Buying an LMS for a Two-Hundred-Person Company: Seats, Content Costs, and Hidden Fees

There is one key aspect that should be taken into account when looking for a proper Learning Management System (LMS) that will fit well if a company employs 200 people. The thing is that it is necessary to make sure that the system chosen is flexible enough but still could provide concrete numbers regarding costs. While the demonstration usually focuses on the great look of the LMS and its beneficial features, the selection of a product implies knowing the total cost of ownership that comes to identifying the number of users who will take advantage of using the LMS, the license model for content creation, and some other inevitable costs. It is especially important for a company like this because it may become the key to success.

What is an LMS, and why do Companies Buy One?

The Learning Management System (LMS) is considered to be a unique technical platform that is designed to implement all the training activities of any organization. That is why, in the past, organizations did not have to create different Excel document, paper-based documents, or even video content. But now everything has changed since LMS provides an opportunity to combine all the training processes into one huge system, including both automated hiring processes and complex compliance programs that help HR and L&D departments upload all needed materials, assign training by roles, and control the whole process at any given time.

In general, companies invest in LMS to make their training activities scalable and efficient, and to make them correspond to various regulations and standards. With the growth of the company (in case there are 200 people working in the organization), the risk of performing the training process manually becomes higher. The implementation of an LMS helps in documenting the required training on safety and certification training provided by the industry.

Does a 200-Person Company actually need an LMS?

• Provides automated tracking of important training programs (cybersecurity courses, programs on HIPAA and OSHA regulations, courses on prevention), as well as generating automated audit reports.
• Eliminates the need to spend time on boring face-to-face training classes by using a common system of self-paced training for employees.
• Makes it possible to automate all processes connected with assigning courses and sending reminders to people.
• Helps keep the training quality the same, no matter where it happens, like at work or off-site.
• Makes it possible to retrain workers if the team size or skills do not meet the needs. 

The Relevance of an LMS for Staff Training

• Enables automated tracking of important courses (courses related to cybersecurity, courses about HIPAA and OSHA, courses that deal with prevention). Also enables automated audit report generation.
• Saves staff time from having to attend dull classroom training sessions through a standardized system of self-paced training.
• Enables automation of all processes related to assigning courses and reminders.
• Enables keeping the quality of training consistent irrespective of location – in-office or remote training.
• Enables the re-training of employees if staffing and skills fail to meet the requirements.

When You Can Wait (Other Solutions Work)

• It will be unnecessary for you to make the compliance documentation, and safety certificates will also not be needed.
• If the members will remain in the same building and you do not often introduce new members, then it will be easier for you to conduct the training in one place.
• A quick and easy way to exchange information is to store SOPs in basic storage systems such as Google Drive, Confluence, or Notion.

How does LMS seat Pricing Work for 200 Employees?

When it comes to the choice between LMS licenses for an organization with 200 employees, one can select between two licensing methods: named user license and active user license. With the first method, one needs to pay once for each registered employee who created a profile in the system. Active users, on the other hand, are being charged only for those who used the system during the specific billing cycle.

With the growth of employees to 200, the company usually enters the mid-market pricing stage. It starts experiencing lower prices compared to smaller companies, where one should expect an estimate of $3 to $8 per user per month from most of the vendors on an annual basis. The core access for the software varies from $7,000 to $20,000. Also, most vendors bundle access into fixed packages such as 100, 250, or 500 seats. So even if the company has 200 people and chooses a 250-seat package, it will need to pay immediately for those extra 50 seats.

The biggest mistake that companies make in the middle part of the industry is to overlook user churn and contract modifications cause. The company will have to pay extra for extra seat packs if the number of new hires and churn changes considerably. Meanwhile, with the Active User model, the company has to provide the minimum number of seats or pay more.

What should you Budget for LMS Training Content?

Concerning the training budget of a company of 200 employees, 3 different strategies can be employed that vary greatly in their price. The choice of what amount should be allocated to the training depends mainly on whether the company will choose ready-made courses, develop the courses inside the company itself, or look for another company to develop the programs.

