How much do managed IT services cost? The short answer is that it depends on various factors.
Because of the complexity of IT services and the varied nature of IT infrastructures and business requirements, it is impossible to estimate costs without first understanding the IT environments and business needs being served.
Costs should be viewed in a comparative context. If you are considering outsourced managed IT services, you will want to compare the costs and benefits of that model against the costs and benefits of staffing an internal IT department.
With average tech salaries hovering around $150,000, it’s no surprise that over a quarter of all small business owners outsource their IT needs. Even larger companies that once maintained in-house departments are now looking outwards for some or all of their IT services.
So, what factors influence how much managed IT services cost, and how can you maximize your ROI on outsourcing?
In this article, we’ll examine managed IT pricing models, review some factors that can impact pricing, and offer suggestions for finding a provider that can address your needs.
Managed IT Services Costs and Managed IT Services Pricing Models
To understand what can affect managed IT services pricing, let’s take a look at the three main types of IT service models.
Pay-as-You-Go IT Services
These services are best suited for businesses with limited IT needs. With this model, you pay only for the services you use, and there is no long-term contract for IT management services.
This can be a good option for businesses who only need temporary IT support, but there is a long list of caveats, including:
- Services without a contract are usually charged at a higher rate
- With no contract, it is unlikely you will receive a guaranteed SLA, so service response times may be longer.
- Since you will only engage with IT engineers on a sporadic basis, they will generally be less knowledgeable about your environment, so there may be an ongoing learning curve which you will pay for
- There will be no focus on strategic IT planning
Project-Based IT Services
Project-based pricing is used when a business needs a one-time solution, such as upgrading its network infrastructure or migrating to the cloud.
The provider will quote a price for the entire project, and, once completed, so is the engagement. This can be a good option for businesses that need extra bandwidth for one-time IT projects but don’t want to commit to a longer-term contract.
Subscription-Based Managed IT Services
Subscription models are common for managed IT services since they are simple and easy to budget monthly.
In this model, you pay a fixed monthly fee for a set of predetermined ongoing services, such as monitoring and help desk support. Services provided beyond the scope of the contract are usually billed on an hourly basis.
There are five types of recurring managed service plans:
This pricing model is among the most common. Companies pay a fixed fee per user, per month for specified services. End users are counted during the onboarding process and regularly reconciled, providing predictable scalability as business conditions change.
2. Per Device
With this pricing model, companies expect to pay a fixed monthly fee for each device that’s being managed. This can be a good option for businesses with many users but few devices. However, things can get complicated as the number of supported devices grows, especially in BYOD environments.
Another challenge is that not all devices will incur the same monthly cost. For example, servers generally cost more to manage than desktops and laptops, which cost more to manage than mobile devices.
3. Tiered Pricing
Some MSPs sell their services as bundled packages. These packages usually range from budget-tier services that provide only the most basic services to premium packages offering a complete suite of services, along with 24/7 support.
Tiered pricing allows MSPs to organize their offerings to achieve maximum profitability. Unfortunately, the tiered pricing model lacks flexibility and is not well suited for small and medium-sized businesses looking to maximize their tight budgets.
Unlimited or “all you can eat” services were once popular with MSPs, most notably those focused on growth and client acquisition. This approach encourages clients to sign up by offering a nearly unlimited range of proactive IT services for a guaranteed fixed price.
While this pricing model appeals to business owners who want all of their needs covered at an attractive cost, the fixed-price nature is not sustainable from a business perspective, as it makes it difficult for MSPs to adjust pricing structures to maintain profitability. Consequently, if a model is not sustainable for an MSP, it’s not sustainable for their customers either.
5. A La Carte
Unlike other managed IT services that are all-inclusive, the “a la carte” pricing model lets organizations choose and pay only for the services they need.
This approach allows you to build a customized suite of services your organization needs most, providing significant cost savings over pre-assembled packages.
The Hybrid Model for Managed IT Services
An evolution of the a la carte model is the hybrid approach, which offers more flexibility by leveraging the best elements of multiple pay-as-you-go and subscription models.
The hybrid model is usually built on the foundation of an a la carte pricing model. It also includes elements such as break/fix pricing, project pricing, and per-user pricing. This approach allows MSPs to build a cost-effective suite of services customized for each customer to help them reach their operational goals.
Effective implementation of this model requires little more strategizing and discovery work up-front to get things right, but that work pays significant dividends in efficiency in the long run.
As is the case with other aspects of IT, careful planning always results in a better product.
Finding Out How Much Managed IT Services Will Cost
Now that you understand the different pricing models, you may still be wondering: how much do managed IT services cost?
The best way to answer this question is to determine which pricing model is the best fit for your business. Here are a few thoughts on how to understand and control your managed IT services costs:
1. Do your research – When looking for an IT provider, be an educated consumer and understand that you can’t get something for nothing and that if an offer seems too good to be true, then it probably is. Ask your colleagues for recommendations of trusted providers and compare their offerings relative to the costs of managed services from several vendors.
2. Carefully consider the services you need – It’s important to be realistic about the IT resources you need to support your business plans. It’s equally critical to align your managed IT services agreement to your specific requirements to get what you need without overpaying for unnecessary services.
3. Understand your budget – Consider what you are spending now, what you would need to spend to get the services you want, and what businesses like yours typically spend on IT as a percentage of revenue.
4. Find a trusted provider – Look for a partner with a proven track record of success and a commitment to its customer’s success.
Finally, carefully consider the human element. The most trustworthy managed services providers will stand out in this regard. They won’t make you feel uncomfortable by trying to push services you don’t need or by complicating their pricing.
Instead, they will have a team of seasoned engineers, consultants, and executive-level resources available who can help design a support program that meets your business needs, from day-to-day technical support to long-term strategic IT planning.
As a leading managed services provider, ITSco is committed to helping businesses like yours achieve peak efficiency with best-in-class IT services. Find out how we help businesses of all sizes get more out of their managed services by contacting us today.