How can you boost the return on your certification investment? Cut costs, raise rates, andfor the truly ambitiousconsider packing your bags.
The ROI of Certification
How can you boost the return on your certification investment? Cut costs, raise rates, and—for the truly ambitious—consider packing your bags.
- By Harry Brelsford
- June 01, 1999
Its always a pleasure to hear from MCP Magazine
readers about how they acquired their certifications.
While many comments are either tales of woe or success,
many readers provide insights on how they got certified
for far less money than one would expect. Those low-cost
certification strategies dovetail very nicely into this
months column on certification return on investment
Whereas having a high burn rate of venture capital funds
and never making a profit is the legendary stuff of Internet
startups, its not the wisest way to boost your certification
ROI. Furthermore, its not always what you make after
you obtain your MCSE that makes the real difference, but
rather how much you spent to get certified. Its
a new way of looking at the rewards awaiting you as an
Lets take a few minutes to visit the mathematics
of certification ROI. An ROI equation has three variables:
costs, inflows, and duration.
- Costs. These are your
certification costs. They may include course fees, exam
fees, book purchases, and lost wages while studying.
In this example, well assume $10,000 in costs
to get certified.
- Inflows. This is the extra
cash youll make because you are, indeed, certified.
Lets assume that youll enjoy an extra $5,000
per year once youre certified.
- Duration. How long is
the ROI relationship valid? That is, does your certification
have a useful life associated with it? The answer in
this caseyou bet it does! Ill assume the
useful life for the MCSE is four years. Why? Because
after four years its likely youll need to
pursue yet another certification to stay on the cutting
edge of your field as a technology professional.
With all three ROI variables defined, lets perform
an ROI calculation. The ROI formula is:
((Inflows X Duration)
Costs) / Costs
In English, you invest $10,000 and receive an extra $5,000
a year for four years because of your certification investment.
This gives us a 100-percent ROI.
But temper your enthusiasm somewhat with a few facts.
Should you somehow account for the many hours you toiled
to earn your MCSE? Thats bound to reduce your ROI.
And ongoing certification costs, while not overwhelming,
also reduce ROI values. Remember, youll probably
need to take a certification exam every year to maintain
your MCSE designation. And in the world of corporate finance,
theres a thing called time value of money that penalizes
inflows in the future by some rate to account for risk,
inflation, and the fact that said dollars arent
in your hand today, ready to be invested by you. (If you
had all those bucks today, you could buy 10 shares or
so of Amazon.com, right?)
Lowering Your Costs
There are several ways to boost your MCSE ROI. An often-overlooked
way is simply to lower your certification costs. Instead
of attending fancy MCSE classes and running up that $10,000
certification bill, perhaps you could get certified for
$1,000 using video, software-based practice assessment
exams, and free advice from your MCSE buddies. If you
lower your MCSE certification costs to $1,000, your ROI
(based on the same formula) increases dramatically to
1,900 percent. Double-wow! Thats the power of controlling
My example isnt far fetched. In fact, Ive
been routinely scolded by the readership of MCP Magazine
for assuming too quickly that everyone attends expensive,
$1,800-per-week certification classes that result in a
total MCSE certification bill of over $10,000. Such is
clearly not the case. Many of you form study groups to
save money, use a variety of software-based practice assessment
exams, attend online training courses, and the like. Good
for you. Thats good ol millionaire-next-door
behavior, where the lesson learned is that its not
always how much you make, but ratherhow little you
spend! And the best way of all to lower your costs is
to get your boss to pay for your certification. At that
point, your ROI is infinite because you have no explicit
costs in your ROI model. But beware, its now your
boss whos looking for a significant ROI.
Boosting Your Salary
The obvious and popular way to boost your ROI is to either
get a big raise at your existing job or get a new, higher
paying job once youre certified. This strategyimplicitly
glamorized by MCP Magazines annual salary
surveyis great if you can pull it off. But getting
more pay assumes that you can either negotiate successfully
with your current boss or find that next, higher paying
job. The good news is that its being done every
day by MCSEs everywhere. But its inherently a more
risky strategy for boosting your ROI than simply containing
your certification costs.
So, how do you get that raise? If youre a consultant,
its easy. You simply need to show your boss that
you can boost your consulting bill rate. Lets say
the MCSE certification allows you to increase your billing
rate from $80 to $100 per hour. Thats a 25 percent
increase. You now have the argument to approach your boss
for a pay increase at or near said 25 percent increase.
Be advised, however, that bosses like to increase salaries
less than gross bill rate increases to account for write-offs
and other factors. In my opinion, give yourself an A
if you can get a 15 percent increase given this scenario.
There are new trends in the MCSE community that may or
may not affect your certification ROI. One is the increasing
supply of MCSEs. As the supply of MCSEs grows larger,
its likely the average salary enjoyed by MCSEs everywhere
will decline on an aggregate basis. Its not that
you or I will necessarily be making less money. But as
a whole community, the greater the supply of MCSEs, the
lower the average income (remember, were just dealing
with averages here). Same thing happened with Novells
CNE program. Bummer. The supply curve at work again.
But fear not! Dunston, a fellow techhead gentleman visiting
from Africa, came up with the answer: shifting the demand
curve. So far, my assumption takes a domestic
view, or in other words, how does this impact me today
in my city? But this doesnt account for external
factors such as the international community (for example,
Africa). International trade and the like add injections
into our simple MCSE ROI model and result in a shift in
the demand curve. This means a higher demand for your
MCSE services. And when demand is high, the supplier (thats
Huh? Simply stated: Move to Africa to be a practicing
MCSE and make a fortune. Huh, again? Some international
markets are dramatically under-served by MCSE-level talent,
so you can command high fees for your craft there. So
for me, its either stay in Seattle and make a good
living or join Dunston in Africa and make my millions.
What do you think I should do?