7 Elements Every LMS Contract Should Have And Tips To Negotiate The Best Terms
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7 Elements To Look For In Your LMS Contract And How To Negotiate The Best Terms

Purchasing a new LMS involves a significant amount of product research, budgeting, and training need analysis. But even if you’ve done your due diligence, the LMS contract could present you with one last roadblock. The LMS vendor is providing a service in exchange for licensing fees or monthly subscriptions. Thus, you must ensure that you get the best value for money and don’t end up trapped in a resource-draining contract. Below are 7 elements to look for in your LMS contract. I’ll also share tips to get the best LMS contract terms so that you can stay on budget without sacrificing your must-have features.

1. Scope Of LMS Implementation

You need to know what’s included in the package deal before making any long-term commitment. What services will the LMS vendor provide? Which features are you paying for? How will the LMS be deployed? These are all things to consider when drawing up your LMS contract. Make sure to get everything in writing so that there isn’t any confusion later. This is also the time to iron out issues or discrepancies with the LMS vendor. For example, their website clearly states that certain functions are included with your pricing plan. However, they are missing from the LMS contract terms.

2. LMS Contract Duration

What are the LMS contract start and end date? In some cases, LMS vendors may opt for an open-ended contract that involves a written termination clause. For example, either party can end the agreement with a 30-day notice. This is usually reserved for subscription-based services. However, even SaaS Learning Management Systems can have set contract durations that require a commitment.

3. Payment Structure And Frequency

How much do you have to pay up-front? Are there monthly or yearly fees involved? And what’s included in your pricing plan? These are all essential elements that must be in your LMS contract. You may also want to request a detailed list of the expenses. For example, how much is the personalized support fee or the installation costs?

4. Support Services

The LMS vendor you choose should stand behind their product and provide the ideal level of support. The question is: how much support does your L&D team require, and how much can you afford? Some LMS vendors include standard support services in their monthly subscription or licensing fees, such as email contacts or online tutorials. However, you may have to pay extra for advanced options, like a toll-free phone or live chats. Make sure that all this is outlined in the LMS contract to get it in writing.

5. Upgrades/Updates

Is the LMS vendor responsible for updating the system periodically to reflect the latest tech advancements or trends? If so, do they include this in your payment plan? Some LMS solutions, particularly licensed options, don’t include free updates. Thus, you must pay extra to keep your LMS fully functional for years to come. Another issue to consider is the upgrades. Will you automatically receive new add-ons when they become available or at an additional cost?

6. Intellectual Rights For Your Content

It’s crucial that your LMS contract mentions intellectual property rights. Namely, that you still retain the rights to all your content, even though it’s being uploaded to their LMS. If the product has a built-in asset library, make certain that you still retain ownership of all the content you create using their multimedia. For example, an eLearning course that you develop in-house using one of their eLearning templates or a cast of their cut-out characters.

7. Termination Terms

In addition to the LMS contract duration, it’s also wise to outline the termination terms. Such as when you’re able to end the LMS contract, who can terminate the agreement, and how. Another important consideration is early termination fees or penalties. For example, how much does the LMS vendor charge if you cancel the LMS agreement a month into your year-long contract?

Tips To Negotiate The Best LMS Contract Terms

a. Request An Itemized Breakdown

Before signing any contract, ensure that the LMS vendor provides an itemized list of fees. How much do they charge for add-on support services every month? Are upgrades included, or do you have to pay extra? A detailed expense sheet gives you the opportunity to not only be aware of ‘hidden’ fees but also to opt-out of certain features. For example, some LMS companies may give you the option to remove the expanded asset library from the LMS contract to cut costs.

b. Set Up A Meeting With The LMS Vendor

Their sales pitch may be spot-on but setting up a meeting gives you a different perspective of the LMS vendor. Create a list of questions to ask so that you cover all the key points and respect their time. This also gives you the opportunity to negotiate a better deal, face to face. For example, discuss possible add-ons or upgrades that they can add to sweeten the deal.

c. Inquire About LMS Packages

Certain LMS vendors offer special pricing plans for packages. If not, you can always inquire about discounts if you plan to purchase additional products or services. Or if you agree to a longer commitment. For example, are they willing to lower the licensing fee by 10% if you sign-on for 2 years instead of 1?

When drawing up an LMS contract, there’s no room for ambiguity. Everything should be clearly worded to ensure that both parties know what to expect, as well as what’s expected of them. You might also consider enlisting the aid of trained legal professionals to review the LMS contract and address your concerns. They can decipher the legal jargon and make certain that you get the best value for money.

Many organizations focus on the product and its unique selling points, but they overlook a crucial step in the LMS vendor selection process: vendor vetting. Read the article 9 LMS Vendor Selection Criteria: What Really Matters, and discover what you should look for to avoid buyer’s regret and ensure that the LMS checks all your boxes.

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