There are many companies who still think using Virtual Reality for training is very expensive. It must be. It is highly innovative technology, long development cycles and hugely expensive hardware. But is that true? Or is there a different side to this story? Are there any returns from VR training investments?
It is a question we often get from clients. And we understand. Although there is more and more research available indicating the superior learning impact of VR, the financial benefit is equally important. Maybe even more important when it comes to persuading other people on your team.
This post debates this financial side of VR training. Although a certain investment always needs to be made when using new tech within your business, could it be a cheaper alternative than what you are doing now? Let's take a look when the returns from investing in VR for training become positive.
Calculating the exact returns for investing in VR training is not an easy task. There are many variables to take into account. Also every situation is unique. And how can you calculate the business impact of the training itself?
In order to calculate returns we need to simplify and compare with a training method that is widely used in organizations today ... classroom training. To simplify we will look at the costs of creating training material, recurring training costs and costs for operational disturbance.
Let's take a look at retail. For example a lifestyle chain with 200 stores and 1000 local sales employees. All these employees go through a full-day sales and customer interaction classroom training once every two years.
The cost of creating training material
Let's assume that the training material for the classroom training is already made. So, no investment required. Creating new VR training scenarios does require an upfront investment. Let's assume we need €100,000 to invest in the creation of multiple VR scenarios to cover everything that is said in the classroom training. This investment is only needed in the first year.
The annual cost of training resources
Besides creating training material, you need resources as well. For the classroom training this is a trainer, location and even traveling expenses. To make the comparison easy, let's only look at the expenses for the trainer. With 20 employees a full-day in a classroom and everyone being trained once in 2 years, you will need 25 training days. Hiring a single trainer for those days will cost you €16,000.
In terms of resources for the VR training you need Warp Studio as a platform and VR hardware. Warp Studio for 1000 employees playing 6 scenarios will cost around €13,500 per year. Purchasing 20 VR Oculus Quests with a depreciation of 3 years, will cost €3000 per year, which brings the VR training to a total of €16,500 per year.
The cost of not working
The last piece of the puzzle is the cost of not working. When your employees are in a training, they cannot directly contribute to the business. Using a €40 internal hourly rate and employees only training once per 2 years, the classroom training will cost €160,000. Assuming the VR training is done 6 times a year and requires 15 minutes per training, the VR training will cost €60,000.
The return on investment
I wrote this post to show the difference of investment when it comes to classroom and VR training. I have simplified by not taking into account things like cost of training material, location hire of traveling when it comes to the classroom training. Actual costs might even be higher.
Also I haven't discussed the operational disturbance. In this example I only used an hourly internal rate and not the cost of production at standstill. When your employees are in training, they can't sell anything. Taking this into account would hugely effect the comparison in favor of the VR training.
And we haven't discussed training engagement and effectiveness. Research indicates training with VR has an improved impact both on the learner and the business.
Adding up all costs will bring the classroom training to €176,000 per year. The VR training requires a first year expense of €167,000, which is about the same. But the following years will only cost you €77,000.
In this example, the return of investing in VR training is reached within the first year. After that moment training with VR will only get more cost-effective.
Are you ready to save money?
Interested in a comparison for your situation? Curious how long it will take when VR training has a positive impact in your company? Contact us and let's work out the ROI of VR training for your organization.
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