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Why Your LMS Should be a Subscription-Based Operating Expense

Updated: Mar 25, 2023

Subscription-Based LMS

A subscription-based learning management system (LMS) is a software application that organizations can use to deliver and manage online learning programs. It is called "subscription-based" because users pay a recurring fee, typically monthly or annually, to access the LMS and its features.

Instead of making a one-time purchase of an LMS, a subscription-based LMS allows organizations to pay for the service over time. This can make it more affordable for organizations to implement an LMS and can also provide greater flexibility in terms of features and scalability.

A subscription-based LMS typically includes a range of features, such as course creation and management tools, assessment and testing tools, user management tools, and reporting and analytics tools. Some subscription-based LMS providers may also offer additional features such as gamification, social learning, and mobile learning support.

The Advantages of a Subscription-Based LMS

One of the key benefits of a subscription-based LMS is that it can be more cost-effective for organizations, particularly those that have a smaller budget or do not want to make a large upfront investment in an LMS. Subscription-based pricing allows organizations to pay for only what they need and can afford at a given time, with the ability to scale up or down as their needs change.

Another benefit is that subscription-based LMS providers often provide ongoing support and maintenance for their software, including updates and upgrades to ensure that the LMS remains up-to-date and functional.

However, it is important to carefully evaluate subscription-based LMS providers to ensure that the features and pricing align with the organization's needs and budget. It is also important to consider factors such as data security and user privacy when selecting an LMS provider.

The Benefits of a Subscription-Based LMS as an Operating Expense

There are two ways to account for the cost of an LMS - as a capital expense or an operating expense.

A capital expense is a one-time cost that is depreciated over time. This means that the cost of the LMS is spread out over its useful life, typically several years. In contrast, an operating expense (such as a subscription-based LMS expenditure) is an ongoing cost that is expensed in the same year it is incurred.

Here are a few reasons why it may be more beneficial for your organization to classify the cost of your LMS as an operating expense:

Predictable and Consistent Costs

When you classify the cost of your LMS as an operating expense, you can budget for it on an annual basis. This provides greater predictability and consistency in your expenses, which can help with financial planning and forecasting.

Tax Benefits

In some cases, operating expenses can be tax-deductible. By classifying the cost of your LMS as an operating expense, you may be able to reduce your taxable income and lower your overall tax liability.

Faster Implementation

When you classify the cost of your LMS as an operating expense, you can typically implement it faster than if you had to go through a capital expenditure approval process. This can be especially important if you need to get your training program up and running quickly.

Improved Cash Flow

By classifying the cost of your LMS as an operating expense, you don't have to tie up a large amount of cash upfront. Instead, you can spread the cost out over time, which can help improve your cash flow.

About LMS Portals

At LMS Portals, we provide our clients and partners with a subscription-based, multi-tenant learning management system that allows you to launch a dedicated training environment (a portal) for each of your unique audiences.

We offer a complete library of ready-made corporate training courses, covering most every aspect of corporate training and employee development.

Our platform includes an embedded course authoring tool that enables most anyone to build engaging courses quickly and easily. So you can build your own courses, utilize our off-the-shelf library, or some combination of the two.

If you choose to, you can create Learning Paths to deliver courses in a logical progression and add structure to your training program.

The system also supports Virtual Instructor-Led Training (VILT) and provides tools for online coaching and social learning.

Contact us today to get started or visit our Partner Program pages

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