SDC’s E+I and Skill Development

1. SDC’s E+I and Skill Development Some remarks on costing, pricing and financing Skill Development

2. SDC’s approaches and key mid-term priorities for Skill Development make Skill Development responsive to labour market developments Cooperation between the state, private sectorand civil society costs &financing develop theskills, especiallyof poor people urbanand ruralareas Skill Developmentin rural areas linkingbasic educationand Skill Development constant exchange of experienceamong all stakeholders

3. The purpose of costing • Deciding on resource allocation (human and others). • Justifying bids for external funding. • Strategic orientation of course programmes. • Knowing costs = prerequisite for proper pricing. • Assessing economic viability of Skill Development, a training provider’s programme or individual modules. • Determining fees for trainees. • Etc.

4. Approaches to pricing • Cost-based pricing approaches: • Cost recovery or • Profit-making • Demand-based pricing approaches: • Deciding on the price on what is obtainable at the market, • Sponsor-determined pricing, • Strategic pricing approaches (e.g. market-penetration, politically motivated pricing)

5. The challenges in costing and pricing Skill Development • Costing and pricing of training are often neglected or done “the amateurish way”. • Lack of easily applicable costing instruments suited for providers with little institutional capacity. • Training providers striving for institutional autonomy need to start this exercise with proper costing and pricing.

6. Financing Skills Development: Who pays? government donors public interest businessorganizations communities trainee employer individual interest

7. Fund raising mechanisms private • fees • in-house training • donor funding • etc. mixed • cooperative systems (e.g. apprenticeship) • government incen-tives to companies for training • matching grants • fees + subsidies • etc. public • taxes • levy systems • donor funding • etc.

8. Fund allocation mechanisms • Input-oriented on the basis of costs for “production factors”. • Output-oriented on the basis of delivering an agreed product. • Tenders. • Market-oriented financing through voucher systems. • Subsidies aiming to push interests or a political agenda. • Etc.

9. What E+I does in the areas of costing, pricing and financing Skill Development • Pursuing a holistic approach by combining issues of costing/pricing and fund raising and fund allocation. • Providing information, instruments (esp. cost calculation and pricing) and lessons learnt. • Ensuring that information is shared among all parties involved in costing/pricing and financing. • Advising in the decision-making processes at all levels. • Promoting costing and pricing as instruments for the pro-active management of training institutions.