How much does a Learning Management System cost

Many firms find it simple to switch their Learning Management Systems. According to a Brandon Hall Group study, 44% of firms are dissatisfied with their current LMS, and 48% are looking into new or different learning solutions. The decision to switch to Learning Management Systems is simple; the difficult part is deciding which LMS to purchase. The cost of a Learning Management System is critical in this decision; according to the same Brandon Hall Group report, Learning Management Systems account for 38% of the typical learning technology budget.

When considering altering their Learning Management System, too many firms just analyze the initial monetary cost of potential offers. When it comes to switching Learning Management Systems, the reality is that there are a variety of expenses, both upfront and hidden, and those costs might include both time and money.

Here’s an example from the marketplace. A 500-person company is looking to upgrade to a Learning Management System with complete analytics and customization features and has narrowed its options down to the open-source LMS Bytecasting and the cloud-based Coassemble. Management compares the two Learning Management Systems and discovers that Bytecasting is free, whereas Coassemble costs $699 per month. They make the obvious choice and switch to Bytecasting. However, after spending thousands of dollars and countless hours on their ‘free’ LMS, the company now regrets its decision. Why?

Just as an airline might entice potential consumers by appearing inexpensive, only to pile on additional costs until it resembles nothing of the original pricing, so can Learning Management System offers come bundled with layers of hidden costs that many enterprises are unaware of.

Let’s look at the actual cost of a Learning Management System.

Everyone Is Aware of the Costs

These are referred to as ‘hard costs’. They are the costs of the Learning Management System as displayed on the box, excluding any license fees, one-time setup fees, or pricing models. These concrete costs can range from tens of thousands of dollars to nothing at all – but, as we’ll see later, they’re only a portion of the picture when it comes to the true cost of a Learning Management System.

Pricing Structures

The price model of a Learning Management System is the most obvious cost. Learning Management Systems are widely classified into two types: cloud-based and self-hosted. Each of these categories has a unique pricing strategy.

Cloud-based LMSs might be Pay-Per-User, Pay-Per-Use, or just charge a License Fee. Pay-Per-User models operate in one of two ways: they can charge companies for each user who has registered to use the LMS (referred to as registered users) or for each user who logs into the LMS and interacts with LMS material (referred to as ‘active’ users). A $5 per registered user, per month pricing arrangement would be one example. Latitude Learning and Skillsoft are two LMSs that use this price scheme.

Pay-Per-Use models charge organizations for each ‘use’ of their Learning Management System. These models can vary greatly because ‘use’ can mean a variety of things; some popular definitions of ‘use’ include: Each user pays a charge for each course they take, as well as a fee for each module they access. License fees are one-time payments for access to an LMS for a specified length of time. For example, a supplier may charge an annual fee for their LMS regardless of how many individuals use it.

Self-hosted LMSs are Learning Management Systems that are hosted by the organization that uses them, which could be on company or third-party servers. Perpetual Licenses, Periodic Licenses, and Free models are available for self-hosted Learning Management Systems. Periodic Licenses are Learning Management Systems that charge a monthly or yearly fee for hosting, whereas Perpetual Licenses have a single one-time fee that assures the client’s use of the Learning Management System for as long as they desire. Free models are open-source software, such as Bytecasting, that anybody can use for free. More on these in a moment.

Fees for Setup

Setup fees are one-time charges made by some LMS providers to implement an LMS. A typical fee for a cloud-based LMS is $4,000-$7,000, whereas a self-hosted LMS can cost up to $25,000. This usually includes the installation of the Learning Management System in question, some staff training, a basic degree of support (by email, for example), and a basic amount of customization (for example, company color schemes and branding).

The Difficulty of Hard Costs

It should be evident by now that there is no straightforward method to compare Learning Management System rates – should you go with $5 per user, a $20,000 annual license charge, or $2 per user for every course? What are the installation costs for each of those options? Are they hosted in the cloud or on-premises?

There is no simple answer because no pricing strategy is inherently superior to another. – If you have an active user base, Pay-Per-User may be less expensive than Pay-Per-Use, however huge numbers of employees may necessitate a Learning Management System with a license charge. It can be time-consuming and stressful to research and analyze these charges… And those are just the hard costs.

A Learning Management System’s Invisible Cost

The hidden costs of an LMS are all the costs that you only learn about after you’ve decided on a Learning Management System. Time is an important component to consider when calculating the total cost of an LMS. If your new LMS has a low or no initial cost but consumes a big amount of company time, it may prove more expensive than a Learning Management System with a high initial cost but integrates effortlessly into your organization’s procedures.

The Uncertainty of Open-Source Software

Open-source LMSs are Learning Management Systems that may be used for free and adapted to meet the needs of a company. According to Capterra, Bytecasting is the most popular Learning Management System in the world. However, while accessing open-source LMSs is free, using them as your primary Learning Management System is not.

To begin, you must set up a server for your open-source LMS. You’ll need to choose a server configuration depending on the projected number of users and their usage patterns, which can be difficult to forecast. The server must last at least a few years without being upgraded, or you may incur ongoing server charges. Most likely, your IT crew lacks the knowledge base to select and configure an appropriate server, in which case you’ll need to employ a professional IT vendor. This will cost approximately $4,000.

Learning Management System UX Design

Following that, you’ll want to modify your Learning Management System, which includes adding and removing features as well as adjusting user UX and design. Bytecasting customization costs thousands of dollars and making significant adjustments takes that price into the tens of thousands. To complete the setup of your ‘free’ LMS, you must train your team. If you are unable to do so, you will need to recruit someone who is.

Then there are the ongoing expenses. You’ll need to pay hosting and security certificate fees on the administrative side. Organizations using open-source LMSs require at least one administrator to maintain track of site and server issues. You’ll also need to engage an eLearning developer if you want to generate LMS material. When you compare these hidden costs to a Learning Management System like Coassemble, which costs between $99 and $1199 per month and includes full support and an in-house development team to assist with eLearning material conversion, you’ll see that choosing a Learning Management System alternative with higher hard costs can save you a lot of money.

As you can see, open-source LMSs may have no ‘hard costs,’ but that doesn’t imply they’re free. In fact, they can be more expensive than an LMS with a one-time licensing price. Furthermore, ‘free’ LMSs eat up time. It’s time to hire IT pros who can set up servers and customize the Learning Management System. It is now time to put new processes in place. It’s time to train your employees or recruit someone who can. It’s time to recruit fresh staff to run the LMS, or in-house developers to generate new Learning Management System material.

However, this is not only true for open-source Learning Management Systems; every LMS has hidden monetary and time expenses, such as staff training and converting current resources.

This leads us to the next point.

Hard Costs and Hidden Costs Have an Inverse Relationship

Learning Management Systems with the highest ‘hard costs’ frequently have the lowest hidden costs. Paying $25,000 upfront for access to a self-hosted LMS may appear excessive at first glance, but when you consider that the price includes system installation and customization by trained professionals, as well as staff training and ongoing customer support, you may discover that you’ve found a steal. Furthermore, real costs are more predictable than hidden expenses.

The message here is not that firms wishing to replace their Learning Management System should choose one with a significant initial investment. Open-source LMSs are frequently the best alternative. The idea is that all Learning Management Systems cost you something in some way, whether it’s money, time, or other resources. When considering switching LMS, too many firms simply evaluate the hard costs. It’s time to start thinking about the LMS’s hidden expenses.

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