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July 5, 2019

Cost of an LMS: What to expect for your next training budget

Implementing an LMS (Learning Management System) is a convenient and flexible way to facilitate continuous learning within your organization. This digital solution allows you to develop personalized course plans and give your staff the ability to learn at their own pace without disrupting their work schedule. 

Before taking action, the following question arises: how much cost a learning management system?

The training budget contains all the expenses involved in upgrading the knowledge and skills of your employees. It includes the trainer's and employees' salaries, the cost of the training, but also the related expenses necessary for the course (room rental, learning platform, etc.)

These expenses are often calculated for continuous training, but rarely for onboarding, or for internal job relocation. However, this information is essential to calculate the return on investment of your training projects! 

The following factors are what managers must evaluate when budgeting their employee training program.

Outline of the article

  1. How much cost a learning management system?
  2. What are the costs of implementing a learning management system?
  3. Is the implementation of a learning management system profitable?
  4. How much can you save on training costs?

Reading time: 5 minutes

In a hurry? Too much to read? Calculate the optimization potential for your training budget using our tool.

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1. How much cost a learning management system?

The first values to consider when searching for your next LMS are all of their licensing and installation fees. 

These costs can vary a lot from one solution to another, especially depending on the pricing model that works best for your organization. 

The installation fee for an LMS hosted on your own servers can go up to $30,000, while the implementation of a cloud solution varies from $0 to $10,000. 

The distinguishing advantage of developing your own LMS is to have a system that is perfectly suited to your organization's needs and to avoid paying for unnecessary features. However, this path requires a lot of investment and programming work, unless you buy a single payment license of an already existing solution.

This avenue is becoming less popular due to the risks of unforeseen events, delays, and long-term maintenance costs. Unless you have your own IT team and developers, we advise not to take this road as it is out of your core business and will prove to be a money pit 9 times out of 10.

As a rule of thumb, the lower the price of the license, the more complex the customization task will be.

The cost of licensing a locally hosted solution on your infrastructure can range from $0 to $30,000, payable at the time of acquisition.

On the flip side, cloud-hosted solutions are a quick and easy way to implement an LMS, as well as being updated regularly. 

While functions can sometimes be limited, pricing is much more flexible and affordable. With the amount of LMS options on the market, you can find a suitable system that should cover 70% of your needs by default.

Although there are packages based on the number of enrollments or courses, most companies prefer to opt for an annual or monthly license fee, which varies between $180 and $1200 monthly, depending on the size of your organization.

Didacte, for example, does not require any implementation, so there is no extra fee!

2. What are the costs of implementing a learning management system?

Once the LMS is acquired, it is important to know the costs associated with its implementation.

 

On a hardware level, it is possible that the computers used in your organization are unable to support the solution. It will, therefore, be necessary to budget for these costs, such as computers or the operating system. This reality is particularly applicable for self-hosted LMS.

New cloud solutions like Didacte are accessible on mobiles, tablets, and computers, and support several previous versions of browsers to facilitate access to content. Therefore, there is no need to worry about hardware.

Looking past the technological aspect, it is necessary to budget the time which will be necessary for the personalization of the system and the creation of the training modules. Nowadays, most cloud platforms can be set up in under 1 hour.

If you are dealing with external consultants, or you are buying copyright on existing content, the fees must be known and identified in advance to avoid unpleasant surprises. 

If you choose to develop the content internally, calculate the cost of time that your employees will spend doing this task instead of their usual responsibilities. Rather than planning time to create your entire training directory, start by evaluating the time needed to create the critical training on which you can quickly see a return on investment. We are talking here about your integration/onboarding training, health and safety procedures, brand values, etc.

The time required to develop online training is similar to the time required to develop classroom training, as the research, preparation and segmentation work is the same.

Content creation may require a little more time, but will pay off very quickly as it eventually becomes sustainable over the long term and no longer requires any intervention by your trainer. 

A 60-minute classroom training can be reduced to 35 minutes in a well-segmented web format. While the 60-minute classroom training can take 5 hours to prepare, its web counterpart can take you between 5 and 7 hours, including the creation of visual support content.

It is important to give employees and managers training so that everyone knows how to use the new system. Such a change can lead to resistance at the staff level, so it is your job as a project leader to facilitate this culture change.

The costs of internal culture change are often difficult to evaluate, therefore, it is good to add a surplus fund to the budget.

Feel free to involve your employees in the content creation process. They will become good ambassadors of the program and act as facilitators for this cultural change. 

Also know that there are government programs to support digital transformation initiatives and subsidize a portion of training, implementation and support costs following the acquisition of new digital tools. 

For long-term employee training program planning, it is recommended that you know in advance the potential costs of technical support, updates, and upgrades of your LMS in the event that they are not included with the solution you have chosen. Check with your LMS provider to be able to add these costs to your budget.

Spoiler: Those are all included in Didacte's Enterprise prices, so you are safe from any hidden fees.

3. Is the implementation of a learning management system profitable?

When making an employee training program budget, savings, revenues and returns on investment are also to be considered since they make it possible to compare the new situation to the old one. 

As each organization is unique, the numbers can vary significantly from one company to another. Here are some elements of the budget that you should evaluate before and after implementing an LMS. 

  • Saving time: An LMS allows employees to learn at their own pace in the training modules and adapt their learning process to their schedule. Thus, staff who learn more quickly can return to their duties as soon as a module is completed, rather than wasting valuable time due to the slower pace of other in-classroom training.
  • Savings on course delivery costs: By pre-registering training content, it is not necessary to move a trainer or employees, which represents savings in accommodation, transportation, and meal costs.
  • Economics of logistics: Promoting digital media eliminates the needs for paper documentation, the rental of rooms and multimedia equipment, and the time required for the organization of sessions (invitations, reservations, and follow-ups).

Didacte clients save between 30% to 75% in budget optimization within 18 months following the implementation!

In the long run, the implementation of an LMS is an investment for which the costs will be easily absorbed by the increase in employee performance, the optimization of training hours required and the reduction in the employee turnover rate.

By properly preparing your employee training program budget and conducting an analysis of your organization's needs, it will be much easier to take action quickly and effectively.

Simplify corporate training management for your team!

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4. Curious to do the math and discover how much you can save on training costs? 

Click on the following link to access our calculation tool and identify the financial gains that could result from such a project!

Marie-Hélène Couette

Marie-Hélène Couette is Head of Sales and Marketing at Didacte. She is also very passionate about entrepreneurship and human development. She specializes in content creation for growing companies looking to better support their teams in this great adventure!