“People spend 59% more than they expect to on their Learning Management System,” according to Capterra. Whether you’re just getting started with eLearning in your company, or planning to change your LMS vendor, estimating the final cost of LMS implementation may seem like a full-scale investigation.
In this blog post, we’ll look at different LMS pricing models and LMS cost structures, and give you step-by-step instructions on how to make the best choice for your training goals. But first, let’s review what an LMS is.
What Is an LMS?
A learning management system is software that helps you manage the training process in a company or school. It’s like your personal virtual university that lets your learners access training materials and take online courses and quizzes, and allows you to see their results.
Here are some LMS features that make it your indispensable assistant:
- User management. An LMS lets you add and edit users, organize them into groups, and assign them roles.
- Content management. You can upload, manage, and deliver learning materials on a single platform.
- Progress evaluation. An LMS helps you assess how a particular learner or a group of learners performs. It gathers stats on responses, attempts, time spent, and more, and provides you with detailed reports.
- Training automation. In an LMS, invitations, enrollments, notifications, deadlines, etc. can be fully automated, so that you can get these tasks off your table.
- Blended learning. You can plan live training sessions in a built-in calendar and notify participants about upcoming events. Some LMSs support hosting web meetings from their interface.
You can read about these and other LMS features in more detail in this article on LMS requirements . But now let’s move on to the five models of LMS pricing and learn what principles lie behind them.
Popular LMS Pricing Models
There are several basic types of pricing plans. To make things easier for you, we’ve put together a comparison table of the most common pricing models and how much you would pay for them, based on the number of learners in your organization. Click on each pricing model to get a detailed analysis.
Learning Management System Pricing Models Comparison
1. Pay per learner
The pay-per-learner model is also often called pay-per-seat. The principle is simple: you pay a fixed price for a certain number of learners added to the system. The benefit of this pricing model is that you can easily predict your monthly and yearly expenses for the learning management system.
Pay-per-learner prices are tiered: as the number of users goes up, the rate goes down. The amount of learners is usually calculated per month or year.
Pay-per-learner pricing example
As an LMS is a service you will stick with for a while, most providers encourage you to pre-pay yearly at an additional discount. Say you have 150 learners in your Talent LMS account. Paying for a year would reduce your cost from $3,948 a year to $2,988, saving you $960.
Here’s a typical example of this pricing model:
This model is very popular largely because of its simplicity, but in some cases this simplicity may cost you a lot. By paying per learner, you pay for hundreds of people added to the LMS upfront. However, that doesn’t give you any guarantee that those employees will actually log into the system and study. So, pay-per-learner makes sense when the amount of learners remains more or less the same for long periods of time, and eLearning is obligatory at your company.
2. Pay per active users
Pay-per-active-users pricing is the second most popular model; it addresses the problem of the previous pricing model. As opposed to per-learner plans, which are charged irrespective of usage, it allows you to add an unlimited number of users to the LMS; you’ll only be charged for the ones who logged into the system during the pay period.
The one thing you should know before committing to this model is that the price is usually bundled. For example, let’s say you expect to have 250 active users each month, so you choose the corresponding plan. Even if you don’t hit 250 but have, say, 200 users, you’ll still have to pay for 250.
Pay-per-active-users pricing example
Let’s suppose you are going to train 120 employees in iSpring Learn LMS. 37 of them are salespeople; they’ll be the most active learners, who need to maintain their knowledge of products and sales techniques, as well as have instant access to presentations and promo materials uploaded to the LMS. The remaining 83 employees will be divided into groups; their training will be spread evenly over a year. So, each month you expect about 80–90 active users, including up to 5 new team members who will have to take onboarding courses.
The iSpring Learn pricing plan that fits that number costs $3.66 per user per month and $4,386 per year. This price also includes a 1-user subscription to an authoring toolkit, iSpring Suite, and technical support.
The per-active-users pricing model is convenient when you need to train different groups of learners each month, for instance, if you’re a large enterprise and need to train your customers or partners. Plus, you don’t need to worry about inactive accounts, as you won’t be charged for them anyway.
3. Pay as you go
The cost of an LMS with this pricing model is directly linked to its usage. You pay little in off-peak times, but may have to pay a fortune when there is a rush of users.
In practice, pure pay-as-you-go isn’t a very popular pricing model among LMSs despite the fact that it lets you stay footloose and fancy free. eLearning isn’t typical SaaS, as launching it takes too many resources (in personal effort if not just money) to conduct it only occasionally.
Pay-as-you-go pricing example
Upskill LMS is among the few that stick to this model. It charges no license, no setup, and no hosting fees. Instead, they offer you to pay for learners to take training courses with “credits”. For example, you will need 3 course credits to sell a course to one learner. For each SCORM course, they charge one additional credit. One credit amounts to $3.50, so you’ll pay up to $12 for each user who buys your content. You can also buy credits in advance and in volume to get a discount.
