A fair number of people who seek out an open source LMS have a major misconception that it is free. Over 60% people want to choose an open source LMS while looking for a solution to manage their learning cycle is because they have no license fee and is supported by a large; very large community. Yes it is an open source and it is free! But dig further and you will find out that free does not mean you have no costs. Dig a little further and you may actually find that you could spend more on your open source LMS than a proprietary LMS.

Let us explain how… What is an open source LMS? Open source LMS is the one which is freely available with an open source code. This precisely means that you have access to the code for free and you can modify it to gain a high level of customization to suit your requirements. Since Moodle is the most popular, let us consider it during this analysis. Let us look at the actual costs upfront to set-up and recurring costs for running a professional grade Moodle installation on an ongoing basis. For the purpose of this example, let us look at a total user-base of 3,000 users in a year with an expected traffic per month – not more than 500. Moderate level of customization required. The good news: freeing yourself from paying off the license fee is a good decision.


However, to run your system, you need more than just a code. There are other elements to successfully launch your LMS, run and administer it during the life time.


Additional Cost elements:

The costs we have considered above are conservative so that we don’t have a bias! Depending on which city or country you are in, this is a cost which will not be way off. Some Moodle administrators may say we are too high or too low! Apologies to both but we had to use some numbers in our assumptions. If you are going to manage Moodle yourself, just remember to calculate your costs plus the time that you will be doing Moodle Administration instead of focusing on running your business or your training department. If you consider a conservative 75,000 USD salary for yourself (given that you know PHP/MySQL, Web-design and server administration!) then if you consider your time is worth 40 USD per hour, then if you spend 100 hours (2.5 weeks) over a 2 month period to set up the system and customize, tweak etc. you server you have spent 4,000 USD for set-up cost. Assume that you spend 25 hours per month or 40 hours per month on your system admin etc., which means you are spending close to 1,000 USD per month or 1,500 USD per month of your time. Now, let us do a simplistic calculation for a proprietary LMS which is licensed per user etc. and fully hosted. Taking an example as above; total user-base of 3,000 users in a year with an expected traffic per month is not more than 500. Moderate level of customization required. To keep this fair, let us assume that this fully managed LMS service also requires customization and for argument sake, let us assume that the cost of customization will be the same. Let us assume that the cost for the proprietary fully hosted system may be 60,000 USD more expensive as compared to Moodle over 3 years. That is 20,000 a year or less than 2,000 a month. Think about the time and effort you would save in doing all of this yourself in-house. That is around 40 hours of yours (calculated @40 USD per hour of your time) saved. You have to consider the time and effort for vendor management, project management to get Moodle set-up, customized, deployed and running over a 3-year basis. So in summary, let us do a check if Moodle or Open Source is right for you:

  1. The open source systems have 100s of features for Corporate Clients, Schools, Colleges, Training Organizations etc. Out of all those 100s of features offered, which do you really need? And do you need additional features which this system does not have and require customization?  If you have to customize a whole lot, perhaps you need another system which is closer to your needs. Also, note, your costs to upgrade to the latest version of Moodle in the future will be directly proportional to the amount of customization you do upfront.
  1. Do you have the time, IT resources and skill-sets in-house that can double up and manage Moodle at no additional cost? If yes, great. If not, you may end up spending more than a proprietary LMS which is hosted in the cloud and you only pay a subscription fee.
  1. What is your budget in hand? Would you like to go ahead and see what it will cost you to customize an open source LMS eventually or you want a one stop commercially available solution with a transparent breakdown of expenditure?
  1. Additionally, have you got a plan in your mind in times of increasing the number of users/content on your LMS or you want to think about it later as you go up? We are emphasizing here because the cost can really shoot up if you select a solution without doing this assessment.
  1. Many people would still like to cast their votes to whatever is the cheapest will be the best for them upfront with the license fee but it is critical to look at the big picture as far as the real cost. It should be well aligned with you short and long term goals.

In short, Free does not mean no-costs. Just no license cost. Running a Moodle installation that is secure, hosted to run having close to 3000 total users and 500 monthly users etc., back-ups, with support for users, and upgraded at least once in 2-3 year cycle is not cheap. The costs will surprise you.