The easiest way to develop a training program would be to subscribe to one of the online course catalogs such as LinkedIn Learning, Go1, or Business. The price of the subscription for every employee is estimated to range from $25 to $150 annually. Thus, a company with 200 employees, subscribing to one of the catalogues, should spend from $5,000 to $20,000 annually depending on the training area covered by the catalog. With this strategy,

In case your training uses proprietary processes, software, or unique onboarding of products, you require a customized development of your own course content. If you would like to create your own courses, you need to purchase authoring tools, such as Articulate 360 or Adobe Captivate, whose prices range from $1,000 to $1,500 per year for a single authoring license, as well as spend internal salary hours for developing the content. 

Alternatively, you can outsource the development of content for learning platforms to an instructional design agency, where the project can cost you from $3,000 to $10,000 per hour of interactive e-learning. In case we talk about a reasonable budget for a trainer for a company of 200 employees, it usually includes a subscription for standard compliance and 5,000-15,000 for internal tools or custom courses by an agency.

Which hidden LMS Fees catch Buyers off Guard?

1. Installation and training process: Often, many providers will bill for the very first stage. Usually, it will comprise setting up the training space, loading your user list, connecting your company email domain, and conducting a brief administration training session. The average cost for such a process is around 1,000-5,000.
2. Integration with HR tools and Single Sign-On (SSO): To connect your LMS to any HR software or even to an Identity Provider for SSO integration, it is possible to incur additional costs. The setup fee per link is common among many vendors, and they are typically priced at 500-2,000. In addition, there might be some extra monthly fees for maintaining such a connection.
3. Migration of data and old Courses: Usually, migration of old training content, old completion history, SCORM packages, etc. is charged separately. The same goes for data migration from spreadsheets. Hiring specialists to transfer all the content will significantly increase your budget. The cost range can be between 1,000-10,000.
4. Lower Plans: May lack elements that would give your subscription the feeling of being complete. Features like those can appear exclusively on higher plans or be available as paid add-ons. Common examples of those features are more control over your brand, additional reporting tools, automatic completion certificates, customized role configurations, and API access.
5. Support and Account Management: If you have basic subscriptions, then chances are that all you will get in terms of assistance is email support and tickets through a website. It is quite common for that type of support to be promised within 24 to 48 hours. However, in case you require phone support from a specific Customer Success Manager or a guaranteed service level agreement, then you should look for premium plans.

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Pro-tip

In case of bids for an LMS deal for 200 employees, add 10% to 15% of additional allowance into the contract. It will help to compensate for employees joining the company during the period of the contract and who have not been accounted for in the initial headcount. Moreover, try to set a 1% cap on the increase per renewal in the master service agreement. Do not forget that the contract should contain information about no one-time setup or integration fees for the new subscription. Before signing the contract, use the 30-day sandbox to verify the SCORM lesson files, make sure that video formats are supported, and verify the HRIS connection.

How do you compare LMS vendors on total cost?

1. Standardizing the user Definition: Make sure that each operator provides pricing based on the same definition in order to compare them. Define one target: either 200 named users or 200 monthly active users. Also, it is necessary to define the criterion of active usage in your particular case. Is it logging or completing the course?
2. Calculate the total cash expense for 3 years: Consider the total cost distribution over three years. Include the basic subscription fee. Include implementation. Add the cost of integration items, such as HRIS and SSO connectors. Do not forget about extra costs for the content library.
3. Separate one-time and yearly costs: Split the cost into Year 1 and other years. In Year 1, include setup expenses like data migration, administrator training, and custom domain work hours. For Year 2 and Year 3, include the recurring expenses such as seat renewal, support service levels, and storage costs.
4. Do Growth & Overages Scenario: For each quote you got to push for vendor bids, run a stress test (15-20% hiring increase or massive retraining). Find out what overages will be for the addition of 20-30 seats within the agreement as compared to going over in regard to the Active Users cap.
5. Internal Resource Hours: Do not underestimate the resource hours you will spend internally. A less expensive solution can turn out to be more expensive if it requires 50 or more hours from your internal IT and HR team. Sometimes it is easier to pay more for a more comprehensive package.

Conclusion

Selection of the LMS for a company of 200 employees involves weighing various factors such as the number of seats you will use and the amount of initial payment. Consider different plans offered by the vendor and additional services offered within the package. Moreover, consider some additional expenses that will occur in the future, including configuration activities and integration processes. With all these considerations, you will be able to select the LMS that will meet your requirements of scalability and stay in budget. Apply a solution that will help you to compare the software and make a purchasing decision. Making such comparisons according to customers' reviews, pricing plans, and features of established companies will enable you to make a reasonable decision concerning software.