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
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.
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.
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