Factors That Affect MSP Pricing
In this era of in-person and remote work, managed IT services are indispensable for keeping teams digitally connected and secure. However, how much should you anticipate paying for managed IT? This can be a difficult question to answer given there are a number of factors that need to be taken into consideration.
It can be a daunting process to navigate from the varying options offered between Managed Service Providers (MSPs) as well as their different pricing models. Understanding how each factor affects pricing is essential in order to make an informed decision about which MSP is right for your business needs.
Luckily, we have you covered because in this article we'll explore these pricing factors in detail so that you can select an MSP with confidence and get the best value for money.
What is a Managed Service Provider?
For their clients, Managed Service Providers offer a variety of managed IT services. These may include proactive protection with cybersecurity and cloud computing, data preservation and restoration methods such as backup procedures or disaster recovery plans, plus additional options like network management.
MSPs can provide a great deal of value to any small business that cannot afford a full-time IT staff. With MSPs, these organizations can enjoy the same advanced level of specialized technical services as much larger companies without incurring those major upfront costs.
Managed service providers pricing factors
Managed service pricing can be one of the most important factors when it comes to selecting an MSP. For many businesses, pricing is a primary part of deciding which MSP to use. It's important to understand the pricing options available from an MSP before making a final decision.
The precise type of service you require will affect the MSP's rate. For instance, if you maintain an internal team and only need supplementary services from time to time, your rate will be less expensive than for a small business that needs to outsource its entire IT division. Here are a few factors that many MSPs use in their pricing:
Complexity
The cost of managed service pricing can vary depending on the complexity of a company's needs. MSPs have to take into account the size and scope of the services they provide, as well as how much time will be needed for them to properly manage a complex IT system. Even if a project appears small, it can be quite complex to execute which can have a direct impact on the associated cost.
Security
Security is a major factor when it comes to pricing for managed services. MSPs need to take into account the level of security that their clients require, and the tools they will use to ensure that security is in place. These tools can have an impact on cost, as they may require additional labor hours or specialized hardware/software to properly implement them. Additionally, there may be costs associated with monitoring and maintaining these systems over time. Therefore, it’s important for businesses looking at pricing from MSPs to consider the security measures needed for their business before making any final pricing decisions.
Amount of Time Needed
The expense of your Managed IT Services could be influenced by the amount of time that your IT provider devotes to you each month. Depending on the service, they may either charge an hourly rate or include a certain number of hours in their flat fee package.
As MSPs become more operationally mature, they tend to offer unlimited onsite and Technical Account Management/vCIO/vCTO services without extra charge. This is because these types of services are necessary to help the client reach their business goals, allowing for a longer-term partnership between both parties. However, this is not guaranteed by any means and should be discussed in initial financial meetings.
Data Usage
When it comes to determining the cost of your IT services, how much data you use is a key consideration. Controlling an intricate IT setting with vast amounts of data can be difficult to maintain, so consequently, MSPs may ask for a higher fee.
Generally speaking, the more intricate your IT system is, the higher your monthly Managed IT Services cost will be. As you develop and evolve over time, so too will these costs as they adapt to meet any new requirements.
Number of Users
Before selecting an MSP, it's essential to consider the total cost of IT services and how many end-users will be supported. Most Managed Service Providers have a user pricing model that charges per individual or computer accordingly. Additionally, think about whether your employees use their own mobile devices (such as iPhones and iPads) for company activities such as emailing or accessing data. If so, you need to make sure that they are secure with monitoring and support from the chosen MSP.
Number of Servers
The cost of your service may also depend on the number and complexity of servers or cloud environments you need to manage. It is more expensive to maintain a complex network than it is for one single server, as extra labor hours are involved in properly monitoring each piece of infrastructure. Additionally, tools and systems have an associated cost that must be taken into account by the MSP when dealing with multiple servers/network devices.
IT Payment Plans: What options are out there?
When choosing Managed IT Services for your team, it's essential to consider which pricing model best meets your needs. There are numerous options available that offer various advantages and drawbacks. Here are a few of the most popular choices:
Monitoring Only
If your budget is tight, some MSPs offer monitoring-only services at a cost-effective rate. Nevertheless, this type of service lacks the responsiveness and troubleshooting assistance that you may require for proper maintenance and upkeep.
A La Carte
Companies with particular IT needs can benefit greatly from an a la carte model, where they choose the exact services and capabilities that fit their business requirements. The managed service provider then charges a fixed monthly fee based on the selected services, making this option one of the most cost-effective solutions when managing customized technology operations.
All-In Flat Fee
For businesses that require professional IT services, this pricing model can be a good fit. You can receive all remote and on-premise services for a single flat rate monthly fee. This option works especially well for small teams or companies with fewer devices that need 24/7 availability and support without breaking the bank!
Per User
When it comes to Managed IT Services, charging per user is the most popular pricing model. Clients will then pay a monthly fee based on how many people are using these services. This also applies even if each individual has multiple devices connected to the network like an office workstation and mobile device, for instance!
MSPs often utilize a tiered pricing model to help keep costs manageable for larger companies that have over 100 users. By providing a lower per-user rate, MSPs can ensure their clients receive the best possible value as they expand their teams.
Per Device
Instead of paying a flat fee per user, some businesses prefer the per-device model which covers the added intricacy involved with monitoring multiple devices. The rate may also change depending on what type of device you choose to utilize. For example, the cost of managing a server is going to be much higher than the cost of managing a single workstation.
What to think about when picking an MSP
For many organizations, the temptation to invest in a Managed Service Provider at the lowest possible cost can be hard to resist. However, this often fails to provide sufficient protection when an emergency occurs; investing in more comprehensive Managed IT Services is almost always a smarter choice. Although it may require greater upfront expenditure, you can benefit from having access to quality support whenever required, something that no amount of money can buy once disaster strikes!
Shopping around for the right MSP can be an intimidating task, but comparing quotes from multiple providers and taking into account their various price structures will help you make a more informed decision. Please keep in mind that while you are evaluating them, most MSPs also must first evaluate your systems to ascertain the complexity of your requirements. If you need help determining which MSP is right for you or if you want to discuss our pricing options, please contact us at Kotman Technology and experience the Kotman Difference.
Kotman Technology has been delivering comprehensive technology solutions to clients in California and Michigan for nearly two decades. We pride ourselves on being the last technology partner you'll ever need. Contact us today to experience the Kotman Difference.