Managed IT Services Pricing [Complete Guide For 2019]

Submitted by Chris Gaines on Tue, 02/ 19/ 19 - 12: 16 PM

Managed IT Services Pricing-1 

MANAGED IT SERVICES PRICING | 15 MIN READ

Whether you're a business seeking managed IT services or an entrepreneur researching how to best price your service offering, this is the blog you need to read before moving forward.

If you aren't exactly sure what managed IT services are, we recommend that you visit this, first: What Are Managed IT Services?

When you get to the end of this article you'll also have an opportunity to download a free IT cost calculator to help you determine which offering is best for your situation.

Not a lot of time? Jump to what you need:

 

IT Service Pricing Considerations

We're asked on a weekly basis by potential customers what the price of our managed services offering is, but we honestly have to respond with -- it depends.

In the Atlanta market alone, there are over 400 IT companies (and that's a conservative estimate). This creates an incredible range of options for any budget.

Everything from break/fix single-person operations in some guy's basement, to large corporations capable of supporting thousands of users are available. The factors to consider when determining what option you should choose come down to three simple questions:


Everyone wants the cheapest price, but that's just one of many considerations you must think about. That doesn't mean you should place your company in financial jeopardy to get the best cyber security, but all factors should be equally understood before making a decision.

For instance, if you'd like to pay no more than $2,000 per month, but your security needs are falling between a $2,500-3,000 per month price tag, can you afford to stay vulnerable?

Network Security Audit Scheduling Link

Being mostly protected would be like building the world's strongest dam with a small portion of the dam missing. Needless to say, it won't take long for water to get through, and if that happens, did the dam serve its purpose.

Another way to think about it is with a car insurance analogy. If I purchase liability insurance on my car but decide that I want to save the $100 per month and not protect my own vehicle, I run the risk of being out of pocket for any damages. If I can't afford to replace my vehicle, I'm just rolling the dice on the hope that I don't have to one day.

Your IT budget needs to be considered in the same manner.

So, if we can agree on that, then what are my IT needs?

Managed IT Services Pricing Quick Guide:

 

Type Price Benefits
Break/Fix Single price or hourly rate
  • Pay as you go
Per Device $5-$100 per device, per month
  • Control over service coverage
  • More predictable pricing structure than break/fix
  • 24/7 coverage option
Managed Services $100-150 per user, per month
  • Most predictable pricing
  • Team of experts for the price of a single internal specialist.
  • 24/7 coverage
  • Most network protection and hardware coverage

 

When deciding what kind of IT service needs are required, consider the following:

IT Service Offerings

24/7 Help Desk

Help Desk

Many larger IT service companies (and some smaller ones) will offer a call center that the employees of your company may call to seek technical assistance. This will often include remote support but it can also serve as a Tier I, II, and III service, with each tier assisting to solve progressively more complex problems.

It's important to note that some companies (even larger providers) outsource their help desk. If your problem is escalated to Tier II or III, you'll likely speak with someone at their company, but that first call may be elsewhere.

This typically results in a cheaper price offered to you but at the cost of having your company data viewable by employees of a company you know nothing about. If you feel comfortable with that knowledge, then an outsourced help desk may be a satisfactory option.

If you're searching for something more robust, then make sure any IT services provider you are considering has a network operations center that can meet the needs of your business.

 

Server Virtualization

Server Virtualization

Some IT companies are able to offer server virtualization to your business. The reality is that 90% of companies will experience unexpected downtime where 50% of those affected are unable to access critical systems, and a third of companies experience downtime each month.

A virtual server is a hosted server provided by your IT company. If your company experiences a network loss, the virtual server kicks-in and is often so quick your company never notices any productivity loss.

 

Data Backup and Disaster Recovery

Data Back Up and Disaster Recovery

This is a staple of any comprehensive managed services plan. As you saw above, nearly every company will experience downtime, but what happens if your information becomes corrupted or lost?

External hard drives are options, but these systems can also fail. Many companies have turned to the cloud for their information back-up needs. The cloud offers a safe and infinitely large space to store data. A quality IT services company will manage this back-up for you at an interval that is specific to your needs.

 

On-Site Support

Managed Services Specialist-min

Almost all professional IT companies offer on-site support, so the service alone isn't much differentiation. To discover where differences lie, it's important to investigate what it costs for an on-site visit.

Questions you should be asking a provider:

  • Does the provider have a limited number of help desk hours each month before being charged a fee?
  • If they promote all-inclusive, what does that mean?
  • How are issues and updates reported?
  • What does your company do to stay current with technology trends?
  • If an engineer must visit my location, is there an on-site fee?
  • Do you understand our company's specific needs?
  • Can you provide references and testimonials?
  • Do you have a local presence?

 

Software and Hardware

Software and Hardware

If you're leveraging a third-party IT provider then chances are they can offer various software and hardware to you. Software is at an additional cost unless it is built into the cost of your network security offering. Hardware is always at an additional cost, but can be rolled into your overall service contract to make the expense more manageable.

Make sure to research the additional products they provide you. Trusting that you're getting the best tools for your money isn't a solid security or financial strategy.

