Calculating The Cost of Managed Services

The cost of Managed Services uses a variety models and is comprised of a number of variables.  These models and variables are detailed here.  To make it easier to understand, the diagram below shows the various components that make up the fees and charges that will be incurred by a client.  Initial fees are one time costs, monthly recurring charges will be the ongoing costs that a client can expect to pay each month.

MSP Pricing

Practical Applications

These are a few examples of how the needs of different businesses can affect the pricing of managed IT.

Chicago Legal IT Services

Mid-Sized, Downtown Law Firm

Demographics-
70 employees
5 Servers
Data backup service
1 Location
35 old computers in use

One Time Initial Fee-
Onboarding – $16,625 (Monthly fee x 40%)
Compliance- $8750 services + hardware
Total -$25,375 + hardware

Monthly Recurring Cost-
Employees – 70 x $145 = $10,150
Site monitoring- 1 x $250 = $250
Servers- 5 x $185 = $925
Backup service- $550
Total- $11,875 per month/ $142,500 annually

Preschool Franchise

Demographics-
37 employees
6 Locations

One Time Initial Fee-
Onboarding – $9,611 (Monthly fee x 40%)
Total -$9,611

Monthly Recurring Cost-
37 employees – 37 x $145 = $5,365
Site monitoring- 6 x $250 = $1500
Total- $6,865 per month/ $82,380 annually

Property Management Company

Demographics-
15 employees
1 Location
2 Servers

One Time Initial Fee-
Onboarding – $8,379 (Monthly fee x 40%)
Total -$8,379

Monthly Recurring Cost-
Employees – 15 x $145 = $5,365
Site monitoring- 1 x $250 = $250
Servers- 2 x $185 = $370
Total- $5,985 per month/ $71,820 annually

As you can see, in the examples above, there are a lot of variables that can affect the cost of IT management for each business. However, in most cases, outsourcing IT management for a mid-sized business is almost always more cost efficient than hiring one, or more, internal IT resources.

Let’s break down one of the examples.

Before we break things down, keep in mind, best practices for Managed IT Support means being proactive.  The goal of proactive support is to significantly reduce or, in best cases, eliminate “downtime” to the computing environment. Employees can’t be productive when the internet is out or a server is down.

In the case of the preschool franchise, there are 37 employees, 6 locations and a lot of employee turnover. 

If the preschool was to hire an internal IT resource, this resource would need to manage the IT support for 37 people. Employee turnover requires time consuming work to on and off boarding employees.  The right resource might be able to handle these tasks. However this isn’t the only thing the IT resource has to manage. 

The 6 locations all have their own network infrastructure, internet connectivity, access control, camera systems and IT security that needs to be managed. Managing the infrastructure for 6 locations, could be a full time job for most IT resources. 

Typically, infrastructure takes the backseat to employee support, which makes sense. Employees will let you know they are having problems. If infrastructure isn’t being  monitored and maintained, it won’t tell you when problems are occuring.

This is reactive support.

Reactive support results in unexpected tech issues (think, server stopped working or the router stopped connecting to the internet). These tech issues result in lowered productivity and high employee frustration.    

 

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