Most cloud based learning management systems (LMS) quote their pricing on a subscription basis. The primary scaling factor is typically users or active users, in addition to a la carte features. There are several definitions of "users" in the marketplace, which can cause confusion for purchasers.
In this post, we lay out three common definitions of "users." There are a few additional pricing models that exist, such as flat fee per registration or revenue sharing, but the vast majority of LMS systems base pricing on some variant of "users."
1. Total User Accounts ("Registered Users")
Historically, learning management systems have been priced based on the total number of registered user accounts. This is a simple metric to monitor, and suitable for businesses with a predictable and stable number of learners. For example, a business with 150 employees and low growth/turnover can purchase an appropriately sized system with a clear understanding of cost per employee.
Downsides of this approach:
- It can be difficult for businesses with unpredictable usage or a large number of infrequent users
- It's more costly in terms of paying for users who don't actually access the system, though with higher predictability on costs (which may be preferred for non-profits and other grant-driven organizations)
- This model can add significant administrator overhead for deleting old accounts.
- Data loss can occur for deleted accounts.
2. Total User Accounts with the Ability to Log In ("Eligible Users")
To address the data loss point above, some LMS systems allow the administrator to keep user accounts in the system but designate them as inactive. These systems are priced based on "active users," where "active" means the user has the ability to log in, though they may not actually do so. Although this has the advantage of keeping historical data for inactive users, most of the downsides from #1 still apply.
Unfortunately, LMS providers use the term "active users" to refer either to users with the ability to log in, or to the ones who actually do (see #3 below). This is undoubtedly confusing for LMS purchasers. A clearer term for this pricing model might be "eligible users."
3. Total User Accounts who Actually Log In ("Active Users")
An increasing number of LMS providers, including Skilljar, structure their pricing based on user accounts who login to at least 1 training course during the billing period. This has the advantage of paying for what you use and not requiring admin overhead. However, it can be difficult to predict the percentage of your users who are active in any given month. Still, if you are willing to trade some cost predictability, you will likely save money versus either of the other two models above.
This is an ideal model for most extended enterprise use cases, since customer & partner training usage tends to be sporadic and less predictable than internal employee training.
LMS providers have evolved their pricing structures to meet the growing demand for online training across many use cases - from internal to external, and from academic to corporate. As you are selecting an LMS, think about your pricing priorities and what type of usage patterns you expect, in order to pick the right model for your organization.