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The Guide to Managed IT Services Pricing

By: Total Computer Solutions

managed service provider

It is a problem that every business eventually wants to have, but a problem nonetheless. Once an organization grows to a certain point, those in charge of the company will need to make a critical decision. Do you hire an IT person internally, or do you outsource? Many businesses do not have the resources to interview, hire, and manage full-time IT staff. In this case, many of them decide to hire a Managed Service Provider

MSPs can improve your IT operations because they have expertise in helping dozens or maybe hundreds of organizations similar to yours. Unlike a single employee, an MSP's technical team is never all sick or all on vacation at the same time. Typically, they have more depth and breadth of experience than an individual. In a sense, an MSP is an entire IT department, not just an employee. The negative of using an MSP is they are not an employee. You cannot insist that they stop working on one thing and start on something else or work this weekend to resolve an issue. Typically, they do these types of things as part of the usual course of being an MSP, but you are asking not telling.

Managed Service Provider is a broad term, and so you want to ask a lot of questions to make sure you understand what is involved. Because MSP is used broadly, there are a variety of pricing models, each with their own merits and disadvantages. Here is a description of the most common pricing models:

Monitoring-Only Pricing Model

This option is often the most inexpensive and commonly used if you have in-house IT expertise, which is sensible, considering this is the most minimalist approach to managing services. MSPs will monitor some aspects of your IT infrastructure from a remote location. When they discover any issues, they will make them known to you, but providing resolution may cost additional money, or be handed off to your team to resolve. The level of monitoring can vary from watching over in-house equipment to a more advanced support system with incident resolution. 

Tiered Pricing Model

This model lets clients decide how many services they want on a more exact level. Different tiers of products are created and associated with defined levels of service. You can buy services in small bundles, and this could be a better fit when you already have some of the pieces in place. The variety of choices is extensive, but can also lead to confusion if you can't decide how much assistance you need. For the MSP, this tiered pricing model could stall customer acquisition or compel would-be clients to settle for the cheapest option.

A La Carte Pricing Model

This pricing model takes the features of the tiered system and makes them even more extreme. It is all about freedom. These packages are the most customizable, so clients can pay for the specific services that they want to have. The problem with a la carte pricing is that it is challenging to sustain profitability for the MSP in the long run. The plethora of choices is so high that clients often become frustrated or confused by the options and inadvertently design packages that don't fully meet their needs. From the MSP's perspective, every client is custom, and this makes their business model challenging and their clients more challenging to support. 

Per-Device Pricing Model

Per-Device pricing is a lot simpler than the previously described models. Here, clients pay a flat fee for each device that is supported by the MSP. Devices are billed on a monthly schedule based on the type that's managed. This method seems straightforward in how it is priced, and it is easier to create quotes than others. Devices can be added or subtracted as needed, so clients are never paying for more services than they have. The downside for this model is trying to make sure all your devices are covered all of the time. With additions and deletions of devices happening on a regular basis, this can be difficult to keep current for both the client and the MSP. When a user calls for support and their device is not on the supported list, this can cause frustrations for the user. 

Per-User Pricing Model

The per-user pricing model is the number of users that require managed IT services on the network, measured against the number of devices on the network. This can be a better deal for clients that have employees using multiple devices. Today most users have at least a computer and a phone, and many have a tablet as well. This means that the per-user price can often appear high, but if you add all of the user's devices into the pricing, you understand the reason. 

Per-user pricing does adjust to account for multiple devices, and client fee is based on the number of users. The per-user pricing model is the easiest for both the MSP and the client to maintain. The business does not need to communicate every device change that takes place, and the MSP isn't concerned about the device, just the user. Per-user pricing is a smart model for clients who need to be constantly connected to multiple devices. 

Valued-Based (Flat-Fee) Pricing Model

But the pricing model that we recommend is the value-based model. This strategy lets MSPs become the client's outsourced IT department for one set price per month. Instead of paying for individual services, a flat fee is paid for a total experience involving multiple jobs. More and more MSPs are using this setup for a good reason. 

Modern IT professionals are judged on the lack of downtime their client's experience, and how quickly they respond to problems. Flat Fee IT empowers you to manage your growth while accessing the full range of TCS's expertise. Productivity will go up due to more uptime, and awareness of potential issues is discovered when they are small before they create downtime.

Value-based models require a lot of expertise to be done well. At TCS, we have 30 years of experience in IT and almost ten years of experience in providing Managed Services along with hundreds of happy clients that can give you confidence that we are a smart choice.

Our Flat Fee IT offering allows us to continually monitor business-critical functions such as servers, firewalls, remote offices, essential desktops, and Line-of-Business Applications. Our objectives are the same as yours: maximum uptime, 24/7, 365 days a year.

If you want to speak with us to see if you are a fit for our Flat Fee offering, please contact us for a no-obligation appointment. The best way to reach us is through our contact page. 

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