Average Сost of Learning Management Systems Development
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A Learning Management System (LMS) is an investment in your workforce and the future of your organization. Its tools give you the ability to integrate large and flexible training LMS programs with your work that also adapt to your unique needs.
LMS helps you grow by providing strong learning opportunities, a comprehensive onboarding program, and a path to professional development for your employees. LMS pricing is an important factor if your training program is within budget and leaves room for growth.
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How Much Does an LMS Cost?
Answering the question of how much does a learning management system costs we can say that learning management systems are used in businesses, schools, hospitals, and other organizations. The differences between customers in these markets are huge, so the LMS software pricing solutions can vary from one another.
It is common for LMS solutions to use a SaaS pricing model where customers pay for the features they use. But some vendors provide a one-year or one-time license.
Here are four standard LMS pricing methods:
- Per student, per month. This method is the most popular, monthly payment for each student. This indicator is calculated from all users of the system, or active users who have been enrolled in the courses. Account creation fees may also apply. In addition, sellers may require an annual payment, even if prices are for one month. The fees are typical $5 or less per student per month. Small and medium-sized businesses with generalized training requirements are best suited.
- Per student, per use - LMS solutions can include more features than the business requires. This model allows you to select only the required parts of the software and pay only for using them. It can also mean that you will be charged for modules, the number of active accounts, or the content you use. Prices range from $1 to $10 per student use. This option is ideal for companies where there is no need for regular employee training.
- Per course - Some LMS providers have a course fee option for employees who require specific certification for their industry or position. Providers can have content available in an internal library or partner with third parties to deliver lessons through their LMS platform. This pricing option has elements of a per-student, per-use pricing model, but with premium pricing for specialized content. Compliance industries with students who must be certified, such as human resources, health, or safety, are best suited for this option.
- License fee - Companies can purchase a license to install LMS software onsite. The license fee can be paid annually or in advance as a one-time payment. There are often additional LMS costs for installation, data migration, and training, and there may be a per-student charge. License fees are typically between $450 and $25,000, and installation can cost over $30,000. This pricing model is best suited for medium to large businesses with an existing data center and in-house IT staff.
How to calculate the cost of LMS development?
If you want to develop a large and complex LMS, you should create an MVP (Minimum Viable Product) to test features and add new capabilities. Most developers charge an hourly fee for their services, so we have put together a rough outline of the development stages with the number of hours it will take to implement them and the average cost of learning management systems:
- 30-90 hours for business process analysis;
- 30-90 hours to build the platform architecture;
- 45-75 hours to create several design options and introduce improvements;
- 45-90 hours to create the UI/UX;
- 35 hours for integration;
- 25 hours for testing.
It will also take the development team’s time to review code, manage projects, install third-party tools, create media or content, etc. This will add another 300-400 hours, depending on the size of your system.
Companies charge between $50 and $250 per build hour, for a total learning management system price of $25,000 to $100,000, excluding server costs. You will also need ongoing maintenance, the cost of which ranges from $45 to $200 per hour. Depending on your needs, the cost can start from $1000 per month.
6 Factors That Affect the Cost of LMS
Here are 6 factors that affect learning management systems cost:
- Registration and installation fees
It all starts with a registration fee. These costs cover the cost of initial download or registration in the case of a cloud LMS. Some LMS providers are waiving these upfront fees in lieu of a monthly subscription fee. If in doubt, ask your LMS provider to provide you with a list of all associated LMS software costs and when they are due. For example, can you pay higher fees in installments, or is a lump sum payment required? Is there a discount when buying bundled offers?
- User fees
Some LMS providers charge a per-user fee instead of a flat fee. As such, you need to consider the number of online learners that will have access to the LMS. In many cases, LMS software fees are based on the number of active users. As such, you should only pay for the number of online learners who actually use the LMS to expand their knowledge.
LMS pricing models generally fall into one of these three categories: subscription, direct purchase, or licensing agreements. In the latter case, you pay for the right to access the LMS for a certain period of time. For example, you must renew your license annually. After your agreement expires, you can choose a new LMS platform or pay a renewal fee. Once again, it is important to ask the LMS provider about what is included in the license agreement. Will you still have to pay for updates or add-ons? What support services are included?
- Training the internal team
In an ideal world, LMS platforms should be plug-and-play. You simply download the software or log in and start developing meaningful online training courses. However, this usually requires some preparation. Your team needs to know the key features of the tool to get the most out of your investment. As they say, you need to make money in order to spend money. In this case, you must provide training to deploy the training.
This could include creating online tutorials and step-by-step instructions or even paying an LMS provider to send an experienced technician who can shorten the learning curve. It depends a lot on your team's level of experience and the complexity of the LMS platform.
- Creation of online learning content
LMS pricing also applies to the content of the online training itself. After all, your new LMS is useless if there are no online tutorials to download. Hence, you should consider development costs or curated content for online learning. There are many people involved in this process, from subject matter experts and instructional developers to e-learning voice actors, and they all need to be paid for their services.
This is often one of the most significant costs you will have to incur when using an LMS. In fact, maintenance typically costs about 15 to 20 percent of the initial cost of the LMS. This is not a direct fee charged by the LMS provider, as the service is usually done internally. For example, integrating an LMS into your current learning and development strategy and regularly updating your software usually comes at an extra cost.
This is one of the main reasons why cloud-based LMS solutions are so popular as the LMS provider usually updates the system automatically at no additional cost.
In-House vs Outsourcing LMS Development
Let's find out the pros and cons inherent in the in-house and outsourcing LMS development process.
- You may face high start-up costs for assembling a professional team and building a low-cost LMS, not to mention rental costs and tax fees.
- Provides your managers with more creative control and team building.
- Own development has less risk of confidentiality breach since all information remains within the company.
- Internal operations can be inefficient in time and it can be difficult to keep up with new trends in LMS design.
- Outsourcing a proven professional team saves money as you don't have to hire, train, and host your own development team.
- With a highly qualified outsourcing team, there is no need to spend a lot of time on supervision and team building.
- When outsourcing services, you must make sure that the company you work with is reliable enough in terms of data security.
- Improving the organizational effectiveness of the outsourcing team increases the company's profits, saves time, and helps to achieve results faster.
- It is not cheap. Expect to spend extra money on office, equipment, licensed software, security, etc.
- Sometimes you will not be able to complete the amount of work required to justify a position in monetary terms. People can sit on the bench, but you will continue with your monthly payments.
- If a person leaves the company, you will need to find a replacement as soon as possible in order to maintain the working pace of development.
- You can fall into a communication trap when the offshore outsourcing team is not properly informed due to their remote location.
- Cultural and linguistic differences can lead to misunderstandings.
- Outsourcing critical business processes can be risky because you, as a contractor, depending on the supplier to stop providing services and meeting requirements at the level you require.
Summing up: What is the Average Cost of an LMS?
LMS implementation is very important for your institution or business to educate your students or staff. This will help you connect with them from almost anywhere, anytime. Not only can an institution make more profits, but an organization can achieve rewarding results such as increased productivity, a more specialized workforce, and most importantly, employee satisfaction.