Cost of an Enterprise LMS. What is a Fair Price?

“Pricing is the exchange rate you put on all the tangible and intangible aspects of your business. Value for cash” –Patrick Campbell.True, right? When we say ‘pricing,’ you should know that it applies to your company’s segment. And this applies to your Learning Management System as well. An LMS is a considerable expense, which MUST yield good. Return on Investments Although learning drives innovation, growth, and taps into unrealised revenues, it does have a price tag!

But why to fear when we are here? First and foremost, let’s get this fact straight. Moving to an online learning platform always has a positive impact on your L&D budget. However, before considering the long-term cost benefits, we understand that you would be concerned about the upfront costs. And the first-time implementation price of an LMS does indeed seem intimidating.

Now, here are some wise words. Before you begin to panic after glancing at the numbers, take a step back and analyse your existing costs, incurred due to current problems. Therefore, how to get started? First up, figure out the costs associated with the current issue. Secondly, calculate the expenses incurred in implementing the new solution. When you have both these figures on paper, it will be much easier to convince your management. Once you have identified the tangible expenses connected to your current model, it’s simpler to browse through the different LMS platforms — and pick one that best suits your needs.

Start by asking these questions. If you invest in a new corporate training program, how much additional revenue can you draw from your clients? What’s the current turnover rate – thanks to low engagement and a poor user experience? How much cash do you lose when you lose an employee or partner? What’s the time consumed in administering this platform each week. The total hours include enrollments, reporting, creating content, uploading content, sending notifications, and sending out materials, among others?

Once you have the answers to all of the questions mentioned above, you should see if an automated learning program will solve them. Each of the aspects, as mentioned earlier, has revenues attached to them. Hence, you should take them into account while deciding how much to spend on LMS software. A thorough cost analysis of the problem is necessary before you go ahead and check out the cost of LMS.

Each LMS vendor provider follows a distinct pricing model based on the number and complexity of features. For instance, the pay-per-user model demands users to pay for the corporate learning platform regularly — whether they use it or not. On the other hand, pay per registered user models, as the name suggests, follow a similar pricing structure as SAAS AKA Cloud LMS space. What happens here is, organisations need to pay for the LMS according to the number of users who have a login and password. However, it does not necessarily mean that all of the users are consuming the content.

Finally, the pay per active user model is the most economical cost of LMS structure. Why? It only demands payment for the people who use it. Yes, the LMS pricing models differ, depending on the vendor. And you can understand the costing structure by looking at the billing cycle or charge per month per active user.

Finally, when you calculate the cost of LMS, have a look at the agreement length — which usually ranges from one to five years. We would advise you to seek the middle ground, i.e. a three-year-contract — since a shorter-term translates to a price increase soon. Again, a longer-term is recommended when you have full fa ith in your vendor and want to develop a lasting partnership. Summing it up! Since you now have a detailed understanding of the different pricing models and added costs, it is time to kickstart the shopping process. All the best!