What’s the Real Cost of Having a Managed IT Service Provider for Your Business?

A woman using a calculator

Let’s face it: no business owner likes spending money. But sometimes, it’s a necessity to ensure business continuity and growth.

Outsourcing your IT management is one such cost that can pay huge dividends - provided you make the right decision and choose a managed service provider (MSP) that you can trust.

But how much should you spend on IT services, and how can you understand if you’re getting value for money?

In this article, we’ll run through some of the different agreement terms offered by MSPs, and how you can better understand the true value of your investment.

MSP Pricing: What Can You Expect to Pay?

Whether you’re a business owner, or you’re a Financial Director in charge of the company's accounts, we know you have to justify your outgoings.

So, the big question: how much does a managed service provider charge? Well, as you might have guessed, it depends. The price can vary based on a range of criteria, including:

  • The size of your company
  • The level of service being provided
  • The pricing model
  • The MSP itself (some will charge less, but is their service as good?)

The key is to find a service level that meets your needs and payment terms that are fair and reasonable based on those needs.

In some cases, MSPs will charge based on the number of IT users at the company. In other cases, it might be a package based on the number of devices, rather than people (in today’s workplaces, many employees have mobile devices and tablets as well as traditional computers or laptops).

There’s also a consideration around the actual payment terms and agreed package. There are three key subscription types that you may wish to consider:

  • Pay-as-you-go support - Paid at an hourly rate or a fixed price, and usually the more expensive option in the long run.
  • Break-fix support - Charged hourly, either paid in advance or afterwards. It can also be offered on a fixed-price contract.
  • Managed service support - The support company actively manages your systems on a retained contract to reduce the chance of things going wrong. 

There’s More to Consider Than Just the Cost

We’ll be clear: choosing an IT support partner based solely on their cheap rates is a recipe for disaster. As with most things in life, low cost doesn’t necessarily equal good value. In many cases, you’re likely to pay an even bigger price in the fullness of time.

Sure, your chosen supplier may be able to fix some basic technical issues, but are they able to adequately protect your data, or provide reliable support? Often the cheaper prices come with lower levels of service, so it can be counterproductive focusing purely on cost.

Lower charges will mean that the MSP won’t be able to attract the best engineers or invest in the best technology to monitor, manage and protect your systems. The number of support engineers, and therefore their ability to respond quickly, will also be more restricted. In short, lower costs inevitably leads to poor service.

It actually pays to do your research and choose a partner that can deliver a premium service. Though the cost may be more than some of the ‘value’ offerings out there, you can more than make that outlay back through various avenues.

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Less Downtime

Unexpected IT issues or server downtime costs money. Think about it: how much would you lose if your systems went down for an hour? How much time is wasted as you wait for service to be restored? Any unplanned downtime can quickly turn into a cash problem as well as a productivity one.

And if your customers depend on your IT systems, it can also soon become a customer service and brand reputation issue. In fact, according to a survey, 37% of SMEs say they have lost customers due to unplanned downtime. Could you afford that to happen?

A reliable MSP will be able to provide peace of mind that your systems are secure and maintained, meaning downtime is minimised - and you won’t be left counting the cost.

Increased Productivity

One of the key benefits of increased uptime? Increased productivity from your teams.

When things are working as they should be, everyone can do their job that bit better - which means better revenues and profitability for you. Sales teams can make calls. Your website can welcome leads and accept payments. Your clients can contact you via email. Your service teams can quickly and easily access the information they need to provide a great service to your customers. All of this can mean you’re delivering the best service possible, and giving your business the best chance of making money.

Reduction in IT Overheads

A good quality MSP will work in the background to keep your systems maintained and functioning correctly. This means that you’re able to focus better on business growth, without having to worry about unforeseen IT problems and subsequent costs to fix them. Your regular payment for the managed IT service becomes a controlled cost, with less to worry about in terms of unexpected fees.

Savings on Salaries

A good IT manager will come with high salary expectations. In many cases, it’s absolutely worth that cost. But sometimes, it’s worth exploring other avenues. Often, a managed service can cost up to half the annual salary of a full time employee, so that’s a huge consideration.

In addition to the basic salary costs there are other overheads to consider such as the office space and equipment they require, the HR overhead of managing internal staff and, in a worse case scenario, dealing with underperformance issues.

Even if you have an IT department, a co-managed service can still be helpful by providing strategic support to your internal team, at a fraction of the cost of hiring new staff.

Peace of Mind

Paying for a high quality IT service means increased protection for your business. A good MSP will actively and proactively monitor your systems to minimise risk and mitigate any threats to your cyber security. Without that, you leave yourself vulnerable to cyber attacks that can have devastating consequences for your business.

Imagine if your customer data was stolen or completely lost. How would you cope? For many businesses, it could be terminal. And even in the best case scenario, it can be an extremely costly process to recover. It can easily cost more for recovery than the initial outlay on good preventative measures (i.e. top drawer security).

As you can see, there’s much more to it than simply the price the MSP charges. Choosing a MSP on cost alone is a dangerous tactic - there needs to be trust that they are reliable and can deliver a good service to your business.

Focus on Value Rather Than Cost

Clearly, you’ll be working to a budget and it’s important to not live outside of your business’s means. But good service comes at a premium. The price you pay isn’t always the be all and end all, and that’s true of managed IT support, too.

What matters the most is the value you get back from your investment - and that means taking into account all of the advantages of using an MSP. As you’ve seen in this article, partnering with the right MSP can deliver a substantial return by helping to boost productivity, reduce downtime, and enabling you and your staff to focus on your business.

If you want to know more about the key considerations when selecting IT support, download our free guide on Managed IT Service Providers: A Guide to Choosing The Right Partner.

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