The Real Cost of an Open Source Learner Management System

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The Real Cost of an Open Source Learner Management System

Learner Management System South Africa | LMS | Synrgise

There is a popular misconception that an open source Learner Management System (LMS) is 100% free. Those who want to opt for an open source LMS solution want to choose this solution because it has no license fee and is supported by a big community.

Yes, an open source solution is technically “free” but you need to look further into this. Free, doesn’t mean no costs. In fact, many end up spending more on their open source LMS than those using a proprietary LMS.

So, how is this possible?

An Open source LMS is a solution that is freely available with an open source code. This means that you are able to modify and change the code for free and you can customize it to suit your requirements. Since Moodle is the most popular Open Source LMS, we have chosen it for this analysis.

Let’s assess the actual costs upfront to set-up and recurring costs for running an enterprise Moodle installation on an ongoing basis.

For the purpose of this example, we will look at a total user-base of 3,000 users and an estimated usage per month of around 500 logins. We will also consider a moderate level of customization.

Let’s look at the acquiring cost. Well, there isn’t any. So there is some good news. It’s free, and you can simply download the system off of the internet. No code or license fees needed.

However, to run Moodle you are going to need more than just the code. There are a host of other moving parts you need to consider to successfully implement, manage and maintain your new LMS solution during its lifetime.

So, what are these elements and what do they typically cost?

Cost element
(other than License Cost)
 Moodle  Notes
One-Time costs Recurring costs
Server Set-up  R 80,000 It is not easy to predict the usage patterns immediately. You may need to set up a server and a hosting platform to manage concurrency (simultaneous users connecting) Installing Moodle on a server takes about 60 minutes. But if you are running a mission critical operation, this may not be the way to go about this. This is the minimum cost a professional IT vendor will charge who will speak to you, listen to your needs and recommend a proper server configuration based on your needs which can last you for a few years without upgrade.
Site Branding and look and feel  R 20,500 We are assuming you would use your in-house designer or a design agency to take on this task.
Customization of features  R 150,000 Moodle is rich with features but this is in itself a double-edged sword. You won’t need all the features as they are. You will definitely need to customize to hide/remove or add the features that come standard. Let us assume low to moderate level of customization. Anything that will alter the workflow of the ‘free’ system will cost upwards of R 150,000 .
Hosting  R 90,000 You have two options when it comes to hosting. Purchase your own hardware or rent a space in the cloud. It would be unfair to only use ‘Buy your own hardware’ costs here so let us assume that you may use a solid hosting service like Google, Amazon, Rackspace or Azure or something similar and pay monthly or yearly. R 5,000 to R 7,500 per month is not a major cost for hosting with a reputable company. Don’t even consider about using your existing website to run Moodle!
Security certificate (SSL certificate)  R 2,800 Let us not assume you have any single-sign-on needs and just need an SSL certificate Depending on provider. In order of costs – Comodo, Digicert, Symantec etc.
IT Personal (full/part-time or Vendor)  R 42,500 It is a one time cost if your vendor installs but you will need a dedicated individual to help you with server related problems ongoing especially if you have 500-1000 plus users Calculated as 25 hours/month @ R 500 per hour
Administrator (full/part-time or vendor) R 504,000 Whether you are taking on the administration yourself or full-time or you employ someone part-time, you will need assistance. Moodle is complicated to administer. Calculated as 30 hrs./week @ R 350  per hour for the year
Administrator and user Training R30,000 Assuming that you need several administrators to be trained on using the LMS, you will need to train them effectively. The person who is installing your system would be the ideal individual to do this. Moodle is not simple. Calculated as WebEx or GoToMeeting – 6-8 sessions of 2 hours
Upgrades  R 165,000 This is the most vital cost element. It is not often considered upfront and this is what causes the most stress. Especially if combined with item 3 which is customization of features. Moodle rolls out at least 2 stable upgrades a year. If you upgrade once a year, this is the minimum you likely spend on upgrading your system. If your customization is vast, it will be much more! This cost is directly proportional to the amount you customize your system. Vendors prefer to set up and customize upfront. However, when you ask them to upgradeor migrate after 2 years and handle the customization they did then – their enthusiasm won’t be there. We are referring to the same vendor in that regard. With this in mind, you will probably end up taking the customized Moodle to another vendor for upgrade.
Sub-Total  R 280,500  R 804,300
Total Cost for 3 years  R 280,500


R 2,412,900 



The costs we have examined are conservative and we are aware of Moodle installations that have cost 200-300% more.

So based on the above, your total cost for a Moodle installations for 3000 users for 3 years would be:

R 2,693,400 or $210,000. That’s a lot more than “free”…

Open Source vs Proprietry

Now, let us do a simple calculation for a proprietary LMS such as Synrgise Learn, which is licensed per user and is fully hosted and supported.

Taking an example as above; total user-base of 3,000 users in a year with an expected traffic per month of no 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.

The cost of Synrgise Learn annually for 3000 users would be roughly R1,000,000 ($75,000) with an initial setup cost of R240,000 ($18,000)

This is roughly R587,000 ($44,000) more expensive as compared to Moodle over 3 years. That is +/- R200,000 ($15,000) a year or less than R17,000 ($1,250) a month.

Consider all the time and effort you would save in doing all of this in-house. The lessons you would not need to learn. You also need to consider the time and effort for supplier management and project management to get Moodle set-up, customized, deployed and running over a 3-year basis.

Ask yourself, is your time worth R17,000 ($1,250USD)  per month?

In summary, let us do a check if Moodle or Open Source is right for you:

  1. The open source systems have a vast array of features (in the 100s) for Corporate Clients, Schools, Colleges, Training Organizations etc. Out of all those features, which do you truly need? And do you require additional features, which this system does not have? If you need to customize, you may require 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.
  2. Do you have the time, IT resources, skill-sets in-house that can manage Moodle at no additional cost? If so, that’s great. If not, you will probably end up spending more than a proprietary LMS, which is hosted in the cloud and you only pay a subscription fee.
  3. What is your budget? Would you like to go ahead and see what it will cost you to customize an open source LMS or do you want a one stop commercially available solution with a transparent breakdown of expenditure?
  4. Additionally, have you got a plan in mind when it comes to increasing the number of users/content on your LMS? The costs can really escalate if you choose a solution without considering this aspect.
  5. Many people would still choose the cheapest upfront but it is important to look at the bigger picture as far as the actual cost. It should be well aligned with you short and long-term goals.

Free does not mean no-costs. It only means there is no license cost. In short, Moodle is just not cheap.

The actual costs will shock you.


Synrgise has spent over a decade engaging with clients on a variety of talent, training and learning  based solutions, from “off the shelf” content to custom learning and talent application development.

With a team that has over 3 decades of hands on experience and exposure to various clients, we offer a personalised talent management solution that works to meet our clients specific end goals.

Synrgise is a world class blended learning and training solution designed to deliver, monitor and report on training both online and offline.

Synrgise has been built on the foundation of best breed technologies, ensuring an effective learner management solution that is quick to implement, easy to use, and feature packed.

Taking the entire learner experience into account, we have developed an advanced reporting engine that allows our clients to draw their required reports at the simple click of a button.

The entire system has been designed with the user in mind, making for a learning solution that is empowering, motivating, and successful.

Contact us today to learn more about our advanced Talent Management solutions.