As a managed IT provider we receive a lot of questions about the costs associated with managed IT. Having so many services and solutions can make the pricing seem very confusing and overwhelming.
To help make it a little easier to understand how costs are determined, here is a comprehensive guide to MSP pricing structures.
What Factors Affect Pricing?
Managed IT costs fluctuate depending on which and how many services the IT company is providing. The price of Managed IT is impacted by the number of users in the network, the number of locations that your business has, and the number of applications that your business utilizes.
Industries that must comply with legalities when it comes to their IT structure may require more support and time from their Managed Service Provider (MSP).
This would be an industry such as healthcare, which has strict industry standards that they must comply with, namely Health Insurance Portability and Accountability (HIPAA). These types of industries can tend to be more costly than those that do not have strict IT regulations.
To learn about different industries that can benefit from It services, read our blog: The 6 Best Industries for Managed IT Services.
The price model your MSP provides will determine your cost breakdown.
What Are The 6 MSP Pricing Models?
There are six popular pricing models for managed IT service costs. They include the break-fix model, per-user per month, project-based, and the device pricing model.
Break/Fix:
This pricing model is where an IT provider charges an hourly rate. When issues arise, you must submit service tickets until each minor issue is resolved. This is considered by many experts to be a band-aid solution that doesn't address overarching issues causing breaks.
Because of this, the break/fix approach is not as popular in recent years. Many businesses prefer a more proactive approach to prevent issues before they cause outages and downtime.
As an alternative, Time Blocks are often associated with the break/fix model. This is when you purchase a certain number of hours, and once you have used up those hours with your MSP, you must purchase more.
An example of this would be if a client pays for 50 hours (about 2 days) at a discounted rate, and once the hours are used up, they would need to buy another block of 50 hours.
With this method, many of the same challenges associated with the break/fix model still apply. The IT provider simply wants to generate more billable time; therefore, they will not try to fix anything other than the issue at hand. On the other hand, you as the client want to minimize the money spent.
The goals of the IT provider are very different from those of the client. This model was once the only model that existed but as the tech industry has matured, so have their services.
Today many IT providers and higher maturity MSPs have shifted their pricing models to align with those listed below:
Per-User/Month:
MSP services are sometimes calculated on a per-user basis for a monthly fee; therefore, more users typically mean a higher cost. The average cost per user monthly typically ranges around $150. This is a simple pricing model in which the number of users determines the price, therefore it can be subject to change.
Clients will not be charged more if users have multiple devices. The per user/month is a simple pricing model which is beneficial for both the MSP and the client, as it is a predictable model.
Per Device/Month:
This is a pricing model which is determined by the number of devices that the client has. All devices have an associated cost to calculate the amount of monthly support. Every server, computer, and often tablet are all added together to produce the final cost. Each device carries its own weighted value based on different variables.
Projects:
For most MSPs, any major effort to deploy new technology typically requires a separate project. An example of this would include moving a client into a new office, a total network refresh, or helping in the deployment of a new line of Business (LOB) applications. Projects allow for a single price that covers all the client's needs without stacking up unplanned costs.
Are There Additional Fees For IT Networking Support?
For most managed IT companies any extra projects that come up within the partnership outside of the original contract will be an additional cost. Microsoft 365 is an example of a project that would be on top of the Services.
If you’ve decided your business would like to onboard Microsoft 365 your managed service provider will take on the task of implementing.
They will then help you the client understand and choose the appropriate licensing for their organization and then act as administrators so that as licensing needs to change, it can be added or subtracted accordingly.
However, this licensing has a cost that is also factored in the monthly spending.
The managed service provider will settle on a standard license and try to keep it as simple as possible while maximizing security and features that are useful. There will always be exceptions, but it keeps things simpler and easier to understand.
IT spending does not have to be a mystery. Planning is the key. Managed providers should use a vCIO (virtual Chief Information Officer) who can help plan expenses and keep the client informed and part of the process. The aim of having a vCIO is to join the client's team and provide helpful support for anything to do with IT and technology.
At the end of the day, IT is crucial to your operations, and it carries a cost. Working with an MSP can help you make the most out of your budget keep your assets safe and running smoothly.
It's important to have a reliable Managed IT provider assess your current environment and network needs. To learn how to get one of these evaluations, read our blog: Understanding Network Assessments: What to Expect & Examples
How to Get an Estimate on Managed Services/IT Pricing
Average msp pricing can vary depending on your chosen provider, the services you require, the size of your business, and the number of users you have.
For this reason, the best way to get an estimate on the cost of Managed IT is to reach out to a managed service provider to get an analysis of your current IT infrastructure.
Managed Service Providers can offer a full briefing on your IT and determine how to create a personalized service package for you.
They will also provide an estimated cost depending on what you require. If you are looking for a Managed Service Provider consultation, Usherwood Office Technology can assess your situation and give an estimate.
If you're ready to secure and optimize your business with the dynamic service offerings of a managed IT provider, click the button below to speak to an expert.
