With various pricing strategies available in the market, ranging from subscriptions to one-time payments and even free versions with limited features, it's essential to understand which pricing model best fits your specific requirements. In this blog post, we'll dive into the world of LMS pricing models, providing insights and guidance to help you make an informed decision.
Deconstructing LMS pricing and related costs.
From the LMS provider’s standpoint, the price for LMS services is made up of the base price charged for the LMS software + hosting + setup fee + customization, such as add-ons or extra plugins.
From the business’s perspective, LMS implementation comes with additional costs: staffing expenses for the IT specialist responsible for integration + work hours that the learning & development team or other end users will spend on the LMS software adoption. But first and foremost, the pricing for an LMS is broken down into:
One-time costs — setup fees charged upfront, introductory product training, white labeling or custom branding options, and initial integrations.
Recurring costs — monthly or yearly fees that may be charged on a pay-per-user or pay-per-active-user basis. Alternatively, the sum of recurring costs may be based on the fixed subscription (license) fee or follow the pay-as-you-go model — we’ll delve into these different LMS pricing options below.
! Pay attention to the exact features and services included in the base price.
Example: Edtch. provides branches to all users, while TalentLMS only makes them unlimited for Enterprise customers
Personalization is more of a standard than a trend these days, so branching an e-learning course may be a must-have for most corporate educators. Knowing the demand, TalentLMS has increased its prices and limited access to branching to its lower-tiered users.
Hidden costs — any extra features, customization, integration with other software (e.g., CRMs, ERPs), or technical support for maintenance and feature development. As a decision-maker, you need to be especially cautious of unpredicted expenses that can eat up your budget and your team’s precious time.
In a moment, we’ll delve into more detail on one-time and recurring costs included in popular LMS pricing models. Next, we’ll share tips on how to avoid hidden costs.
Common LMS pricing models: Which one is the best fit for business?
LMSs for corporate training tend to use one of the two most common pricing models: pay-per-learner and pay-per-active user. Within (and beyond) this classification, prices can be charged as a fixed subscription (typically, tiered) fee or on a pay-as-you-go basis. The latter implies pay-per-course or pay-per-usage charges, where “usage” is defined by the number of courses created, the number of users who accessed the system, the amount of data stored, or the frequency of certain activities such as assessments, quizzes, or content uploads.
Open-source (“free”) learning management systems are normally better suited for educational institutions rather than innovative organizations seeking to train their employees and customers.
One-time payment is also a less common pricing model among corporate LMSs, especially those targeted at growing and scaling businesses.
Pay-per-active-user pricing model: Is it the most cost-effective choice for businesses?
The most functional LMS platforms, including Edtch., have chosen the pay-per-active-user model — and for a good reason:
Cost efficiency: Paying based on active users ensures that you're only charged for those who are actively engaging with the platform, making it cost-effective.
Scalability: This model can accommodate businesses of all sizes, allowing them to start small and scale up as needed.
Flexibility: It's suitable for organizations with fluctuating user numbers, as costs adjust in proportion to user engagement.
Alignment with usage: Since you're charged based on actual usage, it encourages organizations to optimize their LMS for engagement.
Thanks to these pros, the pay-per-active user model is best for:
Growing (Small to medium) businesses
Pay-per-active-user is great for smaller organizations with a limited budget and user base.
Companies requiring different sorts of training for new hires or clients can find value in this model.
Organizations entering the field of corporate e-learning
Regardless of the company size and stage of growth, if a business is only testing the potential of e-learning on its organizational effectiveness, the pay-per-active-user model is efficient.
Companies developing and launching new products in the market might want to create a consistent e-learning flow for their internal teams and customers. As the needs may vary from one calendar period to another, so can the number of active users of an LMS platform.
If the nature of your business category implies spikes in user activity during certain seasons, you can benefit from paying only for active users.
LMS pricing vs. value: how to only pay for the functionality you need.
As you see now, by paying for the number of active users, you can cut off a part of the expenses you would pay for inactive learners. However, the question remains: when choosing an LMS provider, how do you find the one with the best value for money? We suggest you make a shortlist of the best-priced platforms using this checklist:
Estimate the number of active users
The total number of users accessing the LMS can greatly influence the pricing structure. Some LMS providers charge based on the number of active users, while others have tiered pricing plans that accommodate different user levels.
Gauge user duration
There is a difference between steady users and those who change over time. For example, if you plan to execute onboarding courses, your total number of users will stay more or less the same, but users will be different. Accommodate diverse user scenarios relevant to your organization.
Anticipate user base growth
Prepare to scale: select a plan that grows with your organization. Ensure seamless, cost-effective upgrades to higher-tier plans.
