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Andrei Li
34,475 PointsWhat is the value that Treehouse give us?
While having a little rest after another portion of lessons I decided to calculate some numbers.
What is the Net Present Value of the courses that Treehouse give us?
Let's start: Average world salary of the programmer including countries such as China, Russia is around 40 000.
Discount rate - is calculated by Arbitrage Pricing Theory and consist of: 1) World risk. WWIII and so on. Let's take it as 4% 2) Country specific risk. Average is around 5% including emerging markets and not forgetting about Zimbabwe. 3) Company risk. Risk of Treehouse's business. Let's take it as 2%. Very low. 4) Individual risk: a) fall from table and break the leg and not being able to use Treehouse. Let's take it as 1%. b) educational risk: risk of not getting what teacher has said. Let's take it high 15%. Summarizins. numbers and it gives us 27%.
Multiplication factor: 1/27% = 3.7
Let's assume that we are going to study 1 year: 25$ * 12 = 300 USD and are going to pay for the subscription forever.
40 000 - 300 = 39 700 USD
39 700 * 3.7 = 147 037 USD. It's value that Treehouse courses give us.
Correct me if I am wrong.
4 Answers
Zac Mazza
5,867 PointsI like the formula you used to calculate the value Treehouse gives. I'd challenge you to expand your scope to include other 'opportunities' that are made available that enable the value to exceed a direct dollar-for-dollar comparison.
For example, I've been working on a NodeJS REST server at work, and while it works, I've run into a few things that are having me pull out my hair. I just watched a workshop on NodeJS debugging. While it's provided some great resources on how to debug my application, it's also jump started my brain on other potential opportunities. Now I've discovered a wealth of NodeJS resources that I can use as a result. While the video provided 'x' value, it also had further implications and benefits that are harder to tie down to a tangible value.
Consider also the community - which is dynamic, or the Techdegree space (which also has a significantly higher cost, but using the comparison above, also has a considerable return).
All-in-all, the value above represents significant value, but I'd argue that the value extends far beyond the tangible comparisons that could be made.
Good discussion point. Thanks Andrei!
Zac
Andrei Li
34,475 PointsAll can be expressed in numbers. Just add your bonus that your boss gave you to the formula and recalculate it. Also additional value can be expressed in numbers. You can multiply your saved time by salary in hours. Add it to the formula.
Zac Mazza
5,867 PointsThose are good suggestions, but there are likely other factors driving the results as well. For example, a bonus may be calculated based on a performance rating, where additional training may not be a factor. Becoming a better programmer through training and practice make me a better programmer, but it would be difficult for most to tie them back directly to the results of watching x number of videos although gaining knowledge would be likely by doing so. Did I gain the additional results from watching a video? Or through my own training and application? How do you separate the two without having a pre-training data set?
Time saved and bonuses are both subjective based on a wide variety of factors. One way the value of Treehouse could be calculated is by having data available before and after taking the courses, and being able to identify a direct correlation between a workshop viewed, a class taken, or an exercise completed and a unit of work. Having that data would allow you to trend the data to see performance gains, time saved, and more. Not having that makes it more subjective, though.
I'm not an economist - so please forgive me if I use the wrong terms. We know the 'sunk costs' or 'investment costs' as they are the cost of the subscription per month, whether $25 or $50 dollars. What are your methods for calculating the value of opportunities gained - such as networking contacts, results at work, or completion of freelance projects?
Ultimately, I know Treehouse provides great value. This discussion has made me begin to consider the value I'm getting of time invested not only in Team Treehouse but other avenues of learning as well. :-)
- Zac
Andrei Li
34,475 PointsIf you are smart and don't get money. Then the value of this knowledfe is zero. But it's not true. You have to use DCF model with appropriate discount rate to get your potential benefits from knowledge in money terms. For example, you are great JavaScript developer at a company X but company X doesn't need this knowledge. You are just smart. Company Y needs this knowledge and pays more. So you get potential profit and discount it with a discount rate that reflects "risk" of getting to this company Y. 30 000 is the number that you will receive additionally if you go to company Y. Discount rate is about 10% as you are very qualified developer, So, 30 000 / 10% = 300 000 = it's an additional benefit that you will receive from your additional knowledge.
All can be converted in money. And your benefits. I don't like when people say invaluable. I valued about 20 000 companies and I was pretty precise about the future of the price of the particular company and market overall because I valued the inmeasurable things. This number approach I apply to the marketing, HR (salary and bonus payment). All in numbers.
I answered almost all your questions. Opportunites are measured the same way. Potential profit/Discount rate.
I did a small reasearch about other educational platforms but Treehouse goes first. When I started I was surprised by the technology but then I started to see small things. After one teacher ("Dava McFarland") I understood many things in a simple way. He made a new standard for me for Treehouse courses. And these standards are pretty high.
So other platforms. on one platform there no console to code, another is full of amateurs trying to teach, yet another dosen't have a point system. One service got my attention but I wouldn't mention it's here. So, not bad. Just attract the customers you have somthing to sell.
Finally, all invaluable things, can be put in numbers. At the moment, I rank Treehouse very high but there are things that the company and management should work on.
Zac Mazza
5,867 PointsGreat reply, thank you very much Andrei for taking time to add the detail that you did. Thanks for doing this analysis!
stjarnan
Front End Web Development Techdegree Graduate 56,488 PointsI'm not sure if I have a lot to add to the subject, but I would like to say that I have read many of your posts Andrei, and I am super impressed.
You always seem to analyze things one step further than most people do, and that is really impressive to me!
Jonas
Andrei Li
34,475 PointsThank you for a warm comment! When I was in New York one man was trying to get up falled fence in the center of the city and he said to me: "Let's make this a better place". And I thought in my country if building collapses nobody cares. But here are the people who cares about society, about the city. It's not so bad in my country now but there were times. Let's make Treehouse a better and more interesting for students.