The Cost of Managed IT Services
‘Managed Services’ is the latest jargon floating around the Information Technology (IT) domain. A person working in the IT domain must be coming across this term frequently.
While searching for an answer to ‘how much managed services cost,’ you would come across various types of services offered and pricing models for the same. It can be an exhausting, confusing, and frustrating process. By the end of this article, you will be able to fathom nearly all the contributing cost factors, as well as understand the pricing models of Managed IT services.
Before we look at how much ‘Managed IT Services’ cost, we need to understand what is meant by the term ‘Managed Services’ precisely.
What is ‘Managed IT services’?
A range of various IT functions that are provided to a customer by a third-party IT specialist. These services provided by the third party provider/specialist is known as managed IT services, and the third party is known as a Managed Services Provider (MSP). In simple terms, Managed IT service provides IT related solution and maintains IT of the business.
The cost of professional managed IT services
In this field, the most important thing is the price factor; it will vary and usually depend on many determinants. It won’t be wise to expect a fixed price from every managed IT service company out there. Even the same company will be charging a different price when different businesses or organizations are taken into consideration. However, everything is predictable if you follow the trail, a well-organized pattern of pricing and if you manage to work it out through your head, then you will be able to estimate an approximate price.
Most of the times, the following factor determines the prices of a managed IT company.
- The company’s efficiency in solving various tasks
- The area of your marketing campaign
- The competition that you are facing
- Skills of specialist and employees.
There are various pricing models followed by different Managed IT Service providers:
1. Traditional Approach
a) Break-Fix model: The customer doesn’t pay anything until something in inoperational, at which point their IT support company will fix it and charge them.
2. Modern Approach
a) Per device: Per device is when you are charged per supported device.
“Per device makes more sense in the hospitality space, especially when you involve rental hardware in the mix.”
– Chris Rumpf, Founder (Rumpf Computer Solutions)
b) Per-user: It is similar to per device, but a flat fee is billed at the end of the month based on the number of users. This covers support for all devices used by each user, which could mean a smartphone, laptop, and office PC are all covered for one individual.
“Per-user all the way. The devices are going away as more things move to the cloud. Getting paid per-device is a shrinking game.”
–Thomas Clancy, Jr., President (Valiant)
c) Tiered: Which provides different package tiers that correspond to defined service levels. These tiers are structured, based on cost and resources, with a specific price point.
d) Monitoring: A bare minimum approach to managed IT services. It provides network monitoring and alerting services, but solutions support could require extra fees. It can be sold in small and medium-sized businesses (SMBs), as well as midsize and enterprise environments.
e) Flat based range: This model is extremely flexible and includes all remote support. There is on-site support for an entire organization for a flat fee per month.
f) A La Carte: A La Carte model offers flexibility and customization that creates an optimized solution for each client, but it is the most difficult to sell and the most difficult to sustain profitability.
“I recommend bundling as much as possible. This keeps your offering simple for service delivery, billing, and marketing. While there’s always a need to offer some a la carte options, I recommend keeping them to a minimum.”
–Dave Wilkeson, CEO (MSP Advisor)
Primarily, as company size increases, the competition will grow, more significant will be the number of devices requiring these services, and the higher will be the cost of managed IT services.