The is the final act, the last stop on your journey to selecting a new or replacement LMS for external training. Let’s take a look in the rearview mirror to see how far we’ve come. Here are the posts, each providing perspective and proven insights to help you succeed:
All of these are preambles to the proposed financial relationship. John Leh, a respected LMS selection consultant writes in his Talented Learning blog, LMS License Models: What in the World is Going On?:
"Every LMS provider has a unique pricing or license model based on a secret recipe of guesswork, functionality, industry, definition of user or usage, number of users, bandwidth consumption and overall service level agreement."
To be a strong negotiator you need more information about pricing. You need to know:
The most common LMS pricing model is usage-based. It is fair to both parties, predictable and profitable. Sometimes this is called the SaaS license or active user model because it is based on learner consumption – delivering the course(s) to the individual.
Mr. Leh adds:
“Usage can be counted based on users logging in, registering for an event, buying a course or launching a course and can be measured and paid for monthly, quarterly or annually. Typically, vendors will provide discounts for a contractual commitment to a certain minimum threshold of usage and cost.”
If you have a smaller audience of external users, you may find that pricing is in tiers, giving a range of usage for a set price. Larger organizations may negotiate for estimates of actual usage as a baseline.
Your negotiations may further define the combinations of usage licensing that are particular to your business. For instance, you may opt for per location usage instead of per individual. However, a price based on the consumption of courses is difficult for an LMS to track, so this might not be a viable option.
An unlimited usage agreement may seem attractive but be careful, unless you have the leverage of high-volume active learners, this can be expensive. Additionally, this model is not scalable as you grow your training business. The fixed cost leaves no room for the ups and downs of business cycles.
The variables that will affect the LMS pricing model
These variables directly affect pricing:
Guidelines and insights for negotiating LMS pricing
If this is your first LMS solution, when you first saw the pricing you were at once shocked, dismayed and panicky. What can be cut? How can we get this price down?
If this is your second time around the block, you know that this is not the time to shift to the cheapest LMS. Focus on the capabilities you need to meet your business projections. Adding elements and capabilities later will be much more expensive in time, resources and money.
While we can’t provide specific financial advice, we do have some time-tested guidelines for LMS negotiation and how to get the best deal possible:
The contract for a training company LMS
The contract is the last and final step in closing the deal. There are two things to bear in mind to make the most of this last step:
Outsourcing to an LMS selection consultant
If you have hired an LMS selection consultant, they will be guiding you through negotiation to the completion of the contract. As we’ve said, unless you’ve gone through the LMS selection process before, hiring an LMS selection consultant is almost always a good call.
Thought Industries has your back
Selecting and evaluating a new or replacement LMS for external training is a difficult process. We know that the more informed you are, the more successful you’ll be in finding the best LMS solution for your company.
To get you started, and pointed in the right direction, our team has put together 59 Questions to Consider Before Selecting an LMS for External Training. It’s yours for free.
Download this free guide will help you identify and prioritize the software features you'll need to maximize the success of your online external training experience.