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Total Cost of Ownership for Learning Management System

Mostly when one budgets for a learning management system (LMS), major emphasis is only given on LMS license cost and annual maintenance cost. However, there are many other factors, such as system software’s, server hardware, and other operating expenses etc that can have a huge impact on your total cost of ownership.

Given below is table for calculating TCO for self-hosted LMS, and for LMS made available on SaaS (Software as a Service) model.

Before calculating TCO for a LMS, it would be good if you know or if you can guesstimate what is the kind of user load that you expect on the system, i.e. how many users would typically access the system at any given point of time. Tip – Based on our experience from Wizdom LMS installations, concurrent user (CCU) load typically ranges between 0.5 to 5% of registered user base.

Case 1: Client Hosts LMS on Own Premises

Items that go towards calculating TCO are –

Assuming it’s an annual license for LMS, your TCO for 3 years would be –

TCO = (a x 3) + b + c + d + (e x 3)

Case 2: LMS Licensed on SaaS Model

Calculating TCO for LMS taken on SaaS model is relatively easier. Using the above table only, TCO for 3 years in this case would be –

TCO = (a x 3) + d + (e x 3)

TCO_Calculator. Please do feel free to edit and share this calculator as you may wish.

5 thoughts on “Total Cost of Ownership for Learning Management System”

    1. Sure you can create a FB-like eionrvnment with BuddyPress. But students are still going to leave this learning platform and wander over to FB to procrastinate. If you design your learning materials well you can deliver them on FB and your audience is right there (almost) all the time. I'm teaching a class right now that is delivered completely on FB. It's been great, the first-week learning curve normally associated with courses in a traditional LMS didn't happen. Students jumped in and started working, and they keep working without much prompting from me, and they are engaging with each other at least as much if not more than they did in the traditional LMS. And as the instructor although I find FB lacking in many ways, it is much, much better about letting me know when someone has done something in the class.

  1. Hi Minnie,

    Yes, in case you are getting a website/portal developed which has a LMS in back-end or which is part of your e-learning initiative, then you should include it's development cost also in your TCO calculation.


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