Managed IT Services Pricing & Cost Structure

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Managed IT services pricing is one of the most frequently asked questions by  business owners, especially small to medium sized businesses, as they are ideal clientele for managed services. And yet, “what does managed IT services cost?” can be one of the hardest questions to find an answer to. Technology budgeting is required for most businesses,  so why can managed IT services rates be tough to nail down?

Well, because the answer is – it depends. I know, not the response you wanted, and you probably feel that response is a cliché. However, that doesn’t mean you can’t get a good idea of what you should expect when it comes to managed IT cost. Let’s break down some of the different elements involved in managed IT services pricing.

managed it pricing

How to Price IT Managed Services – Charging Per User vs Per Device

The first thing to understand about managed IT pricing – there are 2-3 typical managed services pricing models, dependent on the provider. Although they are fairly straightforward, defining these helps understand your base pricing model. Typically, the charge is a flat fee per month price, whether per user per month or per device per month. For quality managed IT, there is not usually an it managed services hourly rate. Walk away from any IT provider that does not provide a flat fee rate, even if the per hour rate is low. You will undoubtedly pay more in the end and likely receive less than adequate services. 

Per user is what it sounds like – based on the number of users you have. This can be based on active employee email addresses or a list of active employees within the domain controller. Per device, as it sounds, is dependent on how many devices are connected to the network.  Sometimes the pricing can be based on a combination of these two factors.

Make sure to communicate your organization’s situation to your potential managed services provider (MSP). For example, a manufacturer may have 50 computers but 100 people using them.  In this case, you will want to explain this so the vendor understands your use case and can factor this into your monthly fee accordingly. They may decide to charge you per device in this particular situation, rather than per user, given that it is a more unique setup.

Services Provided Affect Managed IT Services Pricing 

managed it services rates
Providing a checklist of what is included with costs associated can help you to understand an MSP’s pricing. *Please note all costs in this image are for example purposes only and do not reflect NetGain Technologies pricing. For NetGain pricing, schedule a meeting with us.

This likely comes as no surprise to any business owner, but depending on what service levels you are receiving, managed services costs can be higher or lower. For example, are you utilizing the MSP’s remote support help desk? Are you leveraging them for monitoring only? Do you have additional cybersecurity services baked into the contract? Individualized services, such as disaster recovery or the frequency of on-site support, will affect your price. 

Each vendor you are assessing as your potential MSP partner should provide you with a checklist or a managed IT services calculator that outlines what would and would not be included in your potential service package(s), along with the costs of each. This way, you can understand what you are receiving, and ensure it meets your expectations.

Understanding what is not included is an important part of doing your due diligence when assessing the cost of an MSP. For example, additional IT projects, such as setting up a new phone system, are typically not included in your monthly fee. These are an additional, typically hourly rate, cost to your organization. However, other costs, such as a virtual Chief Information Officer that assists the leadership team with IT strategy, may be included in some MSPs pricing but not others. It’s important that you do not compare “apples to oranges” and expect them to be the same price. It’s highly likely that every MSP’s managed IT offering is different. 

As with any other element of choosing an MSP, communication is key. As you move further along in the process, the Service Level Agreement can indicate the level of service you can expect, which also plays  into managed IT services pricing. Another example that may affect pricing – is a site visit by an engineer included? If so, is there an hourly limit?

It should be noted that managed services may seem more expensive on the surface, but you often receive additional services you wouldn’t have with internal IT. A good example of this is depth of expertise and number of diverse certifications on the team. Your potential MSP should explain how they provide value that outweighs the cost, which is an important advantage of leveraging a managed service provider.

Why does Pricing Differ Among MSPs?

As explained, the variety of offerings affects managed IT services cost from company to company. Examine the pros and cons of the potential service you are provided versus the cost of service. However, make sure that when assessing potential vendors, you are comparing apples to apples, or as close as possible. If provider A seems less expensive, but includes fewer services than provider B, then comparing them solely on cost does not make sense. 

As we’ve discussed in a previous article, The Price You Pay for Poor Service Quality, not all MSPs are created equal. This is another area of assessment for your organization when choosing an MSP. Ask the provider how long they have been around, what kind of experience their technical team has and for references. You may find once you have this information that an MSP that was less expensive doesn’t seem to be as good of an option as it did previously. Oftentimes a lower cost means less experience or less bandwidth, or they may rely on a break/fix model instead of proactive management. You can even simply ask the potential vendors – why do you charge less or more than your competitors? Regardless of where you land, this helps you make an informed assessment of different MSP prices.

So – How Much Does Managed IT Services Cost? It Depends

Although it can be frustrating to hear “it depends” when asking about managed IT services pricing, it is important to understand that the cost of leveraging an MSP is influenced by many moving parts. Understanding these elements helps you understand what the cost might look like for your organization as you explore potential managed services partners.

 

Want to learn about our managed services offerings? Schedule a meeting here. 

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