Making the Investment: Why a Learning Management System is Worth the Cost

Making the Investment: Why a Learning Management System is Worth the Cost


Absorb LMS


As we navigate through the fast-paced, ever-evolving landscape of modern business, it's essential to understand the pivotal role that continuous employee development and training play in maintaining a competitive edge.

Enter the world of learning management systems — a one-stop solution designed to manage and deliver training programs, track employee progress, and create a centralized hub for learning. These powerful platforms have revolutionized the way organizations approach employee development, offering a seamless and efficient online learning experience. However, with various learning management system (LMS) software options and pricing models on the market, it's natural to wonder if the investment is worth it.

Together, we'll uncover the true value of an LMS and how it can contribute to your business's success. Let's get into it.

The benefits of a learning management system

If you're reading this article, chances are you're already aware of the benefits of an LMS. In fact, you might even be using one right now to manage your company's learning and development initiatives. But in case you're not, here are some of the top reasons why an LMS platform is critical for every business:

1. Improved employee development and performance

An LMS serves as a catalyst for employee growth, providing easy access to a wealth of training materials and course content. This empowers employees to continuously develop their professional abilities, leading to increased engagement, job satisfaction, and overall performance. A well-rounded and dynamic LMS equips your workforce with the necessary tools and knowledge to excel in their roles, fostering a culture of continuous improvement and growth.

2. Greater productivity and efficiency

Online learning platforms enable employees to access training materials at their own pace, accommodating various learning styles and preferences. This personalized approach to learning allows for more efficient knowledge acquisition — directly contributing to increased productivity. Additionally, an LMS can streamline the training process by automating numerous administrative tasks, such as enrollment and progress tracking, freeing up valuable time and resources for other essential organizational activities.

3. Enhanced compliance and regulatory adherence

Industries with strict compliance and regulatory requirements for employee training — such as healthcare, financial services, legal, and other professional service industries — stand to benefit greatly from the use of an LMS. These systems can help organizations adhere to industry standards by offering relevant courses, tracking completions, and generating comprehensive reports to ensure compliance. As a result, businesses can mitigate the risk of non-compliance penalties and maintain a strong reputation in their respective fields.

4. Better tracking and reporting of training data

An LMS platform empowers managers and administrators with the ability to monitor employee progress, analyze training effectiveness, and identify areas for improvement with ease. This data-driven approach enables organizations to make informed decisions about their training programs and allocate resources more effectively. By harnessing the power of analytics, you can optimize your training strategies and ensure the best possible return on your LMS investment.

However, the best way to illustrate the benefits of an LMS is through real-life examples. Check out some of our customer success stories to learn more about how an LMS can help your organization.

The costs of a learning management system

Selecting an LMS involves more than just evaluating its features and capabilities — understanding the financial implications is equally crucial. While there might be free LMS solutions available today, they may not be up to your standards or feature-rich enough to meet your needs.

It’s important to remember that an LMS is a long-term investment. With proper care and maintenance, your system should last for many years and provide value throughout its lifespan. That said, what factors influence learning management system cost?

1. LMS pricing models

Different LMS providers offer various pricing models, including pay-per-user, pay-per-active-user, perpetual license fee, and open source.

  • Pay-per-user: In this model, you pay for each user registered in the system, regardless of whether they're actively using the platform or not. This model might be suitable for organizations with a consistent number of users engaging in eLearning courses.
  • Pay-per-active-user: This pricing model is based on the number of active users in a specific period, usually a month. This can be a more cost-effective option for organizations with fluctuating user numbers or seasonal training needs.
  • Perpetual license fee: A one-time payment grants you access to the LMS software for the length of the contract. However, this model may require additional fees for updates, support, and maintenance.
  • Open source: Open source LMS solutions are generally free to use and modify but often require more technical expertise to manage and maintain. Additionally, you may incur costs for customization, support, and other services.

2. Support

The level of support offered by an LMS provider can significantly impact the overall cost. Some providers offer basic support for free, while others charge extra for advanced support, such as 24/7 customer service, dedicated account managers, or on-site training.

3. eCommerce

If you plan to sell courses or other learning materials through your LMS solution, you may need additional eCommerce functionality. This feature can incur additional costs or require integration with an external eCommerce platform.

4. Extended functionality

Advanced features like gamification, social learning, and adaptive learning can enhance the learning experience but often come at an additional cost. Make sure to evaluate if these features are necessary for your organization.

5. Course Authoring

Depending on your LMS solution, course authoring tools may be built-in or require separate software. Built-in authoring tools can save you time and money, while external tools may add extra costs and compatibility challenges.

6. Analytics and business intelligence

Comprehensive analytics and reporting capabilities can help you track learners’ progress and make data-driven decisions. However, these features may come at an additional cost or require integration with other business intelligence tools.

7. Mobile access

Mobile access to your LMS is crucial for remote or on-the-go learning. Some LMS providers offer built-in mobile functionality, while others require additional investment for a mobile app or responsive design.

8. Integrations

Integration with other systems (e.g., HR systems, content libraries, CRM platforms) can streamline processes and improve user experience. However, these integrations may require additional costs or custom LMS development.

Calculating your ROI

By crunching the numbers, you'll be well-equipped to make an informed choice that delivers the best return on investment (ROI) for your organization.

The formula for calculating ROI is: ROI = (Benefits - Costs) / Costs X 100

1.  To measure the benefits, consider factors such as:

  • Increased employee productivity and performance
  • Reduced time spent on training administration
  • Improved employee retention and engagement
  • Reduced costs associated with traditional training methods (e.g., travel, printed course content)

2.  For the costs, include factors such as:

  • LMS software pricing model
  • Setup and implementation fees
  • Ongoing maintenance and support costs
  • Course authoring and content development expenses
  • Costs for additional features, integrations, or customizations

For example, let's say your organization invests in an LMS that costs $10,000 per year. After implementation, you see a 20% increase in employee productivity, which translates to an annual benefit of $50,000. Using the ROI formula:

ROI = ($50,000 - $10,000) / $10,000 * 100 = 400%

In this case, the LMS provides a 400% ROI, indicating a worthwhile investment for the organization. It's important to clarify that an LMS can benefit companies of all sizes — from small businesses to large enterprises. The key is to carefully assess your organization's needs and select an LMS vendor that aligns with your goals, budget, and employee training requirements.

Choosing the right learning management system

Embarking on the journey to find the best LMS for your organization is an exciting opportunity to unlock your organization's full potential and invest in its future success. By following essential tips and staying focused on your goals, you can transform your employees' learning experience, make a significant impact on your company's growth, and create a lasting legacy of achievement.

Choosing the right LMS vendor will allow you to invest in your organization's most valuable asset: your people. A robust LMS can adapt and grow with your organization, allowing you to tackle new challenges and seize emerging opportunities with confidence. By investing in a quality LMS, you're cultivating a fertile ground for innovation, collaboration, and excellence.

The cost of an LMS is just one piece of the puzzle. Get a demo with Absorb LMS to experience the whole picture.



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