How Much Does an LMS Cost? Pricing Models and Hidden Costs

The Cost of an LMS: What You Need to Know

When it comes to the cost of a Learning Management System (LMS), there’s no one-size-fits-all answer. Just like an LMS has many use cases, cost and pricing models vary as well. Having an abundance of choice is good; however, when it applies to paying for your LMS, it could leave you scratching your head, wondering which model is best and how much an LMS costs.

LMS Pricing Models

Implementing an LMS already entails a great deal of planning and resources (we outline the entire implementation process here), but figuring out the best way to pay for it shouldn’t be one of them. Today, every LMS will offer one or multiple of the following pricing models.

Pricing Model #1: Per Learner

If the LMS vendor you’re talking to has a “pay-per-learning” pricing model, you’ll pay a fixed price based on the number of learners you have in your academy (e.g., customers, employees, channel partners, etc.) So, if the LMS charges $5 per learner and you have 200 of them, you’d pay $1,000 a month.

For many learning teams exploring LMSs, especially those training employees, paying on a per-learner basis provides budget stability since they know precisely how much they’ll pay over the course of the year. For upstart teams, this can be especially helpful when trying to get leadership buy-in. Instead of saying, “well, the cost will vary,” you can give them an exact number. However, as you’ll see in the following pricing model, the downside is that you could potentially be paying for inactive learners.

Pricing Model #2: Per Active Learner

Paying per learner sounds the same as the pricing per active learner. Still, there’s a key difference: If you’re spending on a per-active-learner basis, you’re only paying for people who are actively using the technology. Using the same example as above, if only 150 of those 200 people are logging in and learning, you’ll pay $750 a month (rather than the $1,000). This is also called metered pricing.

This pricing model is ideal for teams wanting to use an LMS to educate their customer base. While they hope everyone they invite to the LMS starts using it to learn, the reality is that only a subset will. Paying on a per-active-user basis prevents them from paying for the people who don’t use the technology. For companies with large or constantly growing customer bases, this substantial cost benefits. This model is also ideal if you experience a lot of learner turnover or use it for a single use case such as onboarding.

Pricing Model #3: As You Go

If your LMS vendor presents a pay-as-you-go pricing model, you’ll be charged depending on how you’re using the technology. You can think of a pay-as-you-go LMS pricing model similar to how you would a pay-as-you-go phone plan. If you use your phone a lot, you’ll pay more. If you don’t use it at all, you won’t pay anything.

The same applies to your LMS, which is why it can be appealing to new teams who are still building a foundation and don’t want to pay for the bells and whistles they don’t need yet.

Pricing Model #4: Licensing Fee

Paying a licensing fee is common among LMS vendors. You pay a set (often annual) fee and you take the reigns — at least most of them. Sometimes, this is called flat-rate pricing.

LMS vendors will often present it in a few different ways when it comes to a licensing fee. An all-inclusive model will give you access to the full suite of features and services. In contrast, a packaged LMS pricing model offers different rates for different feature bundles, allowing you to select the package that best fits your feature needs and upgrade if/when the time comes. This is also called tiered pricing.

Pro Tip on LMS Pricing Models: If you find yourself in a situation where the LMS is perfect on all accounts except for pricing, inquire about a custom contract. If the LMS vendor is genuinely a good fit, they will work with you to negotiate terms that you’re happy and comfortable with.

So, How Much Should An LMS Cost?

It’s impossible to say, exactly, how much an LMS will cost as it’ll vary widely depending on who’s using it. That said, there are ways to estimate the cost. Just ask yourself a few questions:

• Initial Learners: How many do you anticipate?

• Learner Growth: Do you expect the number of users engaged with the LMS to remain stable or fluctuate from month to month?

• Use Cases: What will you be using the LMS for? Just one use case like onboarding or a variety of them?

• Overall Strategy: Is your education initiative a long-term play or something you’re just investing in right now? Do you see yourself needing to upgrade the LMS in the future?

• Internal Users: How many internal administrators will there be?

• Integrations: Does the LMS right out of the box work for you or will you need integration support?

Having answers to these questions (even if they’re not 100% accurate) will give you a reasonably accurate idea of what you can expect to pay for an LMS. Then, once you start a dialogue with a vendor, you’ll have some insight into what to expect.

LMS Pricing: Hidden Costs and Final Thoughts

The sticker price of an LMS isn’t the only thing to keep in mind when making a purchase; you should look out for hidden costs.

Hidden Costs of an LMS

Before you sign the dotted line, talk with your LMS vendor about any hidden costs that may be flying under the radar.

• Implementation

• Upgrades

• Customization

• Customer Success and Support

• Maintenance

• Content Creation

• Integrations

It may seem like these costs would be baked in, but that’s not always the case. So when you’re in the process of purchasing an LMS, talk to the vendor to understand what else you may be on the hook for.

Regardless of the pricing model or hidden costs, investing in an LMS is a wise investment that’ll help position your company and your customers up for success.