How can you compare the cost of your Learning Management System if each service uses a different pricing model? Here’s the breakdown.

Educators new to online education often find themselves faced with a bewildering array of options for their learning management system. Each of these platforms, apart from offering different features, interfaces, and user experiences, also comes with its own pricing structure—whether that means taking a cut of your sales, charging by the user, offering a tiered monthly subscription, or charging an annual licensing fee.

The LMS pricing plan you choose can have significant repercussions for your business. In some cases, it could expose you to a wide audience while also taking a big chunk of your sales. In others, it could simply make it harder for you to get your business off the ground. However, understanding the implications of these pricing structures can be complex, and since they’re all different, making a one-to-one comparison isn’t always possible.

So, in this post, we’re going to do a deep dive into what some of these pricing structures mean from a business perspective so that you can make the best choice for your learning program.

Elearning Marketplace: Host your course for free, lose a cut of your profits.

One of the most famous learning platforms is Udemy, a global marketplace where any instructor can sign up for free to sell their courses potential learners around the world. Because it’s so well known, it can attract a wide range of learners who can search for courses by subject or keyword. This means instructors on Udemy get to tap into a huge audience without having to build their own marketing from the ground up. Sounds amazing!

Unfortunately, that’s where the good news stops. Udemy strictly controls how sales happen on their site, while also taking a huge cut of all transactions. They not only set both minimum and maximum price points for your courses (nothing under $9.99 and nothing over $199.99), they also take 63% of all sales made through their marketplace, whether a student has clicked on one of their ads or browsed through the site.

For users who opt into the Udemy Deals Program, the situation can be even worse. Udemy promotes this program as a way for them to run targeted discounts in specific markets to draw in more students, but what this really means is that at any time they can slash the price of your $79.99 course to $9.99 in order to draw in promotional sales, and they walk away with a cut of that revenue.

The only way you can keep most of your list price (97% after transaction fees) is if you run marketing promotions using your own trackable coupons or referral links, but then you’re back to running your marketing yourself.

Tiered Pricing: Easy onboarding, but everything you need is just out of reach.

While Udemy is certainly a well-known brand, most LMSs don’t actually use the marketplace pricing structure. Instead, they offer purchasing tiers with monthly or annual subscriptions, so that educators can choose whichever plan seems to best fit their budget and their teaching needs. These LMSs usually offer unlimited users and courses, and only take a modest cut of profits (maybe 5%), and mostly only on their free plans.

Overall, tiered pricing plans like this have a lot of benefits. Users who are just starting out can keep their costs low by going without a few features, while those with bigger budgets can use more advanced tools. However, in practice, this payment structure has some significant pitfalls.

First, as anyone who has ever looked at these pricing tiers knows, the tool you really need always seems to be justout of reach. That’s understandable! LMSs are businesses, and they need to do what they need to do to survive. But when you’re trying to plan a course and even basic features aren’t offered until the “Pro” pricing tier, it can become pretty frustrating.

This is especially true when the tools included at various pricing tiers don’t reflect the actual costs associated with developing them. Sometimes, these LMSs will draw users in by offering expensive services at their lowest pricing tiers (“unlimited video hosting!”), but then ask you to pay $99/mo to include graded multiple choice quizzes on your course. Maybe that makes sense to them from a business perspective, but as a user, it just doesn’t feel good.

The bigger problem here is that not every course can be modified easily if it isn’t built with the right tools to begin with. If you build a course using one set of tools, and then later upgrade, making use of your new features means going back and modifying your original course.

What this means is that, if you’re looking at an LMS that uses a tiered pricing structure, do your due diligence to be sure they actually have the tools you need to run a course the way you want to. (In fact, do this research the other way around: first decide what instructional design tools are important to you, then make sure the platform you’re looking at supports them.) Once you’re sure it meets your requirements, look at how they’ve structured their pricing tiers, and decide whether the tier you need is worth the cost.

Pay Per User: Simpler pricing structure, but a giant bill to match.

Some LMSs takes a different approach. Rather than basing their pricing tiers on features, they charges based on the number of users on your account (or the number of courses you create).

Let’s take Talent LMS as an example. Talent is an impressive platform, with a lot of the advanced elearning features that are sadly lacking from competitors like Teachable, Thinkific, or Kajabi. Their basic plan, which starts at $59/mo., will cap your users at 40. The next plan up, which costs $129/mo., caps users at 100, and so on and so forth. These are for their standard plans, when you already know how many learners you expect to have. If you want a little more flexibility, you can opt for their “active plan,” which won’t cap your users, but will charge a higher rate for any users beyond your plan’s limit.

In many ways, they’re wise to choose a pricing structure that puts their full range of features in the hands of their users as quickly as possible. It means their users can start building the course they had actually envisioned from day one, instead of being hampered in the early stages of their course from a lack of necessary tools. Plus, users face no tough calls about whether to double their monthly bill just to get the one key feature left out of the lower pricing tier.

However, tying the monthly bill to the number of active users poses some sales problems. You might easily be misled into reading $129/month for up to 100 users as “each user costs $1.29.” That’s not going to make or break the cost of your course, and you can easily bump the price of your course up to cover it.

But that $1.29/user fee isn’t just one payment. It’s every month. Over the course of a year, that user will cost you $15.48, and will continue to do so for as long as they’re on your account, regardless of whether they’re still paying for content.

Now, maybe if you’re selling your course for $2,000, and it doesn’t matter much to you whether a user stays on your account for four or five years after making that one purchase. This pricing model may also work fine for large corporations, who don’t mind paying less than $20 a year per employee on their platform. But for anyone running a business with tighter profit margins, these expenses can be crippling.

Self-hosted + Licensing: A little more set-up, a lot more control.

As a WordPress-based LMS, we here at LearnDash operate under a different model altogether. Instead of hosting your course ourselves, we leave it to you to choose the hosting option that best fits your needs. This is one of the biggest costs for most users, but it’s also the one that will have the most significant implications for their course infrastructure.

Once they have their WordPress website set up (or if they happen to already be running a WordPress website), they can then purchase our premium plugin for an annual licensing fee of $189 (our Plus Package, including Pro Panel). With that they have access to everything our plugin offers, along with as many users and courses as their hosting plan can support. And we don’t charge a cut of your course sales either—you keep every penny you earn.

For some educators, particularly those who are worried about their technical abilities, the thought of setting up a website can be intimidating—especially as the hassle is often exaggerated. The reality is that you don’t need to be a web developer to launch a course using LearnDash, and we’ve heard from many users who describe themselves as not being technically savvy that they were able to successfully launch a course on our platform.

And the benefits to building your online course on WordPress are significant. You get to use the world’s foremost Content Management System (CMS), you retain full ownership of all your content and data, and you aren’t held back by new restrictions that always seem to pop up the moment your course seems on the verge of taking off.

Choose the LMS pricing plan that supports your business’s growth.

Launching a business is tough. There’s a lot of hard work that goes into the planning and execution, and a lot of big decisions get made even before you bring in your first sale. That’s why your choice of platform—and the pricing model it uses—is so important to your long-term success.

If you’re losing a portion of your profits every time you land a sale, or if the tools you need are always out of reach, or if you’re paying extra for each new user or each new course, getting the momentum you need to grow a thriving business will only be that much harder.

So go easy on yourself and choose the option that won’t hold you back. Choose us.