Pricing of assessment.

By christophersharpe, 14 August, 2009

Herewith my thinking on the assessment pricing topic. I hope that posting a seperate blog rather than a reply is not poor web etiquette, something in which I am unschooled!

In the context of professional services I believe that pricing has to be based on cost as opposed to concepts such as “what the market will bear”, which is essentially where the discussion seems to be right now. Prices per credit/unit standard etc, although genuine attempts to find a rational basis for pricing, are essentially educated guesswork.

I have mostly been a “price taker”, in other words the client has offered an amount which I have accepted or rejected. This latter approach is fine as long as the scope of work and terms of payment are clearly defined and adhered to. In my experience this has often not been the case and the additional expense one may have to incur in order to fulfil ones obligations may make the whole effort less than worthwhile. Poor practice prior to portfolio preparation may badly impact our initial estimate of how long the project might take. Never forget that as assessors we have obligations to the learners, so there is no “bailing out” of the task. (Unless in extreme cases).

There are two main points of view in any pricing exercise; provider and client;

The real issue as far as I am concerned, as a provider, is, am I paid a fair hourly rate for the task? Also, am I recovering the incidental expenses arising out of the process? For example, travelling and transport costs, postage, couriers, collections, delivery, telephony etc, all may arise directly from a project.

Clients are of course not interested in the minutiae of service provider costing, they merely require a price that is realistic, all inclusive and reflects the agreed expected service level outcomes.
So, before we can arrive at a price we need to establish a cost. Certainly each of us has differing needs, expectations and circumstances. In my view however there is no better basis for pricing than starting with a realistic assessment of one’s own “business cost per hour”.

For example:
Annual income required: Rx divided by number of hours available for work = basic rate per hour.
Include in your income requirement the cost of assets you use in your profession. Don’t forget taxation! I won’t go into detail here; this post is already too long!

Take account of: sick days, vacation, public holidays etc. Consider that there will be un-billable hours as well, waiting, travelling, canvassing, CPD hours, etc. The real number of hours available for production may be much less at this stage; hence the basic rate must be increased. Accounting for direct variable expenses is problematic too since they can only be roughly estimated before the fact. On top of the basic rate one should then add a “margin” in the same way that a trading business does. This quantum is another one for educated guesswork.

This simplistic exercise is only a start. Practical experience will inform more refined costing and hence pricing.

After this exercise I would venture that the gap between the lowest and the highest of us in terms of “business cost per hour” will be pretty large! This creates a great deal of uncertainty for all concerned and does nothing to assure high levels of professional practice.

As an aside, I have been dismayed to see how little value is sometimes attached to various skills development practices, judging by some of the advertisements on Skills Portal and elsewhere. An example: the advertiser (outside the major centres) wanted a facilitator/assessor. The likelihood of finding a local resident was minimal. The fee offered was R500 per day; travelling, meals and accommodation were for the “successful” candidate’s account! Most of us I'm sure would not even cover expenses at that rate.

Back to principles, I do believe that the profession should establish a uniform price structure. I believe that the basis should be an hourly rate. I believe it should be possible to arrive at a reasonably accurate estimate of how long it should take to assess any given set of outcomes in the same way that NQF credits are based on notional hours of learning. Assessment design should include estimation of assessment time required. Assessors taking more or less time to do the work, within reason, should impact the individual assessor only; there will be much variation depending on numerous factors. I believe that professional assessors should compete for business only on the bases of subject matter expertise, professional service delivery and availability, not on price. The inverse relationship between price and quality is well known, and in this field of endeavour we are striving for quality outcomes!

Lastly, the ball is in our court. No one else will, or even should, set rates for us. I hope we are all on the same page, wanting to see high quality, uniform, transparent professional assessment practice, insulated from the enormous pressure that can be brought to bear on individual practitioners by powerful conflicting interests. I’m very pleased to note the efforts taking place right now on this site at establishing the NAETDP, or whatever its name eventually becomes.



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