The first wave of COVID-19 pandemic shut down educational institutions in 2020. The second wave of coronavirus pandemic made schools, colleges, and universities continue online classes in 2021. The adoption of learning management systems (LMSs) increased consistently with educational institutions switching from classroom-based learning to e-learning. The surge in the demand for eLearning solutions created opportunities for edtech companies and startups to launch innovative learning management systems.

Most of these new-age learning management system solutions are hosted in the cloud. They function by accessing virtual cloud resources. Hence, cloud-based LMSs make it easier for educational institutions to curtail overall eLearning costs by eliminating the need to set up and manage onsite IT infrastructure. Every educational institution will have the option to choose from a wide range of cloud-based LMS solutions in 2022.

But the software solutions will differ from each other in many aspects, including price. Most edtech companies and startups allow educational institutions to choose from a wide range of LMS pricing models. Each of these LMS pricing models has its own pros and cons. Hence, the decision-makers can curtail and control upfront and ongoing costs only by evaluating common pricing models or options while comparing on-premise and cloud-based LMS solutions.

7 LMS Pricing Models Educational Institutions Must Consider and Compare in 2022

1) Open Source Licenses

According to OpenSource.org,

Open source licenses are licenses that comply with the Open Source Definition — in brief, they allow the software to be freely used, modified, and shared.

An educational institution can use and customize open-source LMS solutions without paying any licensing fees.

But it has to incur additional expenses to set up, customize, and maintain the LMS solution. It must deploy IT professionals to customize, maintain, and upgrade the LMS solution according to the emerging eLearning trends. However, the open-source LMS can be used by a larger number of users simultaneously while remaining vendor-independent.

2) Perpetual License

According to ProfitWell.com,

With a perpetual license, customers can hold the license and access the product indefinitely. However, they will not have access to ongoing product updates or technical support after a certain time – usually beyond a year of purchasing the perpetual license.

Perpetual licensing is one of the most preferred pricing models for on-premise LMS solutions. The LMS pricing model enables an educational institution to use an on-premise LMS by paying a one-time licensing fee initially. But the school or college needs to pay an annual maintenance fee to update and scale the LMS software according to the latest eLearning trends.

3) License Fee/Subscription

Unlike perpetual licensing, periodic licensing requires the educational institutions to access and use the LMS solution by paying licensing fees on a monthly or yearly basis. The subscriber cannot use the LMS solution without renewing the subscription after the stipulated time. Large educational institutions opt for this LMS pricing model to increase the number of learners and courses without paying additional fees.

Also, this pricing option enables an organization to avail of relevant features and tools by customizing the cloud-based LMS according to its precise eLearning needs. Many edtech companies allow customers to choose from multiple subscription plans. The educational institution can avail of additional features or advanced tools only by subscribing to a high-value plan or package.

4) Pay-as-You-Go Pricing

Pay-as-you-go (PAYG) is one of the most preferred pricing models for cloud computing. As its name indicates, the PAYG pricing model allows educational institutions to access a cloud-based LMS solution by paying only for the resources used by them. This is one of the LMS pricing models which are directly linked to resource usage. An organization can save funds by curtailing eLearning costs when the number of learners is low.  But it needs to spend more when the number of learners and courses included. Most organizations opt for PAYG pricing when they cannot estimate the number of learners accurately.

5) Pay per Learner/Course Pricing

This pricing model requires educational institutions to use an LMS solution by paying according to the number of learners or courses. The edtech companies supporting the pay-per-learner or pay-per-course pricing options often provide learners with access to a cloud-based LMS that is developed with many modules, lessons, features, and tools.

Also, they allow organizations to create individual accounts for every learner. The customers also have the option to customize the LMS according to their precise eLearning strategies by including specific modules, features, and/or courses. Many small businesses and startups these days opt for this LMS pricing option to train employees irregularly.

6) Pay per Active Users

Despite being one of the popular pricing models, the pay-per-learner pricing model does not consider resource usage or consumption. Pay per active users pricing model helps organizations to overcome this important shortcoming of the pay-per-learner pricing model. When an organization opts for this LMS pricing model, it needs to pay only for the users who accessed the cloud-based LMS solution actively during a particular billing cycle or pay period. Many enterprises these days opt for this LMS pricing model to provide training to multiple groups of employees and customers without paying for inactive learners.

7) Custom Pricing Models

There are many businesses and educational institutions that lack adequate resources to adopt and continue eLearning. Hence, they do not find these common LMS pricing models viable. Many edtech companies and startups these days help customers to avail of LMS solutions by overcoming budgetary constraints by supporting custom pricing models.

An organization cannot access all features and tools included in the LMS by opting for the custom pricing model. But custom pricing model makes it easier for schools to deliver eLearning and businesses to train employees by leveraging an LMS. Most edtech companies allow customers to switch to other LMS pricing models in the future.

While selecting an on-premise LMS or cloud-based LMS in 2022, every educational institution has the option to choose from multiple pricing models. But the decision-makers must evaluate the pros and cons of common pricing models by following an LMS pricing guide. Also, they must use the pricing models as one of the key parameters while comparing LMSs and edtech companies in 2022.