because planning a budget this way takes significantly more time to research and calculate.
Start Virtual Training with HRDQ
We hope this training budget guide has helped you learn how to create and allocate a training budget that works for your needs. At HRDQ, our live, instructor-led virtual training allows your team to complete sessions and workshops no matter where they are. These collaborative and intuitive programs will help your employees stay engaged, retain valuable information, and function as productively as ever, all while saving you time and money. If you’re ready to experience the power of online training, view our virtual classes to get started!