MANAGED IT SERVICES | 10 MIN READ
Searching for an answer to ‘how much managed services cost’ can be exhausting, confusing, and frustrating, but the truth is there are many factors that determine managed services pricing costs. The top question we get by customers is how much our managed services cost, and rightfully so. By the end of this article you will be able to understand nearly all the contributing cost factors, as well as understand the price ranges created by them.
Check out our updated article: Managed IT Services Pricing: Complete Guide for 2019
It seems in today’s business world, anyone can claim to be an IT person. Given enough IT jargon, it can be a real challenge to differentiate the companies with full teams of IT professionals from the guy running a one-man break/fix business out of his basement. We affectionately refer to this guy as, “ponytail guy.”
After doing some initial research on a variety of companies, you inquire about their service rates and discover that no one wants to give you a price!
"How hard can it be to quote me a price?" you ask. Well, the truth is that every company is very different in their needs. It isn't as simple as just quoting a flat rate if it is done correctly.
Let's explore what to consider when searching for managed IT services, and then see what you can expect it will cost your business.
CONSIDER THE PURCHASE OF A CAR...
Think about the last time you purchased a car. There were many factors to consider, with your budget most likely being one of them. Even if you settle on a specific make, model, and year, the price can still vary. You make decisions like if you want a sunroof, GPS, automatic transmission, or leather seats.
A person who does not know how to drive a manual transmission may find purchasing an automatic vehicle to be non-negotiable, but they may decide that sunroofs are more of an annoyance than a luxury (who wants all that sun in their face?). As a result, the “same” car can vary by thousands of dollars. Your IT solution is no different.
There are several factors that are consider when IT services costs are determined. The level of security your business needs is going to alter the bottom line. Some companies have a break-fix-only option, whereas others offer more full-service support.
Some companies have their support located in your community, and others choose to cut costs by outsourcing their call centers and remote support. Typically, the former results in better service and the later a better price.
Some have a variety of options to back-up your data, and some offer options for you to lease all your equipment (desktops, tablets, laptops, printers, etc.).
Some will have experience with a variety of office technologies, and some will be more computer-only focused. Below are some of the main factors to consider, as they will have an impact on the monthly price of your service:
- Typically defined as a person that uses a piece of technology connected to your network. Some companies will count the workstations (desktop, laptop, tablet, etc) and some companies may even count the number of active email addresses
- Network Monitoring
- A service built around actively monitoring your company's network to proactively eliminate potential downtime
- Data Back-Up
- Most solutions involve cloud computing, data backup options. This ensures your data is available should something catastrophic happen to one of your hard drives
- E-mail Archiving and Filtering
- Backs up past emails and employs a spam filter in an attempt to eliminate phishing threats
- 24/7 Support
- Commonly referred to as Help Desk, this serves as the call center for MSPs. Call centers can range from actual call centers that are outsourced by a third party, to call centers that are in-house and supported by actual IT service staff
- A physical device that is connect directly to your Ethernet port and filters or blocks specific data that is programmed
- The most common form of protection against various forms of malware/computer viruses
- Office Software Management
- Office 365 is an example of such software. Some MSPs will include in their package an office management software to assist with digitizing your company's processes
- Equipment Leasing or Purchasing
- If a company prefers to own or rent its equipment, it can. Equipment can include laptops, desktops, tablets, servers, firewalls and more
- Server and Equipment Maintenance
- Servers are computers or computer programs that managed access to a centralized resource or service in a network (such as a website). Onsite servers or maintenance, as well as server virtualization, where a company's network can continue to function offsite if the onsite machine experiences downtime.
- Mobile Device Management
- Manages the security of mobile devices so hackers are not easily able to find a backdoor into a company's network
- Compliance Considerations
- Tasks an MSP for keeping current on new federal and international regulations that deal with technology and the internet, specifically with PII (Personally Identifiable Information)
- Application Management
- Manages all updates to computer applications to ensure that each are function at their highest levels of operation.
- vCIO (virtual Chief Information Officer)
- MSPs may offer the service of a Chief Information Office to recommend technology upgrades and strategy for your business
- The most subjective or the factors. Each company will suggest they have the best user experience for its customers, but make sure ask specific IT questions to find out what can actually be expected.
When you add the potential expense for a third-party service provider, you might be thinking that you could hire an in-house person for less money. In some cases, the company is so large (150 or more users) you might be correct.
Managed services are an opportunity for smaller and mid-size businesses because their IT solution will never go on vacation, never sleep, never be sick, and never require employee benefits.
