What a week. That’s the way I feel, with a return of an injury on my right hand, the challenges of writing as a result and some alternatives to presenting the information for this blog.
Initially it was going to be 100% video-based, but after hearing from folks who loved the LL product review thru video and equally the number of individuals who wanted screen shots more so, I am hoping that this will be a friendly mix.
For anyone who grew up in the 70s, you will recall the “Choose your own adventure”, great reads with journeys based on what route you choose to go. You never knew where you were going to end up, but it was going to be somewhere and just as adventurous as before.
The adventures varied. Western. Sci-Fi. Future and so on. Each book came with two adventures, and there was an entire series (books).
Today, is your lucky day, because this is the day, in 2021, that you get to choose your own adventure.
Adventure 1 – Pricing Wars – A battle engagement
Adventure 2 – Boost Engagement with online learning and your learning system
Adventure 2
What? You were thinking that this must be linear? That we start with adventure 1? Oh, no no no.
This adventure is 100% video. It is from a webinar presented this past week, but contains extensive information tied to slides, and questions by some attendees. Initially the adventure featured a video captured in the deserts of the old west, but due to technical difficulties – did I mention its the desert- the webinar is the adventure itself.
Or Click this link to view.
Adventure 1 – The Pricing Wars
This fast paced adventure places you, in the midst of learning system vendors battling for the folks to buy their system. Robots have replaced no-one, rather human beings are in control. Do you choose to be the vendor who wants to make a deal or the one, who must win at all costs?
Each path is treacherous, because pricing isn’t magic, so unless Albert Einstein is available (and he’s not), ignore trying to figure out how they calculate and instead focus on the task at hand – understanding what is occuring.
Land mine alert! Nope, sorry, false alarm, it is just a trend.
- Highest pricing ranges ever. If you believe a global recession and pandemic would reduce pricing, sorry, it is not happening. The numbers on avg (as always there are outliers), are trending upward in such a manner, that it would not be shocking to see Enterprise numbers in the band or 5,000 to 10,000 users (active) on avg, surpass $28-30 (USD) per seat/per year.
- Two price trends at the Enterprise route – vendors vary on what enterprise really means when it comes to active end-users. Some go with less than 1,000. Others 2,500, but some are now returning the original standard of 5,000 to 10,000. It is in this range, you can get a true assessment of the market pricing trends, since it is a larger user size, and thus calculating price ranges at lower user bases is easier to ascertain.
- Most popular range (list price) (in USD) ($16 to $22), the second most popular ($25 to $27) – for the 5,000 to 10,000 band. This is for an active user, per year. Thus, if you are in the band range (today, the most popular pricing model), and you have 5,500, your cost will depend on how the vendor bases their band. With band pricing, the vendor says only pay for “active user” but since you purchased 5,500 seats, you are paying for 5,500 seats. If you jump up to 6,000 don’t worry – they won’t turn off the spigot – you are still in the band, and since you are paying in reality for 10,000 users (in this example), go for it.
There are vendors today who are charging over $36 per seat, per year in that band. And no, it is not who you think. One comes on, around $40 per seat. Again, this is per year.
At lower numbers of bands, the pricing is well, astronomical. One vendor surpasses $75 per seat, it appears as a flat rate, so you think, great deal, but uh, divide by your user base and…. If you have a band of 500 to 999 active end users, and the range on avg. is just $4.60 per user/per month – you might be thinking to yourself, this is a great deal. Now take that $4.60 per user/month, and x 12 – that is your actual user cost per seat/year – $55.20 USD.
Lower price bands that appear on vendor’s web sites, tend to show the number as a single digit for up to X users. The avg in the under 500 user seat range is ($56-$60). Thus, if you have 250 end users, and the total cost is only $7 a month, what you are actually paying for one active user/per year is $84
In any battle it is always good to know your competitor’s numbers, but finding out, aha – isn’t so easy, because vendors will negotiate off of list, charge differently depending on country/region in the world, offer toss-ins depending on who is the client, and on the negotiation front, if you are a tough negotiator, you may land an even better deal, than someone who negotiates a little.
However, there are vendors who post their lower numbers on their web sites. Sometimes it is easy to find, other times, it is not – I mean they don’t call it a Jungle for nothing!
Band Option – A
The most common is the band range, and a flat total cost, for that band. Thus, if you have 5,500 active users, you will pay the same total cost as someone who has 8,855 active users. If the band is 5,000 to 7,000 active users, and you have 5,500 active users, you pay the same price as someone who has 7,000 active users. With this band option, the “active user” count isn’t a huge issue, as long as it says in the band.
If the vendor has the band of 5,000 to 7,000 active users, and your user numbers increase but you are still in the band, and they are using Band Option A, don’t worry – you are really paying for the 7,000 seats, so active is up to you! And if you jump into another band, they may offer you a bundle package of seats or just move up to the next band, and modify the pricing, where applicable. Hip! Hip! Hoorah?
