Understanding LMS Pricing Models: Make accurate cost comparisons
Understanding LMS pricing models can be difficult as they will often vary depending on the vendor and the features included. However, getting to grips with them is a crucial part of improving your company’s learning and development programmes.
Once you have this level of knowledge regarding specific pricing models and how each model impacts prices, you can complete a learning management system cost comparison for different providers in a confident and fair way.
In this article we will look at the following topics:
What are the common LMS Pricing Models?
There are several types of LMS pricing models, all with their own benefits. In this section we are going to look at each of the models in detail so you can understand how they differ. From here you can accurately make a learning management system cost comparison and an informed decision on the best type of pricing model for your organisation.
LMS Pricing Model #1 Pay per Learner
Using a pay per learner price model, also known as an LMS cost per user model means you will pay a set price for a specific number of learners. This model may be suitable for training which you know will be completed by a certain number of employees in a small team, meaning you can keep track of costs and keep them relatively low.
It may also be beneficial for smaller businesses with a limited pool of learners. However, if you are planning on including your entire organisation or have larger learning goals, it may not be for you.
Learning suppliers often take into account whether or not users of their system are active/inactive. In a Pay-Per-Learner model, organisations pay a fee for any users that have been on their learning solution within their subscription period. This means that organisations will need to pay for staff who have used the system regardless of whether they are still using it. For example: if an organisation of 500 users who have had 10% of staff leave during their subscription period bought an LMS on this model they would require a license for 550 users.
LMS Pricing Model #2. Pay Per Active User
LMS Pricing Model #3. Pay as You Go
This model is linked to usage meaning you will pay for the learning undertaken. It requires no subscription fee, or a long-term commitment so may be a popular choice for those dipping their toes into the world of a learning management system, or who have a smaller budget.
This can be a cost-effective option for small businesses looking to do ad hoc training, and it also offers the flexibility to scale up if needed.
LMS Pricing Model #4. License Fee or Subscription
The license fee or subscription model is paid on a yearly basis. All users will have full use of access to the platform features and courses on offer, but it is important to be aware that there are often tiers or packages which include different features based on price. If you have specific requirements for your learning solution and know which features are non-negotiable, you can make an informed decision based on the most suitable package or tier. This means that you can tailor your training to suit your specific needs.
This model can be a good option for businesses who need a comprehensive solution that offers advanced features, customisable options, and ongoing support. This may be the case for businesses who want an LMS that will grow with them and support them at every stage.
LMS Pricing Model #5. Free to Use
This model is usually free to use, hence the name. Despite this, it doesn’t mean there aren’t additional costs that may crop up, especially if you don’t do your research. It is important to understand any costs associated with set up, maintenance and customisation.
The term ‘Free to use’ can often be likened to mobile applications which offer a free version that is designed to offer a peek of available technology before encouraging the user to pay in order to access features. A free solution may satisfy a base level requirement but will likely need further investment in the short-term.
At Access, we have a license fee LMS pricing model.
Each LMS pricing model has its benefits and drawbacks depending on what your organisation is looking for. Smaller businesses may be at the very start of their LMS journey in which case probably don’t have a large budget to spend on a higher pricing model. Alternatively, larger businesses, or those looking to invest in an LMS that will offer additional features may look at the subscription model which can offer a comprehensive package.
Another thing to note is that there are LMS suppliers which offer Enterprise licencing.
This means that organisations will pay a fee for unlimited usage. This is often a suitable model for companies that don’t have a fixed number of users or people, such as those offering training for students.
Looking for tips and tricks to find a low-cost solution to train your employees?
5 features LMS packages should include
LMS packages are different from pricing models in that they describe the features and functionalities which support a company’s online learning needs. Whilst it varies depending on vendor and user needs, below are some examples of features that will typically be included a package beyond the software itself.
While this list is not exhaustive, it gives an indication of what to look out for when comparing different vendor’s packages. From here, you can compare your findings with costs and decide which LMS is the most suitable for your specific needs.
Total Cost of Ownership
The last point to cover within this article is how to work out the total cost of ownership. To summarise, total cost of ownership is described as:
"an all-encompassing concept that looks at all the costs associated with owning and using a product or service, including the initial purchase price, ongoing maintenance and support, and any necessary upgrades or replacements over time"
When investing in software, it can be easy to just look at the short-term costs such as set-up fees and training, but this is not the whole picture.
Businesses need to have a strong understanding of total costs over the entire lifespan of the software to be able to manage their budgets effectively. Hidden costs, or costs that appear later down the line, could include maintenance costs, support or adding content.
Understanding the total cost of ownership is a crucial step in making an accurate learning management system cost comparison and ultimately, the most informed decision regarding the LMS pricing model that will work best for your business.
As we have explored within this article, there are multiple LMS pricing models and each of them vary depending on the features and services offered. Understanding the specifics of these will help organisations make accurate learning management system cost comparisons and choose the right solution for their learning needs.
Our Learning Management System includes the means to provide, track and manage all compulsory training. Contact our team today to find out more
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