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How Much Does Managed IT Service Cost?

December 20, 2023
Reading Time: 6 mins
Author: Katherine Spanner

Whenever any business owner is looking at a new partnership, solution, or process, the first question is always “how much should I expect to pay?” While this question is understandable, it’s often too blunt to truly capture your long-term savings despite upfront managed IT costs.

Like anything else, the price of your managed service provider (MSP) will vary depending on who you choose. Most MSPs charge a monthly fee based on various factors such as how many users or devices they support.

Considering there is such a variance in price, service quality, and scope, it’s much more fruitful to think in terms of cost savings rather than average costs when it comes to managed IT pricing.

 

“Spending too much time weighing price tags is a common, but understandable, mistake. Searching for a cost-smart solution is a worthwhile endeavour, but looking at nothing but the price tag is the wrong way to do it.” - Ray Sweeney, Chief Commercial Officer, Sensible Business Solutions

 

Everyone wants to control costs, but a cheaper offering that incurs greater infrastructure costs negatively affects productivity and fails to remove operational roadblocks. This is ultimately a far worse deal.

 

 

Look For More Than a Simple Managed IT Services Price List

You might be surprised to hear that upfront costs don’t mean much. A seemingly cheap provider can wind up being much more expensive in the long run. That’s because most people who go with the cheapest option end up sinking money into break/fix situations and bespoke add-ons.

In fact, most small businesses we encounter tend to pay the most when they choose a provider with a cheap upfront cost. This is not to say that more expensive is automatically better either. It is to say you need to look beyond the price list to truly find the most budget-friendly option for your organisation.

 

Managed IT Services ROI Calculator

The best way to find truly cost-efficient managed IT services is by comparing ROI to your price range. Think about the IT processes you need and how getting an extra hand with them will help you save. Managed cybersecurity saves you from costly breaches, cloud consulting helps you avoid costly misconfigurations, as just a couple of examples.

 

Think of it in terms of this formula:

ROI = (Expenses Without Service) - Cost of Service

 

So, for example, if hiring an MSP costs you $10,000 and the cost of managing your IT services without their help costs $11,000, you’d save $1,000. Bear in mind that service costs may vary based on what you need to get done. Try not to lump everything together. To get the best estimate, look at your individual IT costs, here’s what we mean.

 

IT NeedWhat’s Costing You?How Savings Happen
Cybersecurity
  • Salaries of cybersecurity experts
  • Cost of cybersecurity software tools
  • Potential fines from data breaches
  • Potential lost revenue from reputational damage if breach occurs
Enhanced security protocols and reduced risk of data breaches for the fraction of the cost of full time salaries.
Cloud Computing
  • Salaries of cloud specialists
  • Cost of cloud services and storage
  • Any data losses due to misconfigurations
Optimal cloud resource utilisation and avoided misconfigurations.
Data Backup & Recovery
  • Cost of backup hardware and software
  • Potential loss of business due to data unavailability
  • Recovery costs after data loss
Ensured data integrity and availability after incidents.
Network Management
  • Network hardware and maintenance costs
  • Salaries of network engineers
  • Losses due to network downtime or issues
Stable and secure network operations with minimised downtime.
Software Management
  • Software licence and update costs
  • Salaries of software managers
  • Fines due to non-compliance or pirated software use
Assurance that software is up-to-date and compliant with licences.
Hardware Maintenance
  • Hardware purchase and repair costs
  • Salaries of hardware technicians
  • Downtime and disruption due to hardware failures
Hardware failure prevention and optimal performance.
Help Desk Support
  • Salaries of support staff
  • Training costs for support staff
  • Losses due to delayed issue resolution
Quick resolution to IT issues that prevent operational disruptions.
IT Strategy Planning
  • Losses due to misaligned IT strategies or inefficient technology use
Alignment between IT investments with business goals and more efficient use of technology.

 

The best way to evaluate savings is to compare your current in-house expenses with a provider’s costs for the same services. For instance, you may compare your monthly costs for network management against what a provider charges for network services.

It's important to consider not just direct costs, but also potential hidden costs. For example, not managing licences properly could lead to a 20% increase in costs due to unused licences.

Lacking a mature IT support system might also result in a threefold to eightfold increase in tickets. Each incident could cause 2 hours of user disruption, leading to about 3.5 hours of lost productivity per user every month.

In monetary terms, this could mean over $800 in lost billable activity per month for each employee. Additionally, without strategic IT advice, long-term project costs could rise by 40-50%, which is approximately an additional $10,000 yearly for a small to medium business with about 35 users.

 

Discover More Practical Ways to Save

 

Signs of a Truly Cost-Effective Provider

Price range calculations are one part of a big picture. If your chosen provider doesn’t do their service well, you won’t see any of the savings the above benefits could have provided. For this reason, it’s important to know how to spot a truly cost-effective MSP before you sign any contracts. Here are some telltale signs.

 

Do They Have The Service Offerings You Need?

You won’t save any costs on network management if you choose someone who doesn’t do it. As obvious as that sounds, it’s sometimes too easy to be tricked into the belief that someone does something that they don’t.

Never assume that all MSPs offer the same set of services and dig into the details of every offer they present. For instance, someone might say they can do IT consulting, but they can’t do the kind of IT consulting you need. So, you should always ask for the specifics beneath the service.

They should also be able to explain their consulting process. The ability to provide this explanation shows that they have a clear process instead of simply guessing what’s right. Make sure this process aligns with how you want to work with your supplier in a way that makes sense to you.

 

Can They Demonstrate How They Help?

Businesses have a habit of tossing testimonials at every potential client who asks for proof of their power. While there’s certainly nothing wrong with a solid testimonial, its evidence is limited. Every business is unique, even if they’re in the same industry. Just because one partnership worked out well, it doesn’t mean that yours will.

Instead, discuss your specific problems and ask them how they will address them. It’s ok if you don’t perfectly understand everything they’re saying. What you’re really looking for is their ability to provide a concrete answer that proves they have a plan that fits your unique situation.

 

Are They Possibly Hiding Anything?

Gartner offers a service that helps people negotiate complex contracts. We bring this up not to advertise the service, but to show you that muddying contracts is a common enough practice to warrant such a service need.

If you ask us, any contract that requires professional intervention to understand is a sketchy contract. Overly complex contracts usually have something to hide, including surprise costs that might not catch you until later. Opt for simplicity and transparency instead. Providers who don’t muddy the waters are less likely to overcharge you unexpectedly.

 

Top IT Services From Sensible Business Solutions

Managed ITIT SupportConsultingOutsourcingHelp DeskNetwork ManagementCybersecurity

 

Choose a Truly Sensible Solution to See Real Savings

If you’re shopping for an MSP, you’re probably tired of weighing hourly rates, flat fees, and monthly subscription charges. Hopefully, our insights have shown you a better way to weigh managed IT services rates that will make much more sense with the bigger picture.

Since you’re already here, why not take a look at Sensible Business Solutions to see how we line up. After all, we wrote this article, so you can be pretty confident that we won’t fall into the traps that we told you to avoid.

We’re also quite proud of the fact that we can say that our services have led to an 80% average reduction in IT issues and a 75% decrease in disruptive incidents. However, we did tell you not to take a provider’s boasts at face value. So, please contact us and we’ll explain exactly what we do to accomplish that.

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