Top 10 Surprising Costs of an LMS

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Top 10 Surprising Costs of an LMS

Wouldn’t it be nice to buy an LMS ‘off the shelf’ and not be shocked to learn of additional expenses that weren’t planned for?

Unfortunately, purchasing an LMS isn’t the same or as easy as buying a pair of jeans. And, there are many factors that play into the total cost of a Learning Management System.

Being blindsided with extra expenses related to an LMS is frustrating and stressful to say the least. Nobody wants to have to pull from other, just as important, budgets to make up for the mistake of overspending on an LMS.

Did you know that a survey by Capterra found that most companies had underestimated their expected LMS costs during the planning stage by an average of 59 percent?

Don’t let this be your situation.

The more you know, the more you can prepare yourself so there won’t be any surprising costs along the way.

So, what are some surprising and/or hidden costs of an LMS?

During the selection process, the ‘hard costs’ are the most talked about. They’re the cost of the Learning Management System including any licensing fees, setup fees or pricing models. But, this is only part of the equation when it comes to the true cost of a Learning Management System. Here is a list of the top 10 most surprising LMS costs that get overlooked,

Here is a list of the top 10 most surprising LMS costs that get overlooked,

  1. Time. If an LMS has a very low initial pricing cost, but is taking up large chunks of company time, then it may prove more expensive than an LMS with a large pricing cost that fits seamlessly into your organization’s processes. As an example, the IT department could be spending numerous hours trying to integrate or customize the LMS. Another example would be administrators having a hard time uploading content or pulling reports.
  2. Hardware and Software Required. Is there additional hardware or software required? Examples include database technology, document management and workflow solutions.

  3. Implementation and Setup Fees. Some vendors charge an extra fee for setting up the system, others don’t. This includes single sign-on and integration of the LMS with other systems of record such as your HCM/HRIS system.
  4. System Administration. Is the LMS so complicated or removed from the daily work processes that it requires a dedicated, full-time LMS administrator?
  5. Upgrade Fees. Not if, but when your business grows, will the LMS handle it and what kind of cost does that entail? If you need to upgrade your plan to add additional users –or downgrade if you need fewer seats– some companies will charge fees for that. Anything that will be custom to your business and is not ‘standard’ can cost you. Many LMSs advertise themselves as “white label” but really only permit some basic branding within their library of templates. 

  6. Customization. Anything that will be custom to your business and is not ‘standard’ can cost you. Many LMSs advertise themselves as “white label” but really only permit some basic branding within their library of templates.

  7. Maintenance Fees.
    Who is responsible for maintaining the LMS? One of the most important costs to consider is LMS maintenance. This includes keeping your online training content fresh, downloading add-ons or adding new releases. IT will most likely need to revisit customization and update workflows that were broken by the new version. Is there a charge for new versions or add-ons? Can the LMS admin manage it or is IT support required?
  8. Support. If you have a question or concern, will it cost you? New software always requires significant end-user training, help desk support and hand-holding to ensure sustainable configuration and adoption.
  9. Creation of Online Training Content. Calculating the LMS costs also extends to the online training content itself. After all, your new LMS won’t be of any use if there isn't any online training content to upload. Therefore, you must factor in the expense of developing or curating online training content.
  10. Tool Replacements. You may discover that your new LMS doesn’t mesh with third-party eLearning authoring tools, CRM software and other essential assets. As a result, you’ll have to invest in replacement tools to fill the gap.

The Selection Process

Creating an accurate budget is the secret to LMS success. And, in order to get a holistic number to work with you’ll need to factor hard costs, hidden costs and miscellaneous costs.

During the selection process, be sure to collect this information before making a final decision. 

Hard Costs

Generally, most businesses have a pretty good idea, depending on their unique situation, if they’ll need an LMS in the cloud or self-hosted. Both have different costs associated.

A self-hosted situation generally will require more time, resources and technical experience initially.

Both a SaaS and self-hosted LMS will offer similar features, licensing and administration costs, but the real difference in added costs for self-hosted will come from: set up (including system software, LMS, backup etc.), system administration and purchase of required hardware and software.

Installed LMS software, though it requires more significant initial investments is much more economic when considering a period of three years or more. As studies show, the bigger the company gets, the more it inclines to choose a self-hosted LMS as it acquires necessary infrastructure, IT resources and expertise. Plus, if the company already hosts another management software such as talent management or HR the implementation of one more system doesn’t involve that much extra difficulty.

One of the most cited benefits of the cloud is that it is cheaper than self-hosted installations — making enterprise-quality technology affordable for small businesses.

While a SaaS LMS will offer similar features, licensing and administration costs as other training systems, the real difference in added costs will come from: single sign-on authentication, integration with systems of record, risk and compliance management/security and customization and integration.

Hidden Costs

We’ve discussed this in the previous section. It’s important to ask questions to really pull the information you need from the vendor. This will likely reveal several hidden costs you probably weren’t aware of, and should be considered before purchasing an LMS.

A useful tip is to have a couple of sample use cases for vendors to consider when quoting which will help uncover some of those hidden costs and allow you to compare apples to apples.

Miscellaneous Costs

In addition to considering the main players, and even the hidden players, of LMS cost, there are also functionality issues with an LMS that will hit your pocketbook.

  • If an LMS doesn’t integrate with other systems…it’s going to cost you.
  • If an LMS doesn’t scale…it’s going to cost you.
  • If an LMS doesn’t provide thorough reporting…it’s going to cost you.
  • If an LMS isn’t secure…it’s going to cost you.
  • If an LMS isn’t intuitive and easy to use…it’s going to cost you.

 You get the idea.

There are many variables that go into the total cost of an LMS. Before choosing an LMS for your business, it’s important to gather all cost information together before making a decision. Because, when you do your due diligence, you’ll feel a sense of relief that you’re getting an LMS that fulfills your training and business needs without causing stress of going over budget.

ShareKnowledge provides competitive, no-nonsense pricing for a variety of needsShareKnowledge is available on premise, self-hosted private cloud, public cloud or hybrid deployment options. If you would like more information about how ShareKnowledge can solve your training needs, please fill out the form and someone from our team will contact you shortly.



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