Cost-Benefit Analysis of Learning Management System

David Hughes
David Hughes

The bottom line of using an eLearning course for training and development is improving employee performance for organization benefits. Most organizations are spending huge amounts of time and money making the training program a success. Courses are designed and developed to provide workers with information and skills that will help them perform better in their employment. Most businesses will not invest in e-learning if it does not help the employee’s job performance.

To begin your training planning with an LMS, you’ll need to demonstrate ahead of time that the advantages of implementing and running an e-learning program through a Learning Management System, LMS outweigh the expenses.

To find out how the benefits of LitmosLMS far outweigh the cost, go to the LitmosLMS pricing page.

As a result, calculating the cost-benefit of your LMS before you start developing it is crucial. But before that, we need to understand what these terms stand for.

What is Cost-Benefit Analysis (CBA)?

A cost-benefit analysis is a structured method used by organizations to determine which actions should be made and which should be avoided. The cost-benefit analyst adds up the possible benefits of a situation or action, then subtracts the overall costs of pursuing that action.

Before undertaking a new project, being a manager, you can do a cost-benefit analysis to assess all of the project’s possible expenses and revenues. The findings of the CBA study can decide if the project is financially viable or whether the corporation should pursue another idea.

What is a Learning Management System (LMS)?

Learning Management Systems is a set of efficient software applications that helps trainers to design and integrate course materials, express learning goals, align content and assessments, track learners’ progress in the training program, and generate a tailored analysis for the modern learner. Learning objectives and learning timelines can also be streamlined using an LMS.

Costs to consider for CBA of an LMS

There is a list of costs included in calculating the total price of LMS. The expenses of creating, developing, and delivering a new e-learning course depend upon several factors. You may need to consult with HR to determine hourly rates for specific jobs and then perform some math to convert a salary to an hourly rate. The following are some costs to consider:

  • Infrastructural Costs: Infrastructure for LMS is software and hardware costs that you may need to buy a new authoring tool or webcam.
  • Design and development Time cost: Multiply the developer’s hourly rate by the number of hours required to produce the course to determine development time.
  • Conference Time cost: Consider the worth of everyone participating in the project’s time, such as meetings with management, the tech department, your SMEs, copyediting, graphic design, and so on.
  • Indirect costs: might include electricity, servers, additional data speed requirement, LMS migration cost, administration cost, third party hosting cost, etc.
  • Opportunity costs of buying pre- templates LMS VS customized LMS.
  • Lost Work Time: This is the amount of time your participants spend doing your e-learning course. Use the following calculation to calculate the lost work time: The number of employees multiplied by the hourly rate multiplied by the number of hours the training will last because this is time that an employee will need away from the routine job.

After you’ve determined and estimated the expenses of generating and delivering your e-learning, you’ll need to consider the second element of the equation: the financial worth of an LMS.

Benefits to consider for CBA of an LMS

The benefits to consider for cost-benefit analysis CBA of learning management systems, LMS are as follows:

  • Reduction in operating time or increased productivity after the training by calculating the difference before and after the training.
  • Intangible benefits: from training, such as increased staff safety and morale, satisfaction, and job retention.
  • Benefits given by LMS may be quantified as a competitive advantage or market share acquired as a result of the training choice.

All the things on the cost-benefit list should be measured moneywise by an analyst or project manager. They should take extra care not to underestimate costs or overstate benefits.

Lastly, the overall costs and benefits should be calculated quantitatively to see if the advantages outweigh the disadvantages. If this is the case, the reasonable choice is to proceed with the training project using LMS. If not, the company should examine the learning project to determine if it can be tweaked to boost benefits or lower costs to make it feasible. Otherwise, the firm should probably steer clear of the project.


LMS is much more than a training course. To create results-driven learning solutions, you will need a lot of equipment, technology, and resources. When you convince executives to understand the advantages and business-wise benefits perfectly, LMS is both a cost and an investment.

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