Understanding the Cost of Managed IT Services

At the heart of every potential client's curiosity lies the question of cost when it comes to managed IT services. These costs can be as diverse as the many factors that influence them, such as the intricacy of your IT landscape, your business's unique needs, the quantity of tech users, and any extra projects that may come into play. In this article, we seek to unveil the mystery behind the pricing structures for managed IT services and paint a clear picture of what you should expect.

It's of paramount importance to become well-versed in the variety of pricing models that managed service providers employ, as well as to understand the pros and cons each model brings. In this article, we will delve into hourly, block time, fixed plus hourly, and all-inclusive rate structures. At Chibitek, we've walked a mile in the shoes of every pricing model, enabling us to offer insights that are both authentic and valuable.

Managed IT Services Cost: Pricing Models

Hourly or Break/Fix

In the hourly payment model, you invest in support solely when required, akin to enlisting the help of a plumber or handyman. With rates generally spanning from $100 to $250, the fees are determined by the time spent by the technician in addressing an issue. This approach may appeal to smaller businesses with a limited number of technology users and sporadic issues.

However, the hourly model doesn't necessarily motivate providers to pursue enduring solutions or engage in the strategic planning vital for achieving consistent outcomes. Furthermore, it's crucial to weigh the extra expenses beyond managed IT service costs that may arise due to business disruptions and downtime.

Retainer or Block Time

With retainer or block time plans, businesses can acquire a set of hours, frequently at a reduced rate. This model proves beneficial for enterprises looking to delegate particular, foreseeable facets of their IT support process. If you have a clear understanding of the required hours over a given timeframe or are aware of recurring tasks that need attention, block time or retainer arrangements allow you to purchase those hours in bulk at a discounted rate.

Much like hourly models, most block time or retainer plans offer minimal preventive maintenance or proactive measures. Therefore, exercise caution regarding the scope and potential extra charges that may arise.

Fixed / Base Fee plus Hourly

This pricing model integrates some proactive efforts within the fixed fee, offering providers a more predictable cash flow. This financial stability empowers providers to allocate resources, tools, and services for implementing preventive measures for their clients. Base fees typically span from $50 to $100 per user per month. It's essential to comprehend what this base fee encompasses, as on-site support or assistance exceeding a certain timeframe is not included.

The challenge with this model emerges when providers fail to explicitly outline what is in and out of scope. Clients may consent to a base fee, only to encounter significant additional billing each month. Furthermore, if you're investing less than $100 per user per month, it might not be economically viable for your IT service provider to substantially engage in proactive services, potentially leading to increased out-of-scope charges.

All-Inclusive Fixed Fee or the All you can eat model

Imagine a world where a single, comprehensive fixed fee model revolutionizes the way companies manage their IT needs. A world where, for a set monthly fee businesses can unleash the full potential of their technology. This is not a pipe dream; it's the reality we live in today with Chibitek.

Though some may offer less than $150 per user for this "limitless feast" of services, one must remain skeptical of the consistency and quality provided at such below-market rates. The most fruitful relationships between clients and providers often commence at a minimum of $200, with the market average hovering around $125 to $150.

Envision the beauty of cost predictability, where companies can effectively budget their spending, fostering a proactive approach by providers to tackle issues before they arise. With the all-inclusive fixed fee plan, there's no additional incentive for out-of-scope or after-hours work, so providers are driven to ensure seamless technology operations for their clients.

This innovative partnership encompasses a myriad of services: bug fixes, updates, user setup and termination, round-the-clock support, backups, cloud and vendor management, boundless remote and possibly on-site support, best practice alignment, and strategic planning and consulting.

Expenses Outside of Normal Services

Additional Managed IT Services Costs

In the realm of all-inclusive fixed fee plans, some providers might opt to exclude specific items from the scope to maintain cost-effectiveness per user. Out-of-scope items frequently encompass projects, such as extensive migrations or significant changes, which are generally managed outside the scope of the managed services agreement and may involve separate agreements, like Hardware as a Service (HaaS) agreements.

Another aspect to consider is onboarding fees. These one-time charges, in conjunction with the hourly or monthly managed IT service costs, often differ among providers and can either be a fixed rate or equivalent to your monthly fixed fee.

Hard and Soft Costs

As you navigate the myriad of pricing structures for managed IT services, it's crucial to weigh both the hard and soft costs tied to your provider. Hard costs pertain to the fees for their services, while soft costs include aspects such as downtime and IT inefficiencies that influence your company's revenue.

When technology stumbles, it may lead to inefficiencies, downtime, reduced productivity, and even a downturn in organizational culture, which can negatively impact revenue. By tracking these intangible expenses and juxtaposing them with your IT provider's tangible costs, you can assess if economizing on IT services comes at the cost of constant outages, downtime, and unresponsive support.

Partnering with a provider that prioritizes strategic, empathetic, and proactive measures can significantly curtail intangible expenses and foster smooth business operations. We believe that the return on investment from teaming up with an all-inclusive, fixed fee MSP like Chibitek is genuinely valuable. The all-inclusive fixed fee model is not just a service—it's a revolution in the IT industry, designed to empower businesses and their technology.

We are committed to providing an eco-conscious, inclusive, and empathetic all-inclusive fixed fee solution, inspired by the elegance and simplicity of the "Apple" philosophy. We have faith that this approach delivers the best value and service for our clients, nurturing a solid partnership rooted in shared values and mutual success.

To determine if an all-inclusive provider is the right fit for you, reach out to our friendly team and schedule a free consultation.