What is the Cost of Managed IT Services?

When it comes to Managed IT Services, one of the first and most crucial questions asked is, "How much does it cost?" The answer, as you might expect, isn't a simple one-size-fits-all figure. The cost of Managed IT Services varies greatly, influenced by factors such as your IT infrastructure's complexity, your business's specific demands, the number of tech users you have, and any additional projects you need to implement. In this article, Cyber Husky aims to give you a comprehensive understanding of the pricing landscape, allowing you to know what to anticipate when budgeting for Managed IT Services.

To make an informed decision about your IT needs, you need to grasp the different pricing structures employed by Managed Service Providers (MSPs) and understand the benefits and drawbacks of each. This article will discuss various pricing structures, namely: all-inclusive fixed fee, hourly or break/fix, retainer or block time, and a combined fixed/base fee plus hourly structure.

Managed IT Services Cost: Pricing Structures

1. All-Inclusive Fixed Fee

An all-inclusive fixed fee structure is precisely what it implies. Your company is billed a consistent fee each month, often decided by the number of tech users in your company, covering all IT requirements with minimal to zero out-of-scope charges.

MSPs typically charge between $175 - 300 per user per month for this kind of plan. Be wary of providers charging below $150 per user; they often can't maintain a high level of service at such lower than market rates. A quality all-inclusive service usually costs a minimum of $200 per user, with the market average closer to $135 - $165.

This model offers the highest predictability in Managed IT Services cost, allowing for straightforward budgeting. Moreover, it gives the provider an incentivization to be proactive, mitigating issues before they occur.

2. Hourly or Break/Fix

An hourly model implies you only pay when you need assistance, like with a mechanic or an electrician. An hourly rate is charged based on the time it takes to resolve your IT issue.

Most IT providers charge between $100 - 200 per hour for this model. However, it's worth noting that this structure lacks motivation for the provider to seek lasting solutions and minimize your need for their services. It’s also worth noting that these hourly rates are going up with current market conditions (inflation, difficulty of finding staff, etc.)

In an hourly pricing structure, you must also consider additional costs that aren’t directly billed to you by the consultant – such as business interruption and downtime created by the issue you are having the consultant fix. Additionally, when there is no motivation to put lasting solutions in place, you can expect the amount of issues you experience to increase over time. A fixed fee, all inclusive structure does an excellent job of mitigating this.

3. Retainer or Block Time

A retainer or block time plan lets you purchase a batch of hours, usually at a discounted rate. This model is effective for businesses that want to outsource predictable parts of their IT support process or have regular tasks that need performing. The drawbacks are similar to an hourly arrangement: little preventative maintenance or proactive problem solving.

4. Fixed / Base Fee plus Hourly

In this model, the provider includes some proactive work in their fixed fee, providing a more predictable cash flow. However, be clear about what's included in the scope and what may be subject to extra charges. Pricing of this kind of arrangement can vary widely, but in our experience the cost is something between $75 - $115 per user per month. One issue we hear our customers who came from an MSP who used this model complain about is that they were constantly hit with ‘out of scope’ fees totaling thousands of dollars per month. This is not surprising at all since, in our experience, it is not economical for these MSPs to invest in any kind of serious proactive services. This means that this kind of MSP ends up doing much more ‘reactive’ work which in turn means you get charged more ‘out of scope’ fees.

Additional Costs: Beyond Standard Services

Regardless of the pricing structure you opt for, some additional costs often fall outside the standard scope. These can include:

• Major projects like extensive migrations or server upgrades

• Onboarding fees (although many MSPs will waive onboarding fees if you agree to a particular period of service)

• Out-of-scope issues

Understanding Return On Investment: Hard And Soft Costs

To assess the true value of your MSP, you must consider both hard and soft costs. Hard costs are what you pay your provider, while soft costs are indirect costs like downtime and inefficiencies that affect your revenue.

Choosing an MSP that invests in strategic, proactive measures can significantly reduce these soft costs. For instance, constant outages, downtime, and unresponsive support aren't normal – and you shouldn't have to accept them. By switching to a proactive provider, you can cut back substantially on these hidden costs and enjoy more efficient, smooth-running IT operations.

Strategic Measures To Optimize Your Investment

The idea of paying more for IT might be daunting, given its inherent unpredictability. However, investing in a provider that employs strategic, proactive measures to ensure your business runs as smoothly as possible can significantly reduce soft costs.

At Cyber Husky, we believe in the value of an all-inclusive, fixed fee MSP model. We've found that it delivers the best return on investment, providing the predictability businesses need without compromising on service quality. Our proactive approach means we're always one step ahead, solving potential issues before they affect your operations.

In the end, the cost of Managed IT Services is about more than just the price tag. It's about the value you get for your investment – in terms of both the services you receive and the problems you avoid. By understanding the different pricing models and their implications, you can make an informed decision that aligns with your budget and your IT needs.

At Cyber Husky, we're dedicated to providing top-notch Managed IT Services at a fair and predictable cost. We know that every dollar counts in today's business environment, and we're here to ensure you get the most out of your IT investment.

So, are you ready to explore a new approach to your IT services? Contact us today to learn how Cyber Husky can help your business run more smoothly, efficiently, and securely.