 

Other IT Service Factors to Consider:

Firewall Protection - this is the physical device that serves as a buffer between the outside world and your company's network. It serves the purpose of blocking specific data that is managed by your internal IT specialist or a third-party provider.

Service Level Agreement - whether it's for your server, network systems, or other hardware, check to ensure there is a comprehensive service level agreement between you and the provider that manages expectations and outlines what will be offered. Maintaining critical systems is... critical.

Mobile Device Management - employees are a company's greatest asset and weakness. Most security breaches happen internally and innocently. A clever phishing email to the right employee might be just the invitation a hacker needs to do real damage -- especially if you aren't protected.

Compliance Considerations - one of the great advantages to leveraging the expertise of a service provider is that you employ a team of IT professionals for the price of one internal person. As a result, it is reasonable for managed service providers (MSPs) to assume the responsibility of remaining current on privacy regulations, security trends, and more.

vCIO (virtual Chief Information Office) - not every MSP offers this as a service, but it can be an incredibly valuable benefit if they do. vCIOs function like a CIO would in any company. These individuals offer recommendations on the best technologies to advance company strategy as well as security, but without the price tag of someone commanding such a title.

Experience - with technology developing at a rapid pace, how can any one person keep up? The reality is that they can't, and if you have someone who actually understands everything that is happening/developing in our cyber world, you need to pay them a lot of money to keep them.

Fortunately, IT companies employ a host of information technology talent and can afford to hire experts of specific segments because they're building a comprehensive team. For the price, this is invaluable. A third-party IT team could have a combined 100 years of experience, while a single specialist may only have ten.

How Does Ransomware Work Download 1-1

 

Break/fix Managed Services Pricing

IT Break Fix Service

Break/fix IT services are exactly that. You only use them when something goes wrong. Sometimes these services are offered by full-service managed service providers, but they are nearly always at a premium.

Why?

Because they know you may never return to them again, but also because they are often addressing emergency issues caused by a lack of protection or preventative maintenance. Simply put -- they know you're desperate. 

Be prepared. Break/fix companies charge by the hour and it can sometimes be $100 per hour for them to be onsite if something goes wrong. Unfortunately, these companies can fix issues - often as well as full-service providers - but they can't recover lost data if you aren't protected.

If you feel your company can only afford break/fix services, then make sure you've taken steps to keep your systems and hardware maintained, in-house. Ultimately, it's just a roll of the dice whether this option will be less expensive for you.

IT Service Pricing Per Device - "Panes of Glass"

Per Device IT Service Pricing

This model is a pick and choose, "a la carte" model.

So, what does that mean?

It means that if you only want protection and service for your company laptops, there's a price for that. If you want to only protect your network, there's a price for that. Service calls are often also an additional price, so keep an eye on that bottom line when using this method.

Typically, per device fees can range from $5-$100 per unit, per month. It's almost like purchasing a full-service offering for each piece of equipment you wish to insure.

Managed Services Per User Contract Pricing

Managed IT Services-2

"Full-stack" managed IT services should include the considerations and features listed above. It's a comprehensive service plan that protects your network, maintains your technology equipment, offers help desk support for when issues arise, and provides consultation services to help you implement the best plan for your business.

Many companies will offer a partial stack but it isn't preferable. Not because they simply want more money, but because they understand that offering a partial stack, in many cases, will leave segments of your company vulnerable.

It would be the equivalent of locking the doors of your home, but leaving the windows unlocked. Someone can still get in and steal your valuables.

With full-stack services by an IT company, you can get the software needed to keep hacking attempts at bay, but you also get the assistance for if something goes wrong. Remember, most companies are inadvertently taken down from within. Jake in accounting clicking on that "free cruise" will cause problems every time.

You can expect to pay $100-150 per user, per month with a full-stack of managed services. If you find prices that are lower than this range, make sure to compare your offers (because most get offers from multiple vendors) and see if there are any differences in the service offering.

Read our previous post on how much managed IT services cost.

Managed Services Benefits and Risks

If you've made it this far, you might be having sticker shock. Then again, you may be one of the many companies who has experienced an unfortunate situation involving your company's network or technology. Maybe your friend's company was hit with a phishing attack and you're finally considering pulling the trigger on managed IT services.

Regardless of your reasoning for reading this article, there are benefits and risks to managed services:

Benefits of Managed IT Services

We have discussed several features related to possible IT service offerings, but what are the benefits of those offerings.

Support at all hours. What if you got a call at 11:00 at night and one of your sales reps (who was working on a deal at home with his laptop) told you he accidentally clicked on a link and his computer is "acting slower than normal?"

Would you call your IT specialist? Would you wait till the morning?

If he's connected to your network, you have a big problem, so of course you contact your IT guy. But what if he's on vacation and doesn't answer his phone? What if he's asleep and misses your call? What if you missed your sales rep's call in the first place?

With managed services, you have an option. Resolving issues are as simple as calling your 24-hour help desk and having them remote-in to your sales rep's computer.

I know what you're thinking: "My IT guy is so good, he always answers his phone." That may be true, but unless you have that one-in-a-million specialist, they'll eventually grow tired of being woken up late at night or interrupted when they are away from the office.

