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9 Factors That Determine the True LMS Costs, Part 1

Published Fri Oct 19 2018


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

Let us look at the first five factors to consider.

The True LMS Costs: 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 the first five of nine items to add to your LMS expense sheet to create a realistic budget.

1. Sign Up and Installation Fees

It all starts with sign up fees. These expenses cover the cost of the initial download or enrollment in the case of a cloud-based LMS. Some LMS vendors 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 LMS. In many instances, LMS software charges are based on active users. As such, you have to pay for only 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 time frame. 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? What 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 log in 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 walk-throughs, 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 e-learning voice actors, and they all need to be paid for their services.

Are these some of the points you had considered before? Stay tuned for the second part in this two-part blog series to check out the remaining factors that drive your LMS budget.

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