Costing a Classroom-Based OHS Training Programme: The Real Numbers

Pricing a classroom OHS programme is where new Skills Development Providers either build a sustainable business or quietly burn capital. The temptation is to undercut the market on day one, and the cost of that mistake is paid eighteen months later when the cumulative loss exceeds the start-up capital. Realistic costing is the difference between a profitable SDP and a vanity training business that runs at a loss.

Direct costs per learner

• Material - learner guide, workbook, POE template (printed and licensed)
• Catering - tea, coffee, lunch over the course days
• Certification - moderation fees, certificate stock, postage
• External assessment fees where the qualification specifies it
• PPE for practical sessions if not supplied by the host
• Consumables - first aid manikin lung bags, fire extinguisher refills, harness inspection forms, AED training pads

Indirect costs you must absorb into the rate

• Facilitator day rate including travel
• Venue (own or hired) including utilities and load-shedding mitigation
• Equipment depreciation - simulators, manikins, fire trainers
• Quality management overhead - moderation, document control, IT systems
• SDP accreditation maintenance and SETA / QCTO levy administration
• Insurance - public liability and professional indemnity
• Marketing, sales and account management
• Finance, payroll, tax compliance

Worked example: a single first aid level 1 cohort

Take a two-day first aid level 1 cohort with twelve learners as the base case:

• Material licence per learner: R350
• Catering: R220 per learner per day x 2 days = R440
• Certification, moderation share, postage: R280 per learner
• Consumables (manikin lung bag, gloves, share of equipment depreciation): R150 per learner
• Sub-total direct: R1 220 per learner, or R14 640 for the cohort

Indirect costs allocated to this cohort:

• Facilitator day rate: R3 800 x 2 days = R7 600
• Venue: R2 400 x 2 days = R4 800
• Equipment depreciation share: R600
• QMS, accreditation, finance share (allocated): R3 200
• Marketing and sales share: R1 800
• Sub-total indirect: R18 000

Fully loaded cost: R32 640 for twelve learners, or R2 720 per learner. A market price of R2 950 per learner would yield a margin of R230 per learner, or R2 760 for the cohort. A competitor pricing at R2 200 is running at a loss of R520 per learner, regardless of how busy their calendar looks.

The break-even rule

A classroom of fewer than six learners almost never returns positive contribution after fully loaded costs. New providers who quote per-learner without modelling minimum class size end up subsidising every cohort. The single most useful pricing rule for a new SDP is: build the budget at three class sizes - 6, 12 and 18 - and only commit to a per-learner price that holds at six.

SDL, mandatory grants and discretionary funding

South African employers contribute one percent of the wage bill to the Skills Development Levy. A portion of this is recoverable as a mandatory grant from the SETA on submission of an approved Workplace Skills Plan and Annual Training Report. Discretionary grant funding - typically larger and tied to scarce skills priorities - is a separate stream that flows to projects rather than to companies as of right.

SDPs can structure their offering to help clients access these funds. A learnership delivered against a registered occupational qualification, with the learners contracted under the SETA learnership format, can attract discretionary grant funding that meaningfully changes the cost equation for both the SDP and the host employer.

VAT, tax and learner stipends

VAT registration becomes compulsory once your annual turnover passes R1 million. Many small SDPs delay registration past this threshold accidentally; the consequences include backdated VAT liability and penalties.

Learner stipends paid during a learnership are subject to specific tax treatment - the BBBEE-aligned learnership tax allowance under Section 12H of the Income Tax Act offers a substantial deduction for participating employers when the learnership is correctly registered and reported.

Equipment depreciation and write-off

Adult and infant CPR manikins, AED training units, harness sets, fire fighting trainers and audio-visual equipment all carry capital cost that should be amortised across cohort revenue. SARS allows depreciation in line with normal asset rules; the practical accounting treatment is to charge a per-cohort allocation that recovers the full cost over the asset's expected useful life.

Software and technology costs

A modern SDP runs on at least three software systems: a learner management system, a finance and payroll package, and a document control system for the QMS. Annual software cost is typically R30 000 to R80 000 for a small SDP. Underbudgeting this category is common and creates operational drag.

Pricing strategy beyond direct cost-plus

The cost build is the floor, not the ceiling. Premium pricing reflects brand, response time, customisation, on-site delivery, post-training support and BBBEE rating. Volume discounts make sense for guaranteed annual cohort numbers. Discounting a one-off tender to "win the relationship" rarely pays back unless there is a genuine pipeline behind it.

Scenario-test before you publish

Build the budget at the three class sizes mentioned earlier and stress-test the result against:

• A 25 percent increase in venue cost
• A 15 percent shift in facilitator day rate
• A 10 percent loss-leader discount
• An unexpected travel charge for an out-of-town delivery

If the price still holds positive margin under these stresses, it is a defensible market rate. If not, refine the cost base before committing to a published price.

For a worked example with current South African market rates and a cost-build template, Intrasafe published a full costing breakdown aimed at new SDPs.