Different LMS pricing models
Ok. Let's go!
Model 1: Buying price + setup fee + yearly maintenance fee
This is the old fashioned way. You buy a big software package. You probably have to pay some consultants to setup the software (because it's overly complicated). After the dust settles, you have to pay them a yearly maintenance fee because the software is so complicated and when it breaks down you need an expert to fix it. And with big yearly contracts you have to pay alot upfront and have to hope for the best.
Model 2: Setup fee + monthly subscription fee
For the more complicated online software products you have to setup the system so it works for you. You have to pay the guys who wrote the (complicated) software to get it in usable shape. And then you pay them a monthly subscription fee. Always try to go with a monthly subscription fee so you can leave anytime you want.
Model 3: No setup fee + monthly subscription fee
This is your typical pricing model adopted by all the new and innovative online service companies. Also for LMS Saas solutions it's quite a nice model. They often come in three or four different levels with different features available and different amount of student or course takers. For most products the upper pricing is set because you get (almost) unlimited users and all the features you want. Because you pay by the month it's quite easy to switch to a different LMS provider from a contract point of view (altough it still takes a lot of work to switch systems). With a monthly subscription fee you can leave anytime you want. Maximum flexibility.
If you're satisfied with your setup most LMS companies offer a considerable discount if you pay for a complete year ahead.
Model 4: Pay as you go
A different take on innovative pricing models is pay as you go. You only pay for what you really use. Amazon was one of the first to popularize this pricing model for their cloud computing services. A real disruptive pricing model for the hosting business. For software as a service it feels like a fair pricing, but it's actually quite expensive for the end user. It's easy to start with, just a few users, so it costs just a few dollar. But it can get out of hand if you have a lot of students. And once hooked on the system, there's no turning back. And then it might be better to get a monthly subscription fee for unlimited users. With a pay as you go fee you can leave anytime you want.
Model 5: Custom pricing
And then there are a lot more pricing models to think of which will be more of a one off pricing model for custom work or custom solutions.
Which is model is the best
After reading up on all the different pricing models we know which one we like. That's pricing model 3: no setup fee + a monthly subscription. Of course it depends on the price and the service offered. But if all other things are equal, a steady monthly subscription fee is the way to go. Have a look at our pricing. Our pricing ranges from $20 to $100 a month, while other systems start at $300 a month.