This model can benefit those who sell their e-courses, as this model guarantees that costs go up only during periods of increased revenue. This way you can be sure that you’ll always be able to afford the change in price.
4. License Fee/Subscription
This is probably the easiest pricing model: you buy a periodic license for an LMS, pay a set (often annual) fee, and add as many users and courses as you want.
However, flat rate pricing (single price, single set of features) is relatively uncommon, and most vendors offer two or three flat-fee plan types to choose from. The price depends on the number of features included in the package. With each upgrade, new functionality is unlocked. Plus, when dealing with this pricing model, you need to keep in mind that the variation in the prices of different LMSs at first sight can be really significant (if not terrifying).
Licensing fee example
Teachable’s Business plan with an unlimited number of users and maximum feature set costs $2,988 per year. As a comparison, Topyx’s Essentials plan costs $19,500 per year. For that price, they offer you 3,000 user accounts, 100 GB of storage, and tech support. Topyx’s Expanded plan for $29,500 per year grants access to all the features of the company’s product: unlimited number of users, eCommerce, webinars, dedicated support team, and so on.
As you can see, it’s absolutely necessary to do your homework and estimate the value of each feature included and not included in the offered packages. The prospect of not worrying about the number of users and other things might be tempting enough when buying an all-inclusive package, but if your company is new to eLearning or simply doesn’t need many extra features, this kind of pricing plan can be a waste of money. On the other hand, if you choose a plan with too few features, it may be really expensive to upgrade.
5. (Free) Open source LMSs
Actually, “open source” isn’t a pricing model. The term means that the original source code of the LMS is open and can be freely distributed and modified. We’ve added it to the list, because open source LMSs are often contrasted with those that have closed code. The main benefits are flexibility, meaning you can make any customization you want, and cheaper price. Just keep in mind that it’s not an out-of-the-box solution.
If software is open source, it doesn’t necessarily mean that it is free. Open source vendors declare: “Pay for service, not for code.” In fact, that means that the real cost of an open source LMS involves customization, integrations, and maintenance, as such LMSs require extensive configuration to suit a given organization. Craig Weiss described the main costly challenges of open source you’ll have to face, and the largest of them is that you need to have strong technical skills to work with such LMSs. Otherwise, you’ll have to hire someone who knows programming languages.
Open source LMS example
The best known open source LMS is Moodle, which is designed for educators and is distributed free of charge. Its corporate offshoot Totara is also an open source LMS, but offers customers annual subscription plans with prices based on the number of active users (starts from $3,500 /year).
As it’s rather hard to provide you with even an approximate price, since it strongly differs depending on a particular project, here’s a formula that will help you to get the lay of the land:
LMS price (may be free) + Hosting + Setup fee + Customization (or buying plugins) + dedicated IT specialist salary
How to Choose the LMS Best Pricing Model
The variety of LMS pricing plans may look like a confusing salad of the quantity of users, courses, and features. Before committing to an LMS purchase, follow these instructions to figure out the plan that meets your needs.
Step 1: Tally up the users you plan to train
Before opting for an LMS, figure out how many learners will use the system during a billing cycle, such as a month. Will this amount be stable throughout the year?
Step 2: Determine how long the LMS will be used by each user
Will all your users be the same people, or will they vary? If you plan to use an LMS for onboarding courses only, the total number of active users may be somewhat stable, but the users will be different.
Step 3: Estimate how many courses you’re going to upload
In many cases, the cost of an LMS is based on the number of uploaded courses and space needed for data storage. If you conduct training regularly throughout the day, then look for a provider and a plan with a high or an unlimited data storage allowance.
Step 4: Define essential features and integrations
Do some preliminary research to make a list of features you need. This will help you save time on negotiations with providers who don’t offer the necessary features. Also, this list will help you better estimate the real value provided with each pricing plan.
Let’s look at how this works with a real-life example.
Situation: Oticon is a hearing healthcare company. It needs to maintain a high level of knowledge and skills among all 250+ employees across the country. It is crucial that all employees hear the same consistent messages related to the products sold by Oticon.
There is a 10-week onboarding training program for new account managers who join the company and a wide range of product training, totaling more than 300 e-courses.
The most essential features they need:
Estimating options: Billing for the number of users in the system isn’t cost effective for the case, as with that number of users they’d like to pay only for what they use and save some money.
The reason why Oticon didn’t go for LMSs with a license fee model is that the features they need weren’t present in the basic plans, and all plans like “Business” or “Professional” also include excessive features and integrations. There wasn’t any point paying a monthly/yearly fee and missing out on some of their functionality.
The reason why Oticon refused an open source solution is the lack of user-friendliness and the time- and resource-consuming processes.
Solution: LMS with pay-per-active-users pricing model with unlimited space for data storage, mobile app for offline use, and learning path feature.
