Managed IT Services Costs & Pricing: A Guide

Questions about managed IT services pricing are among the most frequently discussed topics by business owners, especially small to medium-sized businesses (as they are ideal clientele for managed services). 

And yet, “What does managed IT services cost?” can be one of the hardest questions to answer. Technology budgeting is required for most businesses, so why are managed IT services rates so tough to nail down?

Well, the answer is – it depends. However, that doesn’t mean you can’t get a good idea of what you should expect when it comes to managed IT costs, as the price range tends to be somewhere between $99 to $250 per month per user (or device).

Let’s break down some of the different elements involved in managed IT services pricing so that you can get a better understanding of what to expect.

Pricing for Managed IT Services: Per User vs. Per Device

The first thing to understand about managed IT pricing is there are 2-3 common managed services pricing models that you’re likely to see, depending on the provider. Although they are fairly straightforward, defining and exploring these models can help you to understand the baseline pricing model your business would need.

Typically, the charge for managed services is a flat fee, per month price, whether per-user per month or per-device per month. 

• Per User Pricing: Per user pricing means you pay a flat fee for each employee using IT services. Determining how many users you have relates to can be based on active employee email addresses or a list of active employees within the domain controller. The IT support for these employees will usually include help desk support, security, and system updates for devices. The price will range depending on the level of service, the size of your business, and the complexity of the IT infrastructure. One of the biggest pros with this pricing model is that pricing is very straightforward and easy to understand. Your monthly cost scales with the number of users you have. This could also be a con though—if you have a dramatic increase in users, your monthly cost will similarly increase.
• Per Device Pricing: Per device pricing, as it sounds, is dependent on how many devices are connected to your network(s). Similar to per user pricing, you pay a fixed cost each month based on your device count. Device types can vary, but this would include computers, servers, and other network equipment. There could be differing prices based on device type though. For instance, servers might cost more than workstations. If you have a more complex IT environment with custom devices, then you could have a higher cost per device. Per device pricing offers more control over monthly cost, with a set number of devices you have contracted support for. Be careful that you don’t pay for more devices than you actually need though.

Make sure to communicate your organization’s situation to your potential managed services provider (MSP). For example, a manufacturer may have 50 machines but 100 people using them. In this case, you will want to explain this so the vendor understands your use case and can factor this into your monthly fee accordingly.  They may decide to charge you per device in this particular situation, rather than per-user, given that it is a more unique setup.

Of note, for managed services IT you won’t usually find an option for hourly rates. Hourly rates are typically associated with project work or consultations, or short term work. The MSP might have a project services team though, so you 

How the IT Services Provided Affect Managed IT Services Pricing 

This likely comes as no surprise to any business owner, but depending on what service levels you are receiving, managed services costs can be drastically higher or lower. 

For example, are you utilizing the MSP’s remote support help desk? Are you leveraging them for monitoring only? Do you have additional cybersecurity services baked into the contract? Individualized services, such as disaster recovery or the frequency of on-site support, will affect your price. 

Each vendor you are assessing as your potential MSP partner should provide you with a checklist or a managed IT services calculator. This will outline what would and would not be included in your potential service package(s), along with the costs of each. This way, you can understand what you are receiving, and ensure it meets your expectations.

Managed IT Service Rates—What’s Included?

Understanding what is and is not part of the service agreement is an important part of doing your due diligence when assessing the cost of an MSP. 

For example, additional IT projects, such as setting up a new phone system, are typically not part of your monthly fee. These are an additional, typically hourly rate, the cost to your organization. 

However, other costs for services may be a part of some MSPs pricing, but not others. A virtual Chief Information Officer (vCIO) that assists the leadership team with IT strategy might come at an extra cost with some MSP service pricing models.  It’s important that you do not compare “apples to oranges” and expect them to be the same price. It’s highly likely that every MSP’s managed IT offering is different. 

As with any other element of choosing an MSP, communication is key. As you move further along in the process, the Service Level Agreement can indicate the level of service you can expect, which also plays into managed IT services pricing. Another example that may affect pricing – is a site visit by an engineer included? If so, is there an hourly limit?

Managed services may seem more expensive on the surface, but you often receive additional services your internal IT cannot provide. A good example of this is the depth of expertise and the number of diverse certifications on the team. Your potential MSP should explain how they provide value that outweighs the cost, which is an important consideration when leveraging a managed service provider.

Why Does Managed IT Services Pricing Differ Among MSPs?

The variety of services offered affects managed IT services costs from company to company. 

Examine the pros and cons of the potential service you are provided versus the cost of service. However, make sure that when assessing potential vendors, you are comparing apples to apples, or as close as possible. If Provider A seems less expensive, but includes fewer services than Provider B, comparing them solely on cost does not make sense. 

As we’ve discussed in another article The Price You Pay for Poor Service Quality, not all MSPs are created equal. This is another area of assessment for your organization when choosing an MSP.  Ask the provider how long they have been around, what kind of experience their technical team has and for references. More experienced providers may come with a higher price tag. 

Oftentimes a lower cost means less experience or less bandwidth, or they may rely on a break-fix model instead of proactive management. You can even simply ask the potential vendors – why do you charge less or more than your competitors? Regardless of where you land, this helps you make an informed assessment of different MSP prices.

So, How Much Do Managed IT Services Cost? It Depends…

Although it can be frustrating to hear “it depends” when asking about managed IT services pricing, it is important to understand that the cost of leveraging an MSP is influenced by many moving parts. 

Key things questions to consider when weighing prices and quotes from IT services companies:

• What services are they including in the quote? Does their proposal include help desk support, cybersecurity, cloud management, compliance, backup & disaster recovery, etc.?
• Does their managed service proposal include a Service Level Agreement (SLA)?
• What do existing clients have to say about the MSP and their services? Ask for references to hear directly from other businesses about their service and support satisfaction.
• What will onboarding look like, and are there additional costs? Some MSPs have additional upfront costs for migration and setup during onboarding. You may also want to ask if there is any training provided for your team during onboarding.

Understanding these elements helps you estimate potential costs for MSP services for your organization. Getting a quote for NetGain IT services for your business is easy – talk to us today.