How can you boost the return on your certification investment? Cut costs, raise rates, and—for the truly ambitious—consider 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

It’s 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 month’s column on certification return on investment (ROI).

Whereas having a high burn rate of venture capital funds and never making a profit is the legendary stuff of Internet startups, it’s not the wisest way to boost your certification ROI. Furthermore, it’s not always what you make after you obtain your MCSE that makes the real difference, but rather how much you spent to get certified. It’s a new way of looking at the rewards awaiting you as an MCSE.

ROI Mathematics

Let’s 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, we’ll assume $10,000 in costs to get certified.
• Inflows. This is the extra cash you’ll make because you are, indeed, certified. Let’s assume that you’ll enjoy an extra $5,000 per year once you’re 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 case—you bet it does! I’ll assume the useful life for the MCSE is four years. Why? Because after four years it’s likely you’ll 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, let’s 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? That’s bound to reduce your ROI. And ongoing certification costs, while not overwhelming, also reduce ROI values. Remember, you’ll probably need to take a certification exam every year to maintain your MCSE designation. And in the world of corporate finance, there’s 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 aren’t 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! That’s the power of controlling your costs.

My example isn’t far fetched. In fact, I’ve 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. That’s good ol’ millionaire-next-door behavior, where the lesson learned is that it’s not always how much you make, but rather—how 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, it’s now your boss who’s 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 you’re certified. This strategy—implicitly glamorized by MCP Magazine’s annual salary survey—is 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 it’s being done every day by MCSEs everywhere. But it’s inherently a more risky strategy for boosting your ROI than simply containing your certification costs.

So, how do you get that raise? If you’re a consultant, it’s easy. You simply need to show your boss that you can boost your consulting bill rate. Let’s say the MCSE certification allows you to increase your billing rate from $80 to $100 per hour. That’s 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.

Future Returns

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, it’s likely the average salary enjoyed by MCSEs everywhere will decline on an aggregate basis. It’s 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, we’re just dealing with averages here). Same thing happened with Novell’s CNE program. Bummer. The supply curve at work again.

Dunston’s Tip

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 doesn’t 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 (that’s you) profits.

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, it’s 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?