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LMS Budgeting Errors SMBs Make When Implementing A New System

Common new LMS budgeting mistakes made by SMBs

With every type of software or digital product there are “hidden costs” that are often lost in chaos. This includes things like hosting fees, hardware, and onboarding. They can also include transportation (self-hosted servers are bulky and need to be shipped and installed). Certain features may not be included in the basic package and must therefore be paid for separately. What other aspects of LMS budgeting may have been missing from you? And are there any cost factors that SMEs in particular need to consider when introducing a new system?

5 Mistakes To Avoid When Creating Your LMS Budget

1. Underestimate active users

The average LMS has one payment package per user. You will likely pay X amount for up to Y number of users. If you add people who exceed the limit, you will pay an additional fee for each new user. However, if your user base drops below the cap, you will continue to pay the base fee. This can end up being unnecessarily expensive. Therefore, pay attention to the number of employees who consistently use the LMS. Occasional users can share a guest account to avoid additional billing. And if your user base gets too far below the cap, consider a smaller, cheaper package with a lower user limit. Also check the provider’s definition of “user”. Some may count everyone who creates an account while others only count those who are active.

2. Go for the lowest price

You can often find three items in a certain range in supermarkets and retail stores. One is super expensive while the other is ridiculously low. Then there is a middle price point that most people go for. They don’t realize that this strategy is by design. This “median” item has been purposely positioned to offer the best profit margin of all three products. In the software area, this principle works a little differently. One of the most common mistakes in LMS budgeting is considering price alone. The people who make financial decisions aren’t always tech savvy, so they buy the cheapest LMS. Often without consulting IT, HR or L&D. As a result, they might buy something inadequate. Then, in the end, they’ll end up spending more on plug-ins, add-on products, or an entirely new rapid authoring tool. You need to consider all maintenance costs to make sure you are getting the best value for money. Also consider LMS implementation times, learning curve, and payroll hours.

3. Don’t be clear why you want it

Another risky habit is to follow trends. You can buy the LMS just because everyone else has one. Peer pressure can even affect which brand of LMS you buy. But if you don’t know the “why,” you’re throwing money away. For example, you can invest in a certification LMS if your employees don’t need documentation. Or you can get LMS with high-tech simulation tools for a workforce that has little computer skills. And completely disinterested in digital gaming. Perhaps you chose one with a superior authoring tool but no payroll, asset tracking, time sheets, or automated reporting features. In all of these cases, you have wasted time and money. Interview your team to get feedback and identify their needs. This allows you to refine your LMS budget and choose an SMB LMS that actually meets expectations without overdoing it.

4. Overlooked the cost of non-compliance

One of the most common questions on personality tests is, “How are you doing on deadlines?” Some people have severe anxiety and panic attacks. Others consider deadlines to be arbitrary. This can be risky for corporate compliance matters. The first hiring could result in spending a ridiculous amount on an LMS for SMB to make sure you get your compliance certification on time. The latter can ignore the purchase of compliance content until the last minute. In the former case, the cost of the LMS may exceed the cost of non-compliance penalties. In the latter case, you could end up paying thousands of dollars in fines. So before you pull out your credit card, make a cost-benefit-time analysis and make your decision on this basis.

5. Forgetting to consider compatibility

LMS may not be the first software you buy. (Unless you’re a new, digitally savvy company, in which case it’s definitely the first thing you’ll buy.) Usually, you already have some sort of payroll, timesheet, customer care, and invoicing system in place. Modern LMS can cover all of the above (plus training) on ​​a single platform, but if you have your own software you need to make sure that your training purchase is compatible with existing systems. This includes authoring tools and CRM platforms. Otherwise, you’ll end up throwing it all away and spending even more money to replace it.


Creating an LMS budget to stick to is a delicate balance that has very little to do with list price. There are many other things to consider before finalizing the payment. You want to be sure that you are getting the best value for money and not incurring any additional costs. Confirm how many consistent users the LMS will have, and don’t just go for the cheapest product. Instead, know what you’re buying that LMS for because that affects the features you’re looking for – and paying for. Get clear non-compliance costs (fines plus redress) and make sure your new purchase is compatible with existing software. You could also calculate whether it makes more sense to replace them all with a single, sleek, affordable, multifunctional platform.

Finding the right LMS does not have to be a resource-consuming test. Use our online directory to evaluate all of the options and stretch your LMS budget. Select your must-have features, ideal pricing model, and use case to make the process easier.


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