Top Considerations To Create An Accurate LMS Budget

Top Considerations To Create An Accurate LMS Budget
Summary: Does online training really give ROI? If so, how much should be invested in your new online training program? In this article, I’ll highlight the top points to consider to create an accurate LMS budget for your organization.

How To Create An Accurate LMS Budget

Every company has different goals and business strategies. However, one thing all companies have in common is their need to retain top talent. You must be able to keep your employees well-informed and happy on the job in order to stay competitive. One of the best ways to achieve this is to invest in your employees’ professional development. Here are the top tips to create an accurate LMS budget so that you can retain your VIPs and effectively allocate your resources.

eBook Release: How To Buy The Right LMS: The Complete Guide, by eLearning Industry
eBook Release
How To Buy The Right LMS: The Complete Guide, by eLearning Industry
Find out the tell-tale signs that your organization is ready for a Learning Management System.

1. Measure Online Training ROI

Any budget committee is concerned about ROI. Or as the adage goes, “You have to invest money to make money”. But how do you measure an intangible such as knowledge? Or the online training to impart the knowledge? To help obtain the buy-in of upper management, consider a study conducted by Accenture [1]: For every dollar spent on training, the company makes this dollar back and $3,53 additionally, that is a 353% ROI. It may even be possible to spend less on L&D after a couple of years and still see workforce growth. Based on this finding, the study concluded that a training program must be treated as a business and not as a separate entity, with a business plan and actionable goals to achieve.

2. Research Various Pricing Modules For Learning Management Systems

There are several options available for Learning Management Systems. LMS platforms come in three different option categories. It’s wise to research the various LMS pricing models to find the one that’s best for your LMS budget and online training requirements.

a. Cloud-Based

  • Pay Per Learner
    There are no software downloads required for the learner and it is accessible anywhere at any time. This fee is based on the number of online learners using the LMS on a monthly basis. With this package, there may be features included that you don’t need or want. However, you don’t have the option of removing them for a lower rate. LMS vendors may require a monthly or annually payment.
  • Pay Per Use
    If you’re looking for a Learning Management System with multiple tools and modules, this might be your best bet. The pay agreement is for the tools used and the number of users per month. One caution for this option is to verify what the LMS vendor means by “use” before opting in. LMS vendors have different qualifications for what is considered "use", such as a module or possibly the entire online training course.
  • Pay Per Active Learner
    This option is slightly different. You don’t pay for every corporate learner enrolled. Instead you pay for those who are actually taking an online training course. This is a great option for larger companies who may not have all corporate learners taking online training courses at the same time.

b. Self-Hosted

  • Limited Time Licensing (Can Also Be Cloud-Βased)
    Pricing in this option is based on a flat fee. The amount of users or number of online training modules does not increase the rate. There is a licensing renewal fee that will occur annually.
  • Perpetual Licensing Fee
    A one-time flat fee is paid by the organization for the LMS. This fee covers all aspects of the product. Then the organization downloads the software and hosts it locally. They can use the LMS for as long as they want. There are no expiration dates. As an added bonus, most LMS vendors offer free upgrades.

c. Free Learning Management Systems

There are many options for Learning Management Systems that are completely free, especially the open source models. A huge problem with this option is the need to be tech savvy in order to use these LMS platforms. An option to consider if you are not technologically gifted is hiring an LMS specialist to help set it up and train staff on its use. As with anything free, there may be hidden fees or problems. With this option, there are no support services available, so maintenance may be expensive.

Studies have shown that training and development of personnel leads to ROI profits. Using a statistically generated dollar amount, you have a good starting point for determining what type of LMS budget is right for your training department and your company. Once the LMS budget range is calculated, decide which LMS platform will best fit the needs of your company.

Do you need a guide that has all the information you need to find the right LMS for your requirements and budget? Download our free eBook How To Buy The Right LMS: The Complete Guide to discover the key criteria and fees to consider when choosing your new LMS platform. You’ll also learn about the top LMS terms that every eLearning pro should know, as well as tips to help you implement your new LMS and start reaping the rewards that online training can bring to your organization.


  1. Vanthournout, Donald, et at. (2006). Return on Learning: Training for High Performance at Accenture. Evanston, Illinois : Agate Publishing.