Adventure Alert – Alligator ahead!
Uh, oh, Wilford the Gator is on your path, he is looking right at you OR that BBQ sandwich you have in your hand. Don’t worry though, there is another option, Band option B, which could resolve your dilemma.
Band Option B
The vendor still goes band, but in the above scenario of you having 5,500 active users, the cost per seat may differ within that band. Thus, the cost per seat is totally based on the active user base, within that range. For example, at 5,500 the cost per seat might be $30 per seat, but in the upper level of the band, say 7,000 the vendor quotes $25 per seat.
There are only a few vendors who truly count per month and charge per month only the number of active users, but usually they request some money up-front and often will ask for estimates of active end users. Confusing? You bet. And very rare, just like Wilford, who is wearing a red beanie.
Congrats, you selected band option A. Good choice, since the flat rate is pretty simple and it is up to you to figure out what the actual cost really is per seat.
Or maybe you get really lucky and the band is shown as cost per seat, and then it is up to you, to figure out what the total cost for the bundle really is.
Active btw is just a spin, in that a vendor is only going to charge you for active users. One vendor mentions “unlimited” but it is unlimited in the range (band model). Thus, if you have 200,000 employees, and only purchased 10,000 seats, you get unlimited active users at the 10,000 seats you just bought, not for everyone beyond that – which is an additional cost.
Knowing that Band A is the most popular option and it is shown as a flat rate, let’s toss Wilford the BBQ, and make a run for it. Whew, that was close!
List price means exactly that, the list price. You should never pay list price. Let’s play a game. Imagine you stopped by Jen’s Clothing store and wanted to buy a nice armored jacket. Wow, a deal – 85% off list. You think this is a great deal, but what if I told you that the shop never sells it at list, and secondly is still making plenty of money off you.
That is the way to understand the list pricing of vendors in the learning system space. List is what someone would pay if they did absolutely nothing and just signed.
But, you, Adventurer will never do that.
Battle Warning! Full setup ahead
Jumping into the battle- this is where you really are going to see the action. Did you see it? The comet coming towards you, my lord, it is the “Setup Comet”, run for it.
That was a tad to close, especially since the trends around setup are astronomical!
Let’s check our setup trending list
- Setup ranges from no cost to $95,000 USD and more, depending on if you need configuration – but do not assume that by having the standards of config – white-label, tweak here in the system, change some labels – will place you in the no cost or low cost route as it relates to configuration.
- The common components you will get in setup (and there are variances with the vendors, but this list tends to be very common) – white-label with base config (simple config), maintenance, support (base level, some vendors give more), administrator training sessions (vILT), updates for the length of your contract, knowledge base or videos/forum
- Some vendors include SSO as part of your setup package, or a custom domain or integrations/connectors or content, or a combo of items
- Some vendors will toss in project management hours (nice and vague)
- One vendor includes creating some content for you (and good quality too), helping you with additional assets and so forth
Setup Range you can live with. At the Enterprise level, assuming you do not need mass configuration (which BTW, the majority of vendors will NOT do), you should anticipate anywhere from “free” to around $25,000 USD. The current trend line though for setup fees is way beyond the ideal. Right now, the range is $35,000 to $50,000 USD – with base configuration or no configuration (beyond white label – which means your logo, and colors).
If you are buying a system with say, 999 or less or even 1,500 or less, you do not need mass configuration. Mass level configuration you typically find in very large enterprise, 25,000 and higher user base. And even then, some vendors won’t budge.
For most people, the base configuration will be more than enough and the setup too. Setup is a one-time cost.
Hold on! No, don’t touch that API Apple! It could be poisionous. Sheesh, uh, have you ever been on an adventure or read a Grimm Brothers book?
APIs ideally should be free, but the trend is back to charging for them – i.e. the vendor charges you to take the APIs you need to integrate into their system. Even if they have an Open REST API which is free, if you have say SAP for example, and need to connect to your learning system, and decide to do it via API, that’s a fee.
The range today is around $4,000 USD per API. Some vendors are going higher. A few go above $10,000 USD per API, with an additional couple charging over 10K per year. API integrations are usually a one-time cost.
Bottom Line
There are vendors who will present, after this post, that they never charge a setup fee and everything is included. Great, what exactly is that? Does it include unlimited training sessions? Support 24×5, 365 a year or 7 to 5 CET? Does it come with custom domains and multi-tenancy? APIs free? What else is included?
Because one of the latest journeys is charging for e-commerce, which is back once again as an add-on fee. It shouldn’t be. If you want customer education or plan to sell training content/content or whatever thru your learning system, you need e-commerce. There are vendors who charge for you to use their system as an extended enterprise (i.e. external to your customers, members, etc.). Which, is sort of like, selecting an adventure, where the next words you read says
“The End”.
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