Why are LMS pricing models important? When choosing a brand-new LMS, companies need to take into account several aspects, but the cost consistently ranks near the top of the agenda. This article will offer advice on picking your new staff training software with the best LMS pricing model and deployment style.

How to pick a suitable LMS pricing model: Where to begin?

Employers often take a few things lightly when deploying a new staff training LMS. They anticipate that their staff will find using the LMS simple or that they must pay only the listed amount listed. Unforeseen variables are present, though.

For instance, specific LMS platforms are offered for free but have high maintenance and personalization expenses, whereas others might not be mobile-friendly or have a challenging learning curve. Our manual can assist you in picking the appropriate pricing strategy and LMS deployment style for your staff training management system.

The common types of LMS implementation

LMS Pricing Models

Software as a Service (SAAS) LMS

SaaS-driven LMS are housed in the cloud. The front-end users may be able to access support tech on the move, whereas the back-end staff can build and distribute resources remotely. It’s perfect for enterprises with scattered locations and those companies that instruct outside partners.

However, an absence of customization capabilities and data susceptibility are two key issues businesses have with SAAS choices. Hence, you must confirm that your vendor has sophisticated data security systems or that you may customize the LMS by adding your logo.

Self-hosted LMS

A self-hosted needs to be implemented and maintained by you. This typically offers more customizing choices. Additionally, you can add your logo, grow the strategy to align with your changing demands, and modify the security methods to secure critical data.

The drawback is frequent accessibility. It needs to be set up on your server, and it can prevent your employees from remotely accessing content. The company needs the appropriate infrastructure to host the LMS – which might add to increased costs.

LMS pricing models: Which framework best suits your firm?

lms pricing models

Permanent license-based LMS pricing model

You give your LMS provider a one-time payment to get the license and access the application. Afterward, you can continue to utilize it. It also implies paying for any maintenance charges, including updates and modifications. For instance, to enhance functionality, you might need to buy a more recent or substitute piece of software in the next three years.

The advantage is that you have complete authority over your platform and are not obligated to pay regular subscription fees — which may change over time. Additionally, you can have total creative freedom over the program based on the supplier’s stance. 

Software for managing subscription-based staff training typically has an annual or monthly cost. You have the system’s access for as long as the account is in use. Cloud-based services often use a subscription-based pricing structure. Typically, your vendor manages software upgrades and informs you whenever updated models are accessible.

The drawback entails that the costs could increase, or the seller could include or remove capabilities. However, your conditions of possession are likewise subject to that fluidity. For example, if the system no longer meets your needs and an agreement does not bind you, you can move to another platform or even bring more users and connectors to increase capabilities.

Slab-based licensed LMS pricing model

LMS Pricing Models

In this LMS cost structure, you buy a license to access the tool for a predetermined period (between one and three years). You then renew it when it runs out. This approach does not consider the frequency of engagements an active subscriber has with the platform.

Instead, it focuses on the purchaser’s promise to buy the permit for a long time or to ensure a certain threshold of active learners — at times both — to allow unrestricted access privileges. The provider permits limitless use of the LMS if the customer is willing to pay the license for longer than the minimum required number of active trainees.

If only you accept to utilize the eLearning portal for a prolonged period — say, up to three years, with or minus a commitment of a minimal number of users — may the vendor grant you a license to run the software.

This would be a decent choice for a company with a significant L&D expenditure and many workers. Just be mindful of the lock-in time, the withdrawal fee, and data backup if you search for another solution.

Freemium LMS

LMS Pricing Models

Downloading these staff training LMS options is free. They can, nevertheless, offer extras and capabilities that are paid for. It can be a good alternative for your company if you’re happy with the fundamental bundle. But, if you have to access the extra features, the costs could add up fast.

Analyze the portal to determine what is offered and check the small print. For instance, you might not want to select software that watermarks all of your exported files or prevents you from adding your company branding. To avoid future deployment complications, evaluate the product’s restrictions for yourself.

Open source LMS

Some businesses seize the opportunity to acquire free training programs for employees. However, this typically has a cost. A group of programmers that support open-source LMS platforms provides them to the general public for free. However, that is typically where their assistance ends.

They might have a customer forum or a simple FAQ. But, to tailor the application for your L&D plan, you still require programming experience. Along with implementation durations, maintenance expenses must also be taken into account.

For instance, your staff may spend a month waiting for the technology to be operational to start creating content. Or it takes several weeks for your front-end employees to get used to the user interface. Each of these disruptions reduces employee productivity and eats into your finances.

