Videoconferencing: Cost Justification

Videoconferencing is an exciting new cost-effective way to communicate. Anything that is normally done in a business meeting, excluding reaching out and shaking the hands of the participants at the distant site, can be done over videoconferencing. Videoconferencing has numerous applications such as staff meetings, vendor meetings, distance learning, training classes, telemedicine, court arraignments, and public hearings. All of these applications are different in nature, but all have the same result when properly conducted over videoconferencing. That result is cost savings and increased productivity.

Listed below is a worksheet devised by VTEL Corporation, a major manufacturer of videoconferencing equipment. This worksheet will help you in determining the savings that videoconferencing can produce for your company, educational institution or state agency.

Copyright 1995, VTEL Corporation. All rights reserved.

Meeting Costs
(Wages)		 Conventional
Meetings 		Video-
conferencing
A. Number of meetings per year that involve travel?
600
---
B. Number of meetings that could be videoconferenced
(Usually 50% of A)
300
300
C. Meeting length in hours (Videoconferencing tends to be 20% shorter than face-to-face meetings).
2.5
2
D. Average number of attendees for your company/agency.
4
4
E. Number of attendees who travel. (usually 50% of D)
2
---
F. Average hourly wage of attendees. (salary+benefits/1900 hours)
$20
$20
G. Annual meetings cost. (B x C x D x F)
$60,000
$48,000

Travel Cost
Conventional Meetings
Videoconferencing
H. Number of round trips (B x E)
600
---
I. Average cost per round trip (total travel costs; ground, airfare, meals, and lodging)
$50
---
J. Annual travel cost (HxI)
 $30,000 ---

Lost Productivity Cost
Conventional Meetings
Videoconferencing
K. Average travel time in hours (time to travel to and from remote site).
6
---
L. Percentage of non-productive time while traveling.
100%
---
M. Average traveler wage/hour. (F)
 $20 ---
N. Number of round trips. (H)
 600 ---
O. Lost productivity costs. (K x L x M x N)
$72,000 ---

Videoconferencing Costs
Conventional Meetings
Videoconferencing
P. Hours of Videoconferencing (B x C)
---
600
Q. Equipment/facility costs (P x $20 average cost per hour x 2 rooms)
---
$24,000
R. Transmission costs (P x $50 average cost per hour)
 --- $30,000
S. Videoconference costs (Q + R)
 --- $54,000

Total Costs
Conventional Meetings
Videoconferencing
T. Costs conventional meetings (G + J + O)
$162,000
---
U. Costs videoconferencing
(G + S)
---
$102,000
V. Net savings with videoconferencing (T - U)
 --- $60,000

Explanation of Categories and Formulas

Blank Cost Justification Form