Cost Of A Learning Management System – For a lot of businesses, it is not difficult to decide to switch their Learning Management System.
Research conducted by the Brandon Hall Group reveals that 44% of organizations are not satisfied with their current Learning Management System (LMS).
Additionally, 48% of organizations are actively searching for new or alternative learning technologies.
Choosing a new Learning Management System (LMS) is a simple decision, but it becomes difficult when trying to pick the specific LMS to purchase.
The main factor in making this decision is how much a Learning Management System costs.
According to research by Brandon Hall Group, Learning Management Systems make up 38% of the average learning technology budget.
Many businesses only think about how much money they have to pay at first when deciding to switch their Learning Management System.
Switching Learning Management Systems can be expensive and time-consuming due to various upfront and hidden costs.
Here is a simple example from the market. A company with 500 workers wants to improve their Learning Management System.
They want a system that can track progress and be customized. They are considering two options: the open-source LMS Moodle and the cloud-based Coassemble.
The managers compare two Learning Management Systems and find out that Moodle is without charge, while Coassemble requires a monthly payment of $699. They make the smart choice and switch to Moodle.
After several months, the company realizes that choosing a ‘free’ LMS costs them a lot of money and time that they now regret spending. Why are you asking?
Learning management systems can trick people by advertising low prices and then charging more and more fees.
This can end up being very different from the original price, just like when airline tickets seem cheap but then cost a lot more with added fees.
Many organizations don’t realize that learning management systems also have hidden costs.
The Known Cost of A Learning Management System
These expenses are commonly known as “hard costs”. This is the price of the Learning Management System as stated on the box – it includes any fees for using it, fees for setting it up once, and how the pricing is calculated.
These costs can be very expensive, or they can be free. However, there are other factors to consider when calculating the total cost of a Learning Management System.
The price you see for a Learning Management System is the most obvious expense.
Learning Management Systems can be divided into two main types: those that are stored on the internet (cloud-based) and those that are hosted on your own computer. Each group has its own way of determining prices.
Cloud-based Learning Management Systems can charge users based on how many people use the system, how often they use it, or just a one-time fee. There are two ways that Pay-Per-User models work.
The first way is by charging organizations for each user who signs up to use the LMS.
The second way is by charging organizations for each user who not only signs up but also logs into the LMS and interacts with the LMS content.
A simple pricing system example could be $5 for each person who signs up, every month.
Latitude Learning and Skillsoft are two learning management systems (LMSs) that use this pricing model. Pay-Per-Use models means that organizations have to pay every time they use their Learning Management System.
These models can be very different because ‘use’ can mean many things. Some examples of what ‘use’ can mean are: paying a fee for each person who uses a course, and paying a fee for each person who uses a module.
License fees are fees that you pay once to be able to use an LMS for a certain amount of time. For instance, a provider may ask for a yearly fee for their LMS regardless of the number of users.
Self-hosted LMSs are Learning Management Systems that the organization using them hosts themselves. This can mean that the systems are hosted either on the company’s servers or on servers provided by a third-party.
Different pricing options are available for self-hosted Learning Management Systems. These options include Perpetual Licenses, Periodic Licenses, and Free models. Periodic licenses are when you have to pay each month or year to use a Learning Management System.
Perpetual licenses are when you pay a one-time fee and can use the Learning Management System for as long as you want. Free models are software programs that are similar to Moodle, and can be used by anyone without any cost at the beginning.
Complex Hard Costs
It is hard to compare prices for Learning Management Systems because there are different factors to consider. For example, you could choose to pay $5 per user, have an annual license fee of $20,000, or pay $2 per user for each course.
It is also important to know the setup fees and whether the systems are cloud-based or self-hosted.
There is no simple answer because one pricing model is not necessarily better than another. Pay-Per-User can be cheaper than Pay-Per-Use if you have active users, while a large number of employees may require a Learning Management System with a license fee.
