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9 Factors that Determine the True LMS Costs

Posted by Christopher Pappas on May 29, 2018

the true lms costs

Did you account for all the essential expenses in your LMS budget? In this article, we’ll highlight the main factors to consider when calculating your LMS costs.

The True LMS Costs: 9 Factors to Consider

Creating an accurate budget is the secret to LMS success. It allows you to maximize your resources and deploy personalized online training content without breaking the bank. But what is the real cost of an LMS? Can your organization truly afford to make the switch to online training? Here are nine items to add to your LMS expense sheet in order to create a realistic budget.

1. Signup and Installation Fees

It all starts with signup fees. These expenses cover the cost of the initial download or enrollment in the case of a cloud-based LMS. Some LMS waive these upfront costs in lieu of monthly subscription fees. When in doubt, ask the LMS vendor to provide you with a list of all associated start-up LMS expenses and when they are due. For example, are you able to pay more significant fees in installments, or do they require one lump sum? Is there a discount for purchasing package deals?

2. Fees Per User

Some LMS vendors charge per user instead of charging a flat fee. Thus, you’ll need to consider the number of online learners who will access the Learning Management System. In many instances, LMS software charges are based on active users. As such, you only have to pay for the number of online learners who actually use the LMS to broaden their knowledge.

3. Licensing

LMS pricing models tend to fall into one of these three categories: subscription, outright purchase, or licensing agreements. For the latter, you pay for the privilege of accessing the LMS for a specified timeframe. As an example, you must renew your license on an annual basis. When your agreement expires, you can opt for a new LMS platform or pay the renewal fee. Once again, it’s important to ask the LMS vendor about what’s included in the licensing agreement. Will you still have to pay for upgrades or add-ons? Which support services are included?

4. In-House Team Training

In a perfect world, LMS platforms would be plug-and-play. You’d simply download the software or login to the system and start developing meaningful online training courses. However, it usually takes some degree of training. Your team must be aware of the key features of the tool to get the most from your investment. As the saying goes, you have to make money to spend money. In this instance, you have to provide training to deploy training. This may involve creating online training tutorials and walkthroughs. Or even paying the LMS vendor to send out an experienced tech who can lessen the learning curve. It greatly depends on your team’s experience level and the complexity of the LMS platform.

5. Creation Of Online Training Content

Calculating the LMS costs also extends to the online training content itself. After all, your new LMS won’t be of any use if there isn't any online training content to upload. Therefore, you must factor in the expense of developing or curating online training content. There are numerous collaborators involved in this process. From Subject Matter Experts and Instructional Designers to eLearning voice actors. And they all need to be paid for their services.

6. Tool Replacements

Ideally, the LMS you choose should be compatible with tools you already have at your disposal. However, you may discover that your new Learning Management System doesn’t mesh with third-party eLearning authoring tools, CRM software, and other essential assets. As a result, you’ll have to invest in replacement tools to fill the gap and stick to your scheduled launch date. Another cost to think about is data migration. You must transfer all of your existing user data to the new system, which requires time and resources.

7. Additional Support Services

Support services vary by LMS vendor. Some may provide online FAQs and user communities, while others offer more comprehensive support options, such as 24/7 phone assistance or email contacts. Ask the LMS vendor about which support services they include in the package. Then, determine whether it’s adequate for your needs, or whether you need to invest in an upgrade. For instance, eLearning teams with less LMS experience may require one-on-one support. Thus, it may be wise to pay the additional fee if it allows you to get more from the tool.

8. Upgrades and Updates

This is a cost that many organizations overlook. As is the case with any tech tool, an LMS becomes outdated as time goes on. To stay current, the LMS vendor must incorporate new features and functions. Which allows you to provide more effective online training experiences for your audience. However, this comes at a price. Certain LMS vendors include free upgrades and updates in the initial LMS costs. Others invite you to upgrade the LMS for a fee. This usually depends on the pricing model. For example, subscription-based services typically include free updates, but licensed tools do not.

9. Ongoing Maintenance

Undoubtedly, one of the most crucial costs to consider is LMS maintenance. This includes keeping your online training content fresh, and downloading add-ons to make it more efficient. It also applies to L&D payroll, as you’ll need a dedicated team to upkeep the system. Another ongoing expense is monthly subscription fees or licensing renewals. It’s best to create an itemized breakdown of the LMS costs you must cover every month, so that there aren’t any surprises. You should leave some room for unexpected expenses, as well.

Are any of these items missing your LMS budget? If so, you may want to factor them into the equation to calculate the true cost of owning a Learning Management System. You might also consider a meeting with your L&D team to pinpoint any fees you may have overlooked. For example, they are familiar with LMS operational costs and can offer a more accurate estimate for ongoing LMS maintenance. 


Topics: LMS Basics

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