A hired IT specialist may have a few years of experience – maybe even 10 years; however, a company offering IT solutions can have up to 100+ years of combined experience on their team, making it far more likely your company is current on the constantly evolving trends of the industry.
Remember, the average IT person can serve a company of approximately 100 users before needing a second person. From an efficiency standpoint, if your company has less than that number, you are essentially throwing away your money. An IT company can more efficiently leverage resources, making better use of your company's money.
The picture above illustrates the efficiency a managed services company can offer a business. An internal IT specialist at a smaller company would not be utilized 100% and create an excess. This results in a company ultimately spending more money per user before equipment and other costs are considered. Managed Services can increase cost-efficiency while still offering a team of experts that serve your business.
There are other cost saving factors to consider, as well. For instance, doing everything in-house means you may not have access to the cheapest price on products that an IT company may be able to provide. It also means that you must diligently plan for software updates, where a full-service company could save you money by including these updates in your monthly rate.
Keeping up with compliance standards is essential for some industries, otherwise, they risk losing multi-million dollar contracts with companies who are not permitted to do business, unless those standards are met.
Cost savings can be found in thwarting data breaches. According to a 2017 report sponsored by IBM from the Ponemon Institute, a single data breach costs a company $3.6 million, with the average cost per stolen record being $141.
Small and mid-size businesses cannot afford to be caught unprepared when hackers attempt to enter their systems, and even though the Equifax’s of the world are the ones making headlines, 4,000 small and mid-sized businesses are hit every day by data breaches, and 60% of those never recover.
WHAT DOES A MANAGED SERVICES PRICE LIST LOOK LIKE?
There are three basic types of pricing when it comes to IT support services, but typically, only one gives you everything needed, without any extra headache:
#1 – Break-Fix:
Our first option isn’t technically managed services but is useful for companies that are unable to afford complete coverage. This option is the “break-fix” model. Here, you can find your standard computer repair shops (the Geek Squads of the world). If your equipment malfunctions, needs an update, or something else you aren’t sure how to do, you can take it to a store that does nothing but single jobs.
This is a great cost saver if you only have a job or two per month, but this can quickly become expensive if you have several breakdowns within a 30-day period.
This cost is without any of the malware protection, email filtering, vendor management, and data back-up a managed services provider would offer.
All of that would be costlier with a break-fix solution, and you would pay a higher, retail price that would otherwise be lower through a provider.
RELATED: Break-fix to Managed Services: What's the Difference?
#2 - "Panes of Glass" / Per Device:
This "a la carte" model assigns a fee per piece of equipment that can range from $5-$100 per unit, per month. The per unit approach can be cost beneficial if you can find a company that offers everything you need for those prices.
If you have a lot of equipment, though, this can get expensive, quickly (remember - a single company phone or tablet is a piece of equipment in addition to your computers, copiers, and desktop printers).
#3 - Per User:
Per user models offer the most freedom to a company because it allows companies the most room to grow and simplifies their budget planning year-to-year. This is the recommended model if it includes a full-stacked service.
That means everything listed above, and zero hidden costs - - zero. Meaning, no service overages (like having to pay extra because your "service hours" were used up when Bill forgot his password for the tenth time this month).
After all, you wouldn't stand for your IT Manager sending you an itemized bill each month because you asked him to do too many things related to the job! A comprehensive, full-service model will run you $100-$200 per user, per month.
Why is there such a price range for this option?
Some companies have a higher price because they employ different vendors to provide you network protection. An MSP may also offer a lower price because they will can offer a tiered price or are willing to remove services to make the price more reasonable for your budget. Be cautious, though, if you remove too many features you lose the entire purpose of getting managed services in the first place - to effectively managed and protect your network.
YES, IT’S WORTH IT!
The fact you’ve read this article means you believe some form of managed IT services to be worth your company dollars, and it is possible you don’t have adequate in-house support. There are so many factors that go into proper IT support that it is difficult to list every single one of them, and even though every company is different, the good ones will be able to offer you the features listed above.
It is a difficult job for a single person to manage, which is why we require a small army of engineers to assist our customers. A single person is certainly not an effective long-term solution for an employee that wears other hats (like your office manager or receptionist). Growing companies require more.
The truth is that IT services are a lot like healthcare. When you are healthy, you don't think you need coverage to cover extremely expensive medicine or surgery.
But also, like healthcare, it is impossibly expensive if you wait until the day something goes wrong. Solid IT support is something no business can comfortable operate without because it's not a question of if there will be a technology issue, but when, and your business can't afford to be crippled by preventable downtime or data loss.
Want to Learn More?
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