10 Popular LMSs: Price Highlights
- $3.66 per user/month (100 users)
- $3.00 per user/month (200 users)
- $2.82 per user/month (500 users)
We explained above how various LMS pricing models function and mentioned several examples. Next, we’re going to present the prices of ten popular LMSs in a single list. We hope it will make the search for a proper solution easier for you.
1. iSpring Learn
iSpring Learn provides pricing plans for 100, 300, and 500 active users. You can register an unlimited number of learners and pay only for those who actually log on to the system during a given month.
Also, you can request a custom plan to match your needs more closely.
2. Adobe Captivate Prime
Adobe Captivate Prime has two pricing models: based on registered or active users. With the first model, the cost is $4 per registered learner per month. But to get an exact price, you will need to discuss your numbers with the vendor.
- Business Owl $50/month or $499/year
- Corporate Owl $99/month or $990/year
- Enterprise Owl $250/month or $2,500/year.
Blackboard is a highly regarded solution for higher education, and its pricing is based on the number of licenses. The cost starts at $ 9,500 per year.
EasyLMS pricing is a tiered pay-as-you-go model and is dependent upon the number of features you purchase. In EasyLMS, packages are called ‘owls,’ and the cost for a package starts at $50 per month or $499 per year.
- 1 site license $199 (with an unlimited number of users and courses, 1-year support, etc.)
- 2–10 site licenses $229 (same features + ProPanel)
- 11–25 site licenses $369 (same features + ProPanel)
The Academy extension contains learning paths, various access levels, results overview, and other additional options. It is already included in the Enterprise Owl plan, but will add $600 to the Business Owl and Corporate Owl plans ($1,099/year and $1,590/year in total respectively).
LearnDash is a plugin that enables turning a WordPress site into one’s own learning management system. Its pricing is tiered and depends on the number of sites in the plan. The monthly cost starts at $199.00 for a single-site package.
- Starter $110/year (50 users)
- Mini $210/year (100 users)
- Small $370/year (200 users)
- Medium $830/year (500 users)
- Large $1,470/ year (1,000 users)
Absorb is an LMS that functions on a subscription basis. For 500 learners, the cost is $14,500 per year. Other services of Absorb are available at additional costs: it has a setup fee of $3,200 (training and support included) and different plans on Elite or Enterprise support ($5,000 or $25,000).
- $3 per user/month (150–500 users)
- $2 per user/month (501–1,000 users).
Moodle is an open source LMS and provides ‘freemium’ pricing. A basic package is free, but extra expenses can be estimated to be $10,000.
- $5 per user/month (150–500 active users)
- $4 per user/month (501–1,000 active users).
Totara is an open source LMS, a ‘corporate version’ of Moodle. It uses a subscription pricing model, starting at $3,500 per year.
Litmos has two pricing plans, both of them based on the number of active users. The pricing for the first PRO plan is:
- Learning: $3 per user/month
- Learning + Performance: $9 per user/month
- Learning + Performance + Engagement: $12 per user/month
The pricing for the Salesforce-integrated special plan is as follows:
Bridge provides solutions for companies in three distinctive realms: learning, performance, and engagement. They constitute three separate plans with different features. The cost ranges from $3 to $12 per user per month.
4 More Questions to Estimate LMS Cost
We’ve collected a list of the most commonly asked questions. Getting the answers to them will provide you with a better understanding of learning management system pricing, and help you find out how much your LMS really costs.
1. What features are included in each pricing plan?
As we already discussed, some LMSs are sold in packages that include different features: the higher the price, the more robust the system. If you’ve done your homework and defined the features that are crucial for your project, you’ll be able to estimate the relative value of each plan offered by a vendor.
2. Are there any extra expenses I’ll encounter after purchasing the LMS?
See if there are any hidden payments. Sometimes vendors additionally charge for the LMS’s setup, training, technical support, hosting, upgrades, and add-ons.
3. How can I upgrade or downgrade my pricing plan? Are there any special conditions?
As for upgrading per-user plans, you have to purchase an upgrade when you exceed the number of users included in your current plan. What will happen to users who register after the limit has been reached? Will they be able to log in to the system, and if not, will it save their contact details? As for downgrading, you’ll need to know how often this is possible, and if there are penalties for doing so.
4. What is your cancellation and refund policy?
Don’t hesitate to ask if there are any exit costs, just to make sure that you won’t fall into a trap of an LMS that may no longer meet your needs in the future.
To Sum Up
Finding the right balance between price and value can make or break your digital learning project. In this article, we’ve tried to explain the most popular LMS pricing models, though you may find that offers from LMSs with the same pricing model can differ greatly. So, whatever pricing model you’d prefer in the future, you want it to be totally transparent.
Originally published at https://www.ispringsolutions.com on July 29, 2021.