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Remember when your parents told you that “an ounce of prevention is worth a pound of cure?” Well… they were right – at least when it comes to IT service. If you ask most IT professionals, they’ll tell you the same. Managed IT Services are more cost-effective than using a time-and-materials approach with Break/Fix IT Services. With Break/Fix you’ll ultimately be paying for a “pound of cure” for the problems that you could have prevented with Managed IT Services. In this respect, Managed Services cost much less.
6 Popular Managed Service Pricing Models
When you call IT service companies trying to find out what they charge for Managed Services, you’ll probably discover that pricing isn’t uniform. The answers you receive may vary and can go from confusing to outright frustrating. Quite honestly, there’s no online catalogue to pick and choose from or one-price-fits-all formula. However, there are six popular IT Managed Service Pricing Models that you can use as a guide.
First, let’s talk about the benefits of Managed Services…
The goal of managed services it to lower your IT costs and keep your technology running at peak performance. Managed Service Providers (MSPs) monitor the health of your IT system proactively. This prevents downtime. Plus, they can fix issues remotely and quickly before you even notice there’s an issue.
What Are The Six IT Managed Service Pricing Models?
What Is The Monitoring-Only Model?
The monitoring-only model provides network monitoring and alerting services. Your Managed Service Provider offers this model to companies of all sizes. Midsized or enterprise companies with in-house IT technicians can also use this service and be alerted when something goes amiss. With this model, there are several service levels offered.
What Is The Per-Device Model?
The per-device model is a flat fee for each device that’s supported in your IT environment. For instance, a basic per-device pricing model might designate a flat price: per desktop/per server/per network printer/per managed network.
The pricing is straightforward to quote, and the monthly service fee gets adjusted when you add or delete devices.
What Is The Per-User Model?
The per-user model closely resembles the per-device model. But instead of being billed per device, you’re invoiced per user, per month, which covers support for the hardware used by each user. The support typically covers commonly used equipment:
What Is The Tiered Model?
The tiered model is designed to provide bundled packages. With each package, “X” amount of services are included. And as a tiered model, there are three or more bundled package levels, with three or more pricing levels. They usually get labelled as “Gold, Silver, and Bronze” or “Basic, Standard, and Premium.” The premise with this model is simple–when you pay more, additional services are available that aren’t offered with a lower-level bundled package.
What Is The All You Can Eat Model?
The all-you-can-eat model gives you flexibility. Budgeting your IT expenses in this manner enables you to gauge what’s taken place over the past year, and then make calculated IT cost forecasts for the coming year. Typically you’ll have access to:
The all-you-can-eat model gives you the ability to genuinely budget your IT support costs over a year’s time with no hidden or surprise fees.
What Is The A La Carte Model?
The a la carte model is unique. With this model where you’re getting individual services. Maybe there’s a specific problem that came up and needs addressing. This is when you pay for the services you need. You can also create a customized IT managed services bundled package that’s tailored to your company’s specific needs or requirements. That’s what makes this model different from an all-inclusive, IT Managed Services model or pre-bundled package.
What About Actual Pricing Ranges?
Actual pricing ranges vary from one jurisdiction to another. But to give you a brief overview of what pricing ranges look like, here’s the breakdown. Just remember that these aren’t actual prices, only pricing ranges.
NOTE: An important plus is that with Managed IT Services you can predictably budget for your services because they are fixed per month.
You’ll Find That The True Costs Are Very High
Break/Fix services are reactive. Techs only show up when something goes wrong. This means that your technology isn’t monitored for reliability and security. This sets you up for downtime, and just a few days of downtime can cost you in productivity and revenue.
Not only are you paying for hourly service that you can’t control, but you’re also losing money from IT interruptions and downtime. As a result, many companies end up spending the same amount in a few months for break/fix services than they would for an entire year of Managed IT Services.
Break-fix companies make more money when your technology continues to break. And because they charge by the hour, they have no incentive to fix things quickly. A technician comes and charges you by the hour to make repairs. You might think that this is the most affordable way to go, but it’s not.
It can be like putting on a Band-Aid on problems rather than dealing with the cures. We’ve seen Technology Band-Aids when companies use Break/Fix IT Service, and when we do, the typical result is always the same… wasted time and money.
Break Fix IT is when you use an hourly support service without Service Level Agreements that provide guarantees for problem resolution and uptime — And you can end up with Technology Band-Aids that cost you more in the end.
Issues reoccur when they aren’t monitored and prevented. The problem with this type of service is that you can experience the same issue again. And when you do, your Break/Fix company will come back and charge you again. It’s actually in the Break/Fix company’s best interest not to get to the root of the problem and fix it completely because the more often they return, the more money they’ll make.
When IT isn’t monitored, you’re more likely to end up with security issues. While Break/Fix service might solve the immediate issue, they’re bad for your overall security because your system isn’t monitored 24/7 for threats. If you experience a serious data breach, you could end up out of business due to penalties, litigation and lost customers.
Here in Canada, a Break/Fix Service will charge anywhere from $75 to $100 an hour, plus travel time from their facility to your office. Plus, keep in mind that not all repairs and service can be handled by just one technician.
Depending on what you require, you may need another tech to help or one who is more experienced and specialized in the IT solutions you use. Now you’re looking at closer to $266 an hour for a team and up to $200 an hour for a specialist.
Remember again, these aren’t actual prices, only pricing ranges.
NOTE: With Break/Fix Service you can’t predict what you’ll have to pay for. Your costs could constantly change according to what needs to be done.
We hope this helps you make your decision about whether Managed or Break/Fix IT Service is best for your business. Remember, “an ounce of prevention is worth a pound of cure.”