Prioritize must-have features
List essential features aligned with your training objectives. Look for plans offering these features as part of the package to streamline negotiations and estimate value. Save time on negotiations with providers who don’t offer the necessary features.
Think about additional services and related costs
Some LMS providers offer additional services such as content creation, course design, and analytics services that can affect the overall cost.
Example: how Edtch. beats Docebo with the best value for money in the standard package
Without any doubt, Docebo is a strong player in the LMS market, with solid functionality… not included in a standard package. The majority of great features that the platform is advertised for are sold as paid add-ons, so an LMS buyer has to pay a solid sum to get the maximum value from Docebo.
Edtch., on the other hand, does not hide exceptional features behind paywalls. All features, unlimited courses, custom branding, and reports & analytics are available to all users at the starting price of $3/active user per month. Learn more details about the Edtch. pricing.
So it turns out, Edtch. provides a better value for money compared to Docebo.
Estimate the needed content storage
The amount of storage space allocated for hosting course content, videos, documents, and multimedia elements can impact the pricing structure.
Check integration compatibility
Confirm smooth integration of an LMS with your existing tools and systems for enhanced user experience.
Evaluate support and training
Verify what levels of customer support and training resources are included in each plan. You want to ensure smooth implementation of the LMS platform and prompt issue resolution.
Ensure security and compliance
LMS solutions prioritizing data security and compliance with industry regulations may have higher pricing due to the investments required in security measures and certifications.
Confirm hosting options
Whether the LMS is cloud-based or on-premises can also affect pricing. Cloud-based solutions usually involve monthly subscription fees, while on-premises solutions may have upfront costs.
Plan for long-term goals
Choose a plan aligning with your organization's long-term vision. Think about how the LMS that seems advantageous in the short term will serve your needs over time.
Define your budget
Determine the budget covering initial and ongoing expenses for an LMS, such as subscription renewals. Clear budgeting narrows your options effectively.
How to avoid hidden costs in LMS pricing and claim transparency
Disrupted budgeting, unexpected expenses, and low overall value are certainly different from what you expect to get from implementing an LMS. To avoid these negative consequences, prioritize transparency and be vigilant about hidden costs. Here are some crucial points you need to clarify with your potential LMS provider:
Precise pricing breakdown
Look for LMS providers that transparently outline the inclusions within each pricing tier. This should cover features, user limits, integrations, and extra services. A clear pricing structure ensures you grasp the precise nature of your expenses.
As your organization expands, the need for a higher-tier plan may arise. Confirm that scalability and pricing adjustments are communicated transparently, without concealed fees tied to user or feature additions.
If you commence with a lower-tier plan and plan to upgrade later, ensure the upgrade process and costs are explicitly detailed. Concealed charges related to plan transitions can disrupt your budget.
Data storage and bandwidth limits
Keep an eye out for data storage or bandwidth constraints. Some LMS providers may levy additional fees upon surpassing specific thresholds. Opt for plans with sufficient resources to avoid unexpected expenses.
When integration with other tools or systems is necessary, inquire about any accompanying costs. Concealed fees associated with integration can catch you off guard, affecting the LMS's overall cost-effectiveness.
Support and training
While certain LMS pricing plans include standard support and training resources, others may offer premium support for an extra fee. Comprehend the extent of support and any possible additional charges.
Contract and renewal terms
Carefully review contract terms and renewal conditions. Hidden clauses related to automatic renewals, contract termination fees, or mandatory upgrades can lead to unanticipated expenses.
Thoroughly scrutinize contract terms and renewal stipulations. Hidden clauses linked to automatic renewals, termination fees, or mandatory upgrades can incur unforeseen costs.
Determine the billing frequency for LMS pricing—whether it's monthly, annually, or follows a different pattern. Typically, the price for each billing period will adjust accordingly. Various payment schedules can influence your cash flow and overall financial strategy.
Trial periods and demos
Leverage trial periods and product demonstrations to deeply explore the LMS before committing. This aids in uncovering any concealed limitations or costs that might not be immediately evident.
Fees for additional features
Certain LMS providers present a basic plan with the option to purchase additional features separately. Exercise caution with potential hidden costs tied to individual feature purchases, which could significantly elevate the overall expense.
Cancellation and refund policy
The last thing you want is to be stuck with an LMS that no longer aligns with your needs due to unfavorable cancellation terms. To prevent any future surprises, gain a clear understanding of exit costs and refund policies.
Make the informed choice of LMS by its pricing and value
Choosing an LMS provider is a critical decision that can make or break the effectiveness of your e-learning initiatives. Get guided by the questions and aspects covered in this guide, and don’t hesitate to consult LMS experts. Get in touch with the Edtch. team, as we’ll be more than happy to consult you on our offering and share some more details that will help you make an informed decision.