LMS with a fixed user number

LMS Pricing Models

In this LMS pricing model, your vendor permits you to buy a set quantity of learner accounts. You pay for each account you purchase. If your company has 1000 employees and your supplier charges INR 100 per user each month, your total payment will be INR 1200000 (1000 x 100 x 12). Depending on your business size, you spend solely on the number of accounts you deploy.

This LMS pricing model ought to perform admirably if the workforce at your company remains constant. You are well aware of the amount the LMS will cost you annually. It is an ideal option for a company if your goal is for your trainees to utilize the platform to the maximum extent possible, preferably throughout the entire year. Users can be added as needed, so the number of subscribers equals the total employee strength.

Nevertheless, the inability to adapt is a drawback. The possibility exists that only 200 of your 1000 employees will utilize the LMS at some point, costing you INR 1200000 for the entire year. Therefore, to reap the maximum benefits from this LMS pricing model, ensure that employees are motivated, that the curriculum is sufficient, and that leaders in the L&D division are just a little more proactive. In this case, several LMS vendors offer discounts based on the higher number of subscribers.

LMS pricing model based on active users

The term — active users — is defined differently by various suppliers. For clarity’s sake, let’s say that most LMS providers, if not all, characterize active users as any individual who engages with your LMS in some way. It might only require logging in to accomplish this.

A vendor can also use the below-mentioned parameters to determine active users:

  • A worker who enrolls in a new program
  • A worker who obtains certification, etc

For your supplier to charge the customer, the user must engage with the LMS. Most platforms with active-user-based LMS pricing models permit an infinite number of enrolled participants. Your business can enlist all of its existing staff on the eLearning portal under this LMS pricing model — granting them access to the platform.

Your business then chooses a pricing strategy based on how many people (from the enrolled cohort) it anticipates using the LMS throughout any given billing period. As a result, if a company has 1000 employees and knows that only 200 of them would be using the tool at a set moment, they can enroll all 1000 of their personnel on the application and choose an LMS pricing model, which limits the number of active learners to 200 out of the 1000 registered participants.

In this situation, the corporation is virtually betting or expecting that the LMS won’t be utilized as efficiently as it ought to be. Therefore, consumers choose a price range they desire to be billed for.

Each additional employee who engages with your LMS after the initial 200 active users restriction will incur a higher cost per user from any LMS provider that bases its billing on active user LMS pricing models.

LMS Pricing Models

For a better understanding, consider the following scenario: After the company enrolls all 1000 professionals on its LMS, it buys a plan that allows 200 of the 1000 registered members to transition to active members, with a fee of INR 500 for each active user.

The seller then raises the price to INR 1000 for each active subscriber, which is higher than the initial INR 500 per user, once the learner number surpasses the initial cap of 200. The amount that the company will pay for this LMS pricing model will be based on how many users decide to utilize the LMS throughout the payment period.

Suppose you are a leader or director of L&D and you desire to foster a mindset of ongoing growth and to learn among all of the staff members. In that case, it is advised to pick a package that allows all employees to be active participants and not stress about paying additional fees for additional users.

You may prevent people from signing in when you’ve selected a costly LMS and are banking on minimal usage. It may seem contradictory, but that’s just because LMSs that distribute to training firms also utilize active user licensing, and this LMS pricing model is highly effective there. It might or might not be the suitable model for certain business companies looking to instill an ongoing learning environment.

Customized LMS pricing model

Small and mid-sized businesses, which might not consider any of these above LMS pricing models practical, are quickly adopting this strategy. Providers increasingly strive to comprehend the company’s monetary restrictions and provide LMSes that might not represent their platforms fully.

The supplier charges less than the cost of an LMS since it restricts the LMS’s capabilities to the essential components needed to train staff. Providers sell specialized LMS pricing models in various ways, including this one. In this model, the vendor offers customized pricing based on each company’s feature requirements and budget.

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Final word

Recognizing your usage habits and the values you wish to teach in your learners as the L&D manager is crucial. Suppose the organizations desire to move toward a mindset of ongoing development and learning. Choosing a plan might not be optimal according to the number of individuals actively using it.

The best solution is to give every employee access to your LMS without causing additional expenses to the firm, as the demand to develop and educate human resources is constantly changing. Even during the learning needs assessment process, selecting the best staff training software application is a complex process that involves involvement from all parties.

However, by establishing a financial strategy and assessing the requirements of your L&D department, you may reduce operational pressure. Choose the implementation method and LMS pricing model, which will enable you to extend your budget while achieving the optimum combination of flexibility and usability.

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