If you’re considering adopting an LMS (or in the process of implementing one), you’re going to need to formulate a business case for the learning technology. One of the easiest ways to do this is to explore the cost differences between LMS learning, and your current method of learning, whether it’s face-to-face, webinar training, or through a proprietary LMS.
If you’re conducting face-to-face learning, calculating the ROI is simple. We’ll show you how to get started.
Here are some of the costs related to face-to-face training to take into consideration:
- How many people in your organization do you train per year? Consider both new and existing employees.
- What is the average cost of each course?
- Do you pay learners to travel to attend courses?
- Do you pay for accommodation for these learners?
- What’s the annual cost for an LMS that will fit your requirements?
Let’s apply these to an imagined scenario:
- You have three job sites in Los Angeles, and one in San Diego.
- 100 people take two, two-day courses at $595 per person each year. The total cost is $119,000.
- On average, 50 people travel to attend the learning event. The average cost of travel is $0.60/mile, with an average travel distance of 30 miles. The total cost is $1,800.
- 25 of these 50 travellers require accommodations, at $130 per night. The total cost is $6,500.
- The grand total for 100 people to attend two, two-day courses in person, is $127,300.
These costs will be higher if air travel is required, and if you are required to supply food. You will also need to consider the cost of administrative tasks, such as tracking attendance, and who has and has not completed training. This record keeping can be done manually, or through an HR management system online.
The costs of a hosted Learning Management System:
An average annual cost for a hosted LMS system based on Totara Learn or Moodle LMS is around $20,000 to $30,000. This will vary depending on the add-ons you choose. A hosted LMS will accommodate more than 100 learners, and allows you to run as many courses as you like, making them available 24/7, 365 days a year, and receive real-time reporting on learner progress. This cost does not include course development or purchasing. Most companies maintain proprietary systems to develop their competency courses or contract with instructional developers to produce and develop on their behalf.
When paid for on this basis, a course can cost anywhere from $10,000 to $100,000 - depending on the length and level of details involved. When you have paid for course development, you can use the course any number of times you like — this reduces the per-student learning fee significantly over time. The cost for the platform does not change no matter how many courses you run in a year.
If you want more information on calculating the ROI of your LMS, watch our on-demand webinar, Top Strategies for Assessing the ROI of Online Learning.