Studying and examining these expenses can take a lot of time and be very frustrating. And that’s only the actual expenses.
Setup fees are fees that LMS providers charge to install an LMS. These fees are paid only once.
A cloud-based LMS usually costs between $4,000 and $7,000, while a self-hosted LMS can cost up to $25,000.
This usually involves getting the Learning Management System ready, training the staff, providing basic support through email, and making basic customizations.
Learning Management System: The Hidden Cost
The hidden costs of an LMS are the extra expenses that you only discover after selecting your Learning Management System.
One important thing to think about when considering the overall cost of an LMS is how much time it takes.
If your new learning management system (LMS) doesn’t have an upfront cost, but requires a lot of time and effort from your company, it might end up being more costly than a LMS that is expensive but integrates easily with your organization’s workflow.
Let’s use the free, open-source pricing model as an example:
Open-Source Software and its Precarious Nature
Open-source LMSs are free Learning Management Systems that can be changed to fit what an organization wants.
One example is Moodle, which is the most popular system for managing learning around the world, as stated by Capterra.
However, even though open-source learning management systems (LMSs) may not cost anything to access, using them as your main LMS still has associated expenses.
First, you have to prepare a server for your open-source learning management system (LMS).
You have to choose a server setup based on the number of users you expect and how they will use it. This can be difficult to predict.
The server should work for a few years without upgrades, otherwise, you will have to spend money on the server again and again.
Your IT department may not know how to choose and set up the right server, so you may have to hire an expert IT vendor. This will cost about four thousand dollars.
Next, you’ll want to personalize your Learning Management System – this means modifying and deleting features, as well as adjusting user experience and design.
Modifying Moodle to suit your needs can be very expensive, with basic changes costing thousands of dollars. If you require significant modifications, the cost can go up to tens of thousands of dollars.
To complete the process of getting your free LMS ready, you will have to teach your employees. If you are unable to do it by yourself, then you will have to find and pay someone who can.
Then, there are the ongoing expenses. To run the website, you have to pay for hosting and security certificate.
For organizations using open-source LMSs, they need to have at least one person in charge of fixing problems with the website and server.
If you want to make any LMS content, you have to hire an eLearning developer too.
If you compare the secret costs to using a Learning Management System like Coassemble, which costs between $99 and $1199 per month, and offers support and a team to transform eLearning materials, you will see that selecting a Learning Management System option with higher upfront costs could actually save you a significant amount of money.
As you can see, open-source LMSs may not require upfront payment, but that doesn’t mean they’re completely free.
Actually, they can end up costing more money compared to an LMS that has a one-time fee for a license.
Additionally, “free” LMSs take up a lot of time. We need to find professionals who can set up servers and make changes to our Learning Management System. It is now time to start using new methods. It is time to teach the employees or find someone new to hire who can do the job.
It is time to bring in new staff to manage the Learning Management System (LMS), or hire developers who can make new content for the LMS.
However, this doesn’t only apply to open-source Learning Management Systems. Every LMS has hidden costs in terms of money and time, like training employees and converting existing materials.
Hard Costs VS Hidden Costs: Their Inverse Relationship
Usually, the Learning Management Systems that cost the most upfront have the fewest additional expenses. Paying $25,000 in advance to use a self-hosted learning management system may seem expensive at first.
But when you realize that this includes getting help from experts to install and adapt the system, as well as training for your staff and ongoing customer support, you might discover it’s actually a great deal
. In addition, it is easier to predict the exact amount of money needed for hard costs compared to hidden costs.
The main idea here is that organizations should not choose a Learning Management System based solely on its expensive price tags. Usually, open-source LMSs are still the top choice.
The main idea is that all Learning Management Systems require some kind of payment, time, or other resources from you. Many businesses only think about the basic expenses when deciding to change their Learning Management System (LMS).
It’s time to start thinking about extra costs that are not obvious in the LMS equation.