The hidden costs
Although the upfront sum may suggest otherwise, the total cost of owning an LMS goes far beyond the initial purchase price (or lack of one!). Many organisations are lured in by the low licensing fee, often purchasing an open source plan as their first Learning Management System. What they don’t often consider however, is that the open source LMS cost excludes configuration. Such systems require constant maintenance and human effort to keep them ticking over effectively.
Typically, the cost breakdown of an LMS platform indicates 10% for the software, 45% in maintenance costs and 45% in administration. Whilst the software can be downloaded for free and installed on a low cost web server, soon enough a mounting pile of invoices from developers required to configure the system begins to build up. In addition, administrators are burdened with an even higher workload by having to manually manage their workforce’s training. Is it really worth that cheap or absent first payment?
An ideal model
One way to avoid a low return on investment and continuous upkeep is to dodge an open source system and opt for an LMS with a reasonable licencing fee which is ready to use with little configuration, also known as ‘turn-key’ (you start it up, and it just works). An SaaS model has just that; boasting built-in automation that does not need to be overseen full-time by an administrator. This LMS pricing breaks down in a far more logical way; with the cost of licencing at 75%, maintenance at 5% and human administration at 20%.
In spite of the cost of an LMS being far from what it may first seem, investing carefully in an LMS can save a company significant amounts of both time and money, especially when compared to a traditional face to face learning approach.The overriding consideration when debating the price of an LMS and preventing any unnecessary expenditure is, quite simply, its licencing fee. This initial cost is a huge factor when it comes to differentiating a great deal from an endless bill, and if priced reasonably, suggests minimal maintenance and administrative costs in the future.
Of course, learning management systems have their benefits, but be careful to refrain from having to eventually pay over the odds whilst untimately receiving less in return when investing in the right platform for you.