When it comes to switching Learning Management Systems, too many companies just consider the upfront expenditures.
However, every LMS costs both time and money and determining the true cost of a Learning Management System can be difficult. Here’s why hidden costs should be factored into the LMS calculation. In this article, I have shared “The True Cost Of A Learning Management System”.
In which LMS platform should you invest your time and money? This review will tell you more about it
Contents
A Look At The Real Cost Of A Learning Management System
Changing a Learning Management System is a simple decision for many firms. According to a Brandon Hall Group study, 44% of firms are unsatisfied with their current LMS, and 48% are looking into new or different learning technology.
The decision to switch Learning Management Systems is simple; the difficult part is deciding which LMS to purchase.
The cost of a Learning Management System is also important in this decision; according to the same Brandon Hall Group study, Learning Management Systems account for 38% of the typical learning technology expenditure.
When opting to alter their Learning Management System, too many firms just evaluate the up-front monetary cost of potential offers.
When it comes to switching Learning Management Systems, the reality is that there are several costs, both upfront and hidden, that must be considered. These costs might include both time and money.
Here’s a simple market illustration. A 500-person company wants to upgrade to a Learning Management System with complete analytics and customization possibilities, and they’ve narrowed their choices down to the open-source LMS Moodle and the cloud-based Coassemble.
Management compares the two Learning Management Systems and discovers that Moodle is free, whereas Coassemble will set you back $699 per month. They make the rational decision to migrate to Moodle.
However, months later, the corporation laments its decision after spending thousands of dollars and countless hours on their “free” LMS. Why?
Learning Management System solutions can come bundled with layers of hidden charges that many firms don’t see coming, just like an airfare can entice potential clients by appearing inexpensive, then pile on added cost after added cost until it resembles nothing like the initial pricing.
Let’s look at how much a Learning Management System really costs.
The Costs That Everyone Is Aware Of
These expenses are referred to as ‘hard costs.’ They include any license fees, one-time setup fees, other pricing models, as well as the cost of the Learning Management System as displayed on the box.
These tangible costs can range from hundreds of dollars to nothing at all, but as we’ll see later, they’re only one part of the picture when it comes to the true cost of a Learning Management System.
Models of Pricing
The price model of a Learning Management System is the most obvious cost. Learning Management Systems can be categorized into two types: cloud-based and self-hosted. Different price systems apply to each of these groups.
Pay-Per-User, Pay-Per-Use, or a License Fee can be charged for cloud-based Learning Management Systems. Pay-Per-User models function in one of two ways: they can charge businesses for each user that registers to use the LMS (known as “registered” users) or for each user who logs in and interacts with LMS material (known as “active” users).
A monthly fee of $5 per registered user is an example of a pricing scheme. Latitude Learning and Skillsoft are two LMSs that use this price scheme.
Pay-Per-Use models charge businesses for each time their Learning Management System is used. Because ‘use’ can signify many different things, these models can vary greatly.
Some frequent 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 that allow you to use an LMS for a specific length of time. For example, regardless of how many individuals use their LMS, a supplier may charge a yearly fee.
Self-hosted LMSs are Learning Management Systems that are hosted on business or third-party servers by the organization that is employing them. Perpetual licenses, periodic licenses, and free models are all available for self-hosted Learning Management Systems.
Perpetual Licenses have a single one-time payment that assures us of the Learning Management System for as long as the client requires, whereas Periodic Licenses have a single one-time cost that guarantees the use of the Learning Management System for as long as the customer requires.
Free models are open-source software like Moodle that are available to everyone for no cost upfront. These will be discussed further down.
Fees for Setup
Some LMS providers charge setup fees as a one-time payment to implement an LMS. A cloud-based LMS typically costs $4,000-$7,000, while 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 (for example, via email), and a basic amount of customization (for example, company color schemes and branding).
Hard Costs Are Complicated
It should be evident by now that comparing Learning Management System pricing is impossible – should you pay $5 per user, $20,000 for an annual license, or $2 per user per course? How much does it cost to set up each of those options? Are they self-hosted or cloud-based?
There is no simple answer because no pricing strategy is inherently superior to another. – If you have an active user base, Pay-Per-User can be less expensive than Pay-Per-Use, however a Learning Management System with a license cost may be necessary if you have a large number of employees. It can be time-consuming and stressful to research and analyze these charges… That’s simply the upfront costs.
A Learning Management System’s Hidden Cost
The hidden costs of an LMS are those costs that you only learn about after you’ve decided on a Learning Management System. When calculating the total cost of an LMS, one of the most important elements to consider is time.
If your new LMS has a low or no upfront cost but consumes a significant amount of company time, it may end up being more expensive than a Learning Management System with a high upfront cost but integrates effortlessly into your organization’s procedures.
As an example, consider the free, open-source pricing model:
Open-Source Software’s Precarious Situation
Learning Management Systems (LMSs) that are open-source can be downloaded for free and adapted to meet the needs of an enterprise. Moodle, according to Capterra, is the most used Learning Management System in the world. However, while utilizing open-source LMSs as your major Learning Management System is free, using them as your primary LMS is not.
To begin, you’ll need to install your open-source LMS on a server. You’ll need to choose a server configuration based on the number of users you expect and their usage patterns, which can be difficult to forecast.
If you don’t upgrade the server for at least a few years, you’ll be looking at recurrent server fees. Your IT department is unlikely to have the expertise to select and set up an adequate server, therefore you’ll need to employ a professional IT provider. This will set you back about $4,000.
Next, personalize your Learning Management System by adding and removing features, as well as changing user IX and design. Moodle customization costs thousands of dollars and making significant changes costs tens of thousands.
You’ll need to train your employees to finish setting up your ‘free’ LMS. If you are unable to do so, you will need to recruit someone who can.
Then there are the ongoing expenses. You’ll have to pay hosting and security certificate expenses on the administration side.
On the recruiting side, open-source LMSs necessitate at least one administrator to maintain track of site and server concerns. You’ll also need to engage an eLearning developer if you want to build any LMS content.
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 conversion, you’ll see that going with a Learning Management System with higher hard costs can save you a lot of money.
As you can see, just because open-source LMSs have no “hard costs” doesn’t mean they’re free. Indeed, they can be more costly than an LMS with a one-time licensing price.
Furthermore, ‘free’ LMSs consume time. It’s time to hire IT experts to set up servers and customize the Learning Management System. It’s time to start implementing new procedures.
It’s time to train your employees or recruit someone who can. It’s time to hire new LMS administrators or in-house developers to build fresh Learning Management System material.
This isn’t just true for open-source Learning Management Systems; any LMS includes hidden monetary and time costs, such as staff training and resource conversion.
Hard Costs and Hidden Costs Have an Inverse Relationship
Learning Management Systems with the highest “hard costs” frequently have the lowest “hidden costs.” At first, sight, paying $25,000 for access to a self-hosted LMS may appear excessive, but when you realize that the price includes system installation and modification by skilled professionals, as well as staff training and continuous customer support, you may find you’ve stumbled across a steal. These hard costs are also easier to forecast than hidden costs.
The point isn’t that companies wishing to replace their Learning Management System should choose one with high hard expenses. 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 it comes to switching LMS, too many companies simply examine the hard costs. In the LMS equation, it’s time to start thinking about hidden costs.
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