Top 10 Things To Consider When Estimating Your LMS Budget

Establishing a budget for employee development can be a challenging task for many HR professionals. With the global pandemic, this task becomes even more difficult.

Even though there are many uncertainties, it is critical to plan for and be clear about particular learning requirements and associated costs, such as that for a good learning tool like an LMS.

A learning management system enables you to deploy online training on a large scale, regardless of your goals and job responsibilities. Every employee in your organisation can use the LMS platform to receive customized online training resources.

But how much should you expect to pay for a good learning management system? Here are the 10 most important factors to consider when estimating your LMS budget.

Factors To Consider When Estimating Your LMS Budget

The key to LMS’s success is creating an accurate budget. It enables you to make the best use of your resources and deliver personalized online training materials without breaking the bank.

Here are a few things to include on your LMS expense sheet to create a reasonable budget.

1. LMS Training

Even the most user-friendly tools necessitate some training. This is especially true if your learning and development team is new to the LMS platform and has never used one to implement and track online training before.

Some LMS providers offer free online training through instructional videos and other online resources, whereas others provide one-on-one assistance from an IT specialist who instructs you through all of the key features.

It’s critical to inquire about the learning curve ahead of time, as well as which support services the LMS vendor incorporates into the package.

2. Installation And Initial Expenses

If you buy your LMS explicitly, you should expect to pay the licensing costs upfront. Even if you choose a monthly or yearly subscription, you must still consider all of the preparation costs.

Evaluate your current online training materials to prepare them for transformation and the time it takes to analyze the available options and identify the optimal LMS that aligns with your objectives.

For instance, the LMS vendor may provide a free trial and demo, but you will be required to still spend payroll hours evaluating each LMS platform to test out the features and relevance.

3. Licensing Fees On A Monthly Or Annual Basis

Some LMS platforms charge a license renewal fee on a monthly or annual basis. If you do not renew your license, you may be refused access to the LMS platform and lose certain privileges.

LMS vendors may even provide various subscription packages. For example, one’s certain package may be designed for a specific number of users and includes only the most basic features.

This is the best option for smaller organizations that want to evaluate the LMS before committing to a long-term contract with more advanced features.

4. Fee Per User And Learner

The pay-per-user and learner fee is another LMS pricing strategy to consider. This option allows customers to pay only for active users, making it a more cost-effective option for organizations incorporating online training on a limited scale.

Keep in mind that some LMS providers have a minimum user requirement. For example, there are a few vendors that require you to must have at least 40 to 50 active users.

Another option is to charge per course and module. In this case, you are charged based on the number of online training materials you upload to the LMS.

5. Consistent eLearning Authoring Tools

You may already have eLearning authoring technology in your organization. They may, however, be incompatible with your new LMS. In that case, you’ll need to buy new software to develop effective online training resources that can be saved in the LMS.

Alternatively, you may wish to purchase additional quick eLearning authoring tools that help speed up the development of online training. All of these expenses should be included in your LMS budget.

6. Payroll For The Learning And Development Team

Without the all-essential human factor, no LMS budget is complete. You must add up all of the payroll hours spent on the LMS process, from choosing the best tool to implementing and tracking the online training content.

The LMS is only as good as the people who use it. Those individuals will require time to master the tool before applying all of their skills and talents to putting your online training strategy into practice with the assistance of the LMS.

It’s a good idea to overvalue the number of payroll hours required for each task. The remaining funds can then be used for other factors of your online training development, such as gathering eLearning reviews from your corporate learners to improve the benefits of your online training course.

7. Upgrades And Additional Features

If you choose a more basic and simple LMS package, you may need to consider the cost of upgrades and extra features, especially if your online training is expected to scale and you need a stronger, more reliable, and more flexible LMS.

An example of such a situation could be your need for more advanced support services and reporting abilities to receive customizable LMS reports that focus on particular areas of problem in online training.

8. Costs Of Online Training Development

You may have chosen a strong LMS, but it cannot develop and implement online training courses on its own. That means you’ll have to include the costs of consistently creating online training courses in your LMS budget as well.

This includes a wide range of costs, such as gathering images and graphics for use in your eLearning course structure and employing Subject Matter Experts and Instructional Designers to create purposeful online training experiences that correspond with your organization’s goals.

9. Ongoing Maintenance

Learning management systems necessitate ongoing maintenance. To stay on the cutting edge, you must keep updating your online training content and integrate new multimedia.

Moreover, the LMS may necessitate software updates on a timely basis. This ongoing maintenance demands payroll hours and, in some cases, unanticipated fees.

As a result, it’s always a good idea to budget for LMS maintenance in your online training budget.

10. Remember To Include Indirect Costs

When developing your budget, you must also account for a total count of indirect costs. These indirect costs usually involve employee absence and the impact on the organization.

Accounting for employee absences adds up fast if you calculate the organization’s average hours of formal learning for every employee per year.

This also applies to any position that may require to be filled in temporarily while your employees are in training. Such costs should be factored into your budget.


Creating a realistic and accurate LMS budget allows you to better allocate your resources and select the LMS platform that meets your specific requirements.

The key is to account for all hidden costs, payroll hours, and time spent on the process. For example, the time you’ll need to devote to training your employees to use the LMS effectively.

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