Four distinct components make up the price of a SaaS based LMS:

  • Set-up Costs
  • Licensing Costs
  • Hosting Costs
  • Additional Costs

When licensing an SaaS based LMS, it is important to note that the pricing of these four components is flexible, and by making certain tweaks and adjustments, the pricing of your LMS can be altered.

LMS final Pricing

However, there is a prevalent confusion with regards to the cost involved in setting up an LMS. Too many businesses only consider the up-front costs when looking at investing in learning management systems. In reality, LMS cost both time and money, and calculating the actual cost of a Learning Management System can be rather complicated. Basic knowledge about LMS pricing models isn’t enough. To understand LMS costs, companies must know about costs other than the license fee.

understand the lms cost

While buying an LMS, companies sometimes have a similar experience to that of someone buying cheap airfare. The initial cost appears to be nominal, but you later realize that there is a heap of hidden charges which drastically increase the total price. An LMS comes bundled with layers of other costs that many companies may not see coming.

Here’s a list of all the costs involved in the LMS equation:

1.Fixed Costs

These costs include licensing fees, one-off setup fees, or pricing models.

Licensing Fees   Licensing Fees

This can range from thousands of dollars to barely anything or even nothing at all. And, contrary to what most buyers believe, they only form a nominal part of the equation when it comes to the actual cost of an LMS.

Pricing Model   Pricing Model

This is the most visibly prominent cost of a Learning Management System. A SaaS-based LMS can be split into one of two categories: Cloud-based, and self-hosted. Each of these has different pricing methods.

pricing model

Cloud-based systems can be Pay-Per-Use, Pay-Per-User, or could charge a License Fee.

Pay-Per-Use models charge companies on a per-use-basis i.e., each time they use the LMS. These models can range wildly as their definition of ‘use’ can mean many different things. For example, they could charge each user for each course, or each user for every module they access.

Pay-Per-User models work in two ways. They could charge companies for every user registered to use the LMS, or for every user that logs into the LMS and makes use of the LMS content.

Self-hosted LMSs are hosted by the company using them. This means they are hosted on the company or a 3rd party server. The initial set up cost will have to factor in the cost of the hardware that the LMS would reside on -the servers, disks, and the network elements. Choosing these configurations will be based on your expected number of users and their usage patterns. In case your IT department does not have the knowledge to pick and set up an appropriate server, then you will need to tie up with a professional IT vendor. Put together; all this amounts to a substantial cost.

Pricing models for these types of LMSs comprise Perpetual Licenses, Periodic Licenses, and Free models.

Periodic Licenses involve a monthly/yearly charge for hosting. Perpetual Licenses have a one-time cost that warrants the use of the LMS for as long as the company needs it.

Free models are about open-source software that is available to anyone, with no up-front fee.

Set-up Fees   Set-up Fees

Set-up fees are one-time payments that certain LMS providers charge to install an LMS. This fee covers the set-up of the LMS, staff training, basic support, and some customization. The set-up fees for a self-hosted LMS is usually higher than that of a cloud-based LMS.

The customization you will need to factor in would have to include the integrations with your enterprise systems for managing your employee training and other HR MIS systems. This is also the place to consider the technology needs your LMS will have to serve. Will your employees need to access the courses over the phone? Will your LMS allow that? Are there other localization requirements—like language or other standards? You would also need to factor in a cost for securing the employee data and the training content that the LMS will be hooked up to.

2.Hidden Costs

What about the costs that you are probably missing out in your calculations?

One of the critical factors to examine when looking at the holistic price of an LMS is your time. If the LMS chosen by you has little or no upfront costs but requires a substantial time investment, then it may end up being more expensive than an LMS with high fixed costs.

hidden cost

Let’s take a look at an example of Open Source LMSs.

example lms

While an open-source LMS is free, setting it up and using it is not. Even an open source LMS can have costs associated with them if you seek specific customizations, professional installati9on, and maintenance support.

An LMS brings with it several costs. Getting your training content ready will be one of them. This will be the case even if you are migrating from an older LMS to a newer one.

You will incur network and communication costs as your employees access the LMS and the courses that reside there. The larger the number of the employees and the volume of the courses, the higher this cost will be.

Conclusion

All Learning Management Systems cost you in some form or the other. Some will cost you in terms of money, while some with time, and other resources. Businesses often only tend to consider the hard costs when looking at investing in an LMS. However, to maximize the benefits and ensure a good ROI, they need to understand the choices better and to factor in even the hidden charges.

We have also deconstructed our pricing plan for our audience. Our LMS follows a SaaS-based licensing plan.  You can watch the webinar recording here. Contact us to know more about our pricing. Reach us at contact@abaralms.com or click here and we shall get back to you shortly. We also create eLearning courses for your new LMS. Reach us at contactus@enyotalearning.com or click here to get started with your new eLearning courses.

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