How Much Should I Be Paying for IT Services? (Questions/Answers)

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Before we begin, it’s important to recognize that the cost of IT services varies greatly.

Your location, the comprehensiveness of the agreement, and the size of your business all factor in to the final cost.

Lakeland IT Services

Pricing:

The vast majority of Managed Service Providers (MSP), the official title of outsourced IT support businesses, operate on a “per user” or “per device” basis. Therefore, charges are based on the number of users or devices on the network. The MSP incurs cost for the agent (a management device that is installed on all devices), anti-virus, any extras, and of course the support for each endpoint. Therefore, this flat number should cover their expenses and provide a level of profit that allows the business to grow.

This number can range from $10 to $250 per user/device per month. You may think the $10 per month sounds great! Or that $250 a month is only charged by business owners that have surely gone mad from staring at a computer screen for too long. However, there are some business owners that happily pay $250 per user a month to eliminate the worry of hardware cost, additional bills, and a long response time. I can confidently say that this is the minority though. Most business owners prefer the $10-$100 per user range. They are okay working with a smaller IT business, additional bills for projects, onsite work, and sometimes even remote support.

Before you make your decision on what you are willing to pay for support, review the types of agreements below. This will help guide your expectations going into a new agreement or help to evaluate the comprehensiveness of your current agreement.

Types of agreements:

T&M – Time and Material – $75-200 an hour

The first plan is the old-fashioned time and material. Some MSPs stay away from this plan entirely. One-off projects and ongoing hourly support typically fall under this domain. In this plan, the IT business gets paid when things break … not the best incentive.

Monitoring – $10-$30 per user/device per month

Every single MSP in the country should offer a remote monitoring and management tool. This allows them to manage computer/server patching, provide alerts for any troublesome areas on the network, and ongoing network optimization. This typically runs between $10-$30 per user/device per month. Any remote support, onsite support, projects, consulting, hardware, or applications will incur an additional expense. This allows a low barrier to entry, but makes budgeting for ongoing IT expenses much harder for business with over 5 users.

A monitoring plan SHOULD NOT be higher than this range. If it is, you should tell them to lay off the wacky tobaccy. The cost and time commitment of these agents cannot justify charging outside of this range. Any less than this range and you can guarantee things are not being managed correctly.

Remote Support – $30-$100 per user/device per month

This plan is very common in the MSP community. It includes everything in the remote support plan, typically a certain level of consulting, and unlimited remote support. Most IT businesses don’t want you to know this, but 90-95% of tickets are completed remotely, so this is a practical option for the price conscious business owner.

The best way to describe this plan is “a la carte.” Most things are included, but you are left with additional bills for firewalls, backup, Office 365/G Suite, projects, and onsite support. This is a budget friendly option, but be prepared for some variations in your monthly IT expenses.

The “All-in” Model – $100-$300 per user/device per month

On to the final plan, the “All-in” model. Most MSPs offer some variation of this model and come up with some stellar marketing term for it like “MSP Premium,” “All you can eat,” or “MSPness.” As you can see, techies are much better at computers than creativity. Nevertheless, this model is perfect for the thriving business that likes to have a defined budget for their IT expenses and high expectations of their outsourced team.

This model can contain everything including:

  1. Hardware upgrades every 3-4 years
  2. Licensing
  3. Project Work
  4. Remote and Onsite Support
  5. Dedicated Technology Consultant
  6. Staff Augmentation in some cases
  7. Firewalls
  8. Business Continuity
  9. Applications (Office 365, G Suite, etc.)

Some MSPs will still tack on additional charges for hardware, projects, or applications, but, for the most part, this is a completely comprehensive IT plan. Budgeting is easy, response is quick, and downtime is very low. That makes this plan very advantageous, despite the hefty invoice each month.

Remember that customer I spoke about earlier that is all about the $250 per user per month plan? It may have been hard to imagine earlier, but hopefully this provided some insight into why they are willing to pay the higher IT expense.

What is right for your business?

The model that is right for your business is up to you to decide. However, I will give you some quick tips. Remember when I mentioned the main factors that define this range? Location, business size, and type of agreement? Well, some of these factors can be manipulated for your benefit. Let me explain:

  1. Location – Typically big cities house MSPs that charge on the higher end of the spectrum I mentioned above. If you are in Tampa, Miami, New York City, or most other major cities, prepare to receive quotes that make you cringe. Because after all, you must have your outsourced IT team right next door, right? Not exactly. Remember when I mentioned that 90-95% of tickets are completed remotely? This has allowed MSPs to expand their geographic range significantly. Therefore, it may behoove you to consider a well-established MSP in a smaller market. Their support and response time will be comparable to a big city, but their quote will probably make you 😊. However, if you are already in a market that sits on the lower end of this range, there’s not much you can do regarding this specific factor.
  2. Business Size – Let’s say you are a 50-user business. Anything over 25 users is a sweet spot for most MSPs. Yes, that MSP has a set price per user per month cost. They will be stern and assure you that they DO NOT discount! Their own pride is that of Beowulf himself and lowering their prices would be blasphemy of immeasurable proportion. Sure, until they realize their about to lose a deal that sits very comfortably in their sweet spot. Provide a reasonable adjustment and they will almost certainly relent. It may only be $5 per user per month, but do your own annual calculations to see how many vacations that would pay for!
  3. Type of Agreement – As I mentioned, the agreements and costs vary greatly. But each MSP will have set services in each of their agreements. Let’s hold the monthly cost and location static in this example and only focus on the agreement. Let’s say they are pitching you the Remote support plan. It includes everything except onsite support and the extras. Ask them to include some onsite work for the first month or start with room to negotiate and ask to include 2 hours of support EVERY MONTH in the agreement. They may not agree to that, but I can assure you they’ll budge on the agreement to get you onboard. Most MSPs have a yearly client retention of around 95%. When a client comes onboard, they are typically there to stay. Use that to your advantage.

If you are already in a small market, paying on the lower end of this range, are a business with under 20-25 users, and have already squeezed your MSP for some additional add-ons to your agreement, then this advice probably won’t help much. However, if you are in such a comfortable position with your MSP, I doubt you would have read this far into the article.

Conclusion

I will end this article as I started it; there is A LOT of variation in MSP pricing. Look at your own MSP agreement and review the factors that are leading your bill to be higher/lower than expected. If it is too low, I can guarantee you are not happy with the support on the front end and things are absolutely being left undone on the back end. If it is too high, review the factors and advice I mentioned above. Would working with an MSP in a smaller market save you money while providing the same level of support? Could you negotiate the per user cost down because you are in the MSP sweet spot? What about add-ons to the agreement? These are all things to consider when reviewing IT pricing for your business.

If you have managed to make it to the end of this article, you obviously have second thoughts about your own IT support agreement. Full disclosure, I do work for an MSP in Lakeland, Florida called Alltek Services . I would be happy to speak with you about your own agreement. Despite our 5-star reviews, countless testimonials, awards, and speedy response times, I will not mention one thing about my own MSP unless you ask. I’ll simply provide advice, like I did in this article, and help you decide on the right MSP for your business.

Feel free to message me on LinkedIn or give me a call at the office: (863) 709-0709 ext. 1127.