A breakdown of costs involved in hiring a managed services provider
If you don’t want to handle IT in-house, you can contract a managed IT service provider (MSP) who will review, manage, and support your IT network offsite.
Once a business determines managed IT services are the answer to their IT needs, their next question is how much will it cost them.
The truth is, the cost to implement managed IT services varies based on an individual company’s specific needs. There isn’t a magic number or formula to give an exact number without the MSP knowing the specifics of your business environment.
The KR Group typically serves clients with 10 to 100 employees. However, some MSPs serve all sizes of companies. Managed IT services are tailored to each company’s needs, but there are a few overarching components involved in pricing:
- MSP customers start with an audit.
- Managed IT services customers need a firewall.
- All MSP customers need antivirus, anti-spam, and anti-malware and a DNS filter.
- Managed services customers need a back-up device to store their data.
Here are the steps to determine how much an MSP will cost:
1. MSP customers start with an audit.
To get the best idea of what your business needs, every MSP plan begins with an initial audit, which typically costs $500 per site.
This is a review of your company to give our team an overview of what technology you have in place and if it is compatible with our services. During an audit, an engineer reviews your technology infrastructure and determines what you’ll need for hardware (firewall and back-up devices) and software (antivirus, anti-spam, anti-malware, etc.)
The price of all these components varies based on each company’s size and needs, but they’re all vital to managed IT services’ operations.
2. Managed IT services customers need a firewall.
A firewall filters traffic between the network and computers. Its purpose is to prevent malware and malicious attacks from entering your system.
The cost of firewall hardware can range from $750 to $2,000 per site. The price increases with demand on a company’s end.
In some cases, customers own a compatible firewall, but it’s a good idea to anticipate the cost when budgeting for managed IT services.
3. All MSP customers need antivirus, anti-spam, and anti-malware and a DNS filter.
In conjunction with the physical firewall, the software offers thorough protection from malicious attacks.
All these appear as one line item on your managed services bill, but they are four separate pieces to protect you from outside attacks.
Anti-spam catches malware at the email level. It flags suspicious emails and prevents malicious software from coming through your user’s online inboxes.If a malicious link or file manages to get through your email or a user downloads it from elsewhere, antivirus and anti-malware stop the outbreak of the virus to other components of your network.
If a virus manages to make it through those three layers, a DNS filter is a security software that prevents the virus from traveling in your network.
Your MSP will charge for this software as a monthly, per-user fee between $85 and $100. The larger your company is, the cheaper the software is because the price scales down with size.
4. Managed services customers need a back-up device to store their data.
As the name implies, a back-up device saves information in case of a failure or outage. It lives in your IT stack.
This piece of equipment lives in your IT stack. You’ll typically lease it from your MSP, and the cost is incorporated in the monthly software fee.
There are some situations, such as you are governed by HIPAA or FICU regulations, where you’ll need to purchase your own back-up device. Typically, in these situations, you have to destroy the hard drive when you retire a back-up device, so it wouldn’t make sense for you to lease one from your MSP.
If you own a back-up device already, talk to your MSP during the onboarding process to see if it is compatible with the software your MSP uses.
The cost of an MSP + pricing examples
When you add the components together, managed IT services cost anywhere from around $13,500 to $118,500 or more per year.
That’s a pretty big range, so we’ve broken it down to give you a better idea of costs based on three scenarios.
Theresa is opening a daycare center. Her primary focus is on hiring skilled caregivers, so she’s decided to look into an MSP to handle IT services.
Theresa’s daycare only has 15 employees, and an audit of her business costs $500. Since her business is new, she doesn’t own any firewall hardware and will need to pay $1,000 to purchase one.
Although Theresa has 15 employees, she only needs software for 10 computers. This will cost her $1,000 per month, and the fee also covers the back-up equipment rental.
Theresa’s total set-up charge is $1,500, and her monthly price is $1,000. She will pay $13,500 in one year.
Bill recently expanded his manufacturing company, and he’s decided to shift from in-house IT services to managed IT services.
At Bill’s Manufacturing, all 50 employees use computers with complex programs. He pays $1,000 for an audit.
During the audit, an engineer realizes Bill’s current firewall hardware is incompatible with their services, and a new one costs $1,500. Bill also needs a back-up device and software, which costs $90 per user per month.
For 50 employees, Bill will pay a monthly rate of $4,500. His total cost for one year is $55,000.
Dr. Derrick’s Clinic
After struggling to find a qualified IT director, Dr. Derrick has decided to go with an MSP for IT services for his three locations.
Altogether, Dr. Derrick’s Clinic has 100 employees all working with computers. Since auditing Dr. Derrick’s business requires an engineer to visit each location, the audit fee is $1,500.
The audit reveals Dr. Derrick will need to purchase a firewall at each site, which costs approximately $3,000. His monthly price is $85 per user per month.
Dr. Derrick’s monthly fee for MSP services is $8,500, and he’ll pay $118,500 for one year.
As you can see, the price of MSP services varies based on size and need. However, other factors can raise or lower the ultimate price.
Factors that impact the cost of managed IT services
1. You already own compatible hardware.
Bill could save $3,000 if his current firewall was compatible.
2. You have part-time employees or employees who don’t require computer access.
If all of Theresa’s employees needed computer access, she would end up paying $5,500 more every year.
3. You agree to a three- or five-year service term for an approximate 15% or 25% discount.
If Dr. Derrick agreed to a five-year service term, his cost in year one would decrease from $118,500 to $88,875.
4. You agree to a remote support agreement with as-needed onsite visits.
Your MSP can solve about 80% of IT problems remotely. If Theresa is willing to opt for remote-only support, she could see a 20% savings ($200) per month.
Another way your bill might change is if you add or lose a user or if you require on-site support. Some MSPs generate a separate billable engagement for either situation. Doing so allows you to avoid feeling like you’re being nickeled and dimed.
Our pricing is average when compared to our competitors. Some MSPs might be more or less expensive, but the saying “you get what you pay for” is true. A cheaper MSP might come with offshore support, and a more expensive MSP may solely employ higher-tiered engineers and pass the increase onto the end customer.
If our prices and services sound like something you’re comfortable with we’d love it if you’d reach out to us so we can design a package to meet your specific needs.