A team of experts. As I touched on above, full-service IT support offers you a team of experts for the price of an $18 per hour employee in some cases! It's a value you can't beat and it includes professionals with a variety of IT backgrounds and experiences.

With the speed at which technology and cyber threats develop, it's impossible for a single IT professional to have experience handling all problems.

Remember, IT companies handle your security and other companies' security, which means they are learning from every client that exists in their portfolio. That means you get the benefit of them getting better, even when there isn't a problem at your firm.

Protection from downtime costs. If you're protecting your network with the latest in cyber security, utilizing a virtual server for when your in-house server goes down, and having all of your important files backed-up to the cloud, you avoid the cost of downtime.

In short, downtime is the opportunity cost you incur when your network or technology goes offline. For instance, if your sales reps can't contact customers or access their files, or if your an e-commerce company who's website goes down.

Keep in mind that downtime costs can't estimate the amount of reputation damage that can occur, especially if your sensitive data is accessed by a hacker. The FBI estimates that 4,000 companies every day are hacked. That means it's far more than your giant retail chains and credit agencies.

Most cost-effective option. If you're reading articles about the pricing structure of various IT services, then you understand the necessity of having them. I won't go as far as saying "money is no object" because we all know there's a limit to that statement, but I will say that it's important you don't pick the cheapest option just to save a buck.

Luckily, managed services are the cheaper option. Imagine having an entire team of professionals who don't require healthcare benefits or a 401k match and never go on vacation or get sick. That kind of employee simply doesn't exist within your organization at this moment.

Managed Services Risks

Now, I've been talking about all the positives of various managed services. But what about the risks? It can't all be sunshine and roses, can it?

Certainly not in all scenarios.

Managed services who choose outsourcing. This may be one of the number one issues with some managed services companies. Some companies offer everything I listed above in the factors and considerations, but choose to outsource portions of their services.

This allows managed services to maintain their ideal margins (like any business) and still deliver on a service they promised. Sometimes, this is OK. You probably don't expect an IT services company to develop their own software in-house, but did you know that many IT companies choose to outsource their Tier I help desk?

Yep, that's right. When you call in to get assistance with a slow computer or downed network, who do you initially speak with?

Is it a person who has been vetted by the same IT company that you vetted? Or is it someone in a call center located in a foreign country?

Now wait a second. How is this an issue?

The reason why outsourcing is so enticing is because it can be done more cheaply. Turnover in call centers is pretty high and like all Tier I support, they will have access to all of your company data. Do you really want a person from a company you know nothing about to have access to your company's private data?

Managed service providers who are understaffed. Every business owner wants more customers. Why? Because it means they generate more revenue. More revenue means more profit if you can keep costs to a minimum.

Sometimes this results in an MSP overworking its staff due to a lack of capacity as their company grows. The result: long wait times when you need something done quickly.

Lack of infrastructure. If you're considering services from a provider, make sure you've visited their office. They may not be able to give you access to each area, but you'll get a good sense of whether or not they are a legitimate IT company pretty quickly.

If all meetings and presentations are at your office, how do you know the difference between the major IT company with a team of professionals and the ponytail guy in his basement?

Nickel and diming you to death. When an MSP says they are all-inclusive, make sure you understand what all-inclusive means. If they don't say their services are all-inclusive, make sure you understand what will be covered.

We speak with potential customers all the time who share the horror stories have signed a multi-year contract with an IT company only to find out that each site visit costs them an hourly rate (many times around $100 per hour).

We've even discovered that some companies charge for each support call made, so it's very important to understand what you're getting in your contract. Take the time and crunch the numbers. Look at how often you have technology issues today, and calculate what it would be if you were being served under the contract you're about to sign.

The best plans include all of these services so that you can truly have a flat, monthly rate that protects your infrastructure and gives you peace-of-mind.

Are IT Services Worth It?

My guess is that you're reading this article because you understand the need for some form of IT support (internal or external). But the cost may be making you a little gun-shy. That's OK, it is a lot of money.

But stop asking yourself if you can afford to have IT services and begin asking if you can afford not to.

Sit down and calculate what the true cost of downtime is if your network goes down and you can't access any data or use your computers. What if you're hit with ransomware (remember that figure from the FBI mentioned earlier)? Can you afford to be down for several days and pay a hacker's demands?

If you're like the vast majority or smaller and medium-sized companies, you'll discover very quickly that the costs can be crippling. The Denver Post reported that 60% of small businesses who are hit with a security breach never recover and are out of business in as quickly as six months.

Managed IT services gives you the peace of knowing you have an option in the case of such an emergency. Better still, they offer the ability to prevent issues effectively, before they happen.

So, yes, it's definitely worth it to protect your company's network from outside threats (and inside ones), because it isn't a matter of if you experience downtime but when.

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Posted by Chris Gaines


Chris Gaines has been with Standard Office Systems as the Director of Managed Services for the past three years and has over 25 years of experience as a Network Administrator in the office technology industry. He has a passion for helping small businesses discover the best technology solutions for their specific needs.

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