Managed service provider (MSP) pricing models vary depending on business needs, size, support levels, industry risks, and compliance requirements. Trustworthy managed IT service providers support business continuity through cybersecurity services, compliance management, cloud infrastructure management, and strategic guidance.
Knowledge of pricing models, average IT service pricing, and what is included in MSP service packages is important for ascertaining value for money. It’s also essential to evaluate the quality and fit of prospective MSPs beyond the monthly fees to maximize the partnership’s business impact.
What Is Included in Managed Service Provider Pricing?
Modern managed service provider pricing usually includes proactive maintenance and IT management, cybersecurity services, help desk support, monitoring, backup services, and technology planning. There is typically a regular service package, with premium package options that include more advanced security services. Predictable monthly costs are one of the top benefits of working with a managed service provider.
Core MSP Services (Typically Included)
- Remote monitoring and management
- Help desk support
- Device management
- Microsoft 365 support
- Patch management
- Network infrastructure monitoring
- Endpoint protection
- Vendor management
Advanced Services With Premium Packages
- Compliance services and management
- Disaster recovery planning
- SOC monitoring
- Cloud migrations
- Co-managed IT
- Strategic VCIO consulting
- 24/7 support
- Business continuity planning
Why Are Strategic MSP IT Service Costs Higher?
An IT managed service provider that also offers consulting becomes a partner in your business ventures, offering business strategy, risk reduction, and operational planning in addition to proactive IT support. This strengthens your bottom line in ways that help-desk support alone cannot.
Organizations pay a fixed monthly fee while enjoying the benefits of executive-level advisory and business alignment. These service levels and proactive management are advantageous for businesses that want to scale.
Average Managed Service Provider Pricing for SMBs
Most small and medium-sized businesses pay between $100 and $250 per user, per month. The price depends on the scope of service, security requirements, and operational complexity.
Typical per-user pricing models define a small business as having between 10 and 25 employees. Mid-sized businesses are defined as having between 25 and 100 employees. Managed service providers generally offer personalized pricing for enterprise, regulated, and security-sensitive organizations.
Per-Device Pricing vs. Per-User Pricing
- Per-user pricing models charge per user. Per-device pricing models charge a fee per device, even when more than one person uses the device.
- Per-device pricing is best for companies in which employees use shared workstations, shift-based roles, or where the number of devices greatly outnumbers the number of workers.
- Per-user pricing is better for companies in which employees use several devices or work remotely. Many MSPs prefer per-user pricing for greater predictability.
Why Cheap MSP Pricing Models Cost More Later
Cheap MSP pricing models end up being more expensive over time than comprehensive managed IT services due to the hidden costs of:
- Reactive support
- Weak cybersecurity services
- Increased downtime after an incident
- Lack of strategic planning
- Hidden fees
- Poor disaster recovery
Check each managed service provider’s certifications, verified client reviews, and service-level agreement (SLA) carefully before signing on.
The Most Common MSP Pricing Models Explained
MSP pricing models vary depending on the services included in the bundle. The choice of tier must align with your desired business outcomes.
- Per-user pricing is best for growing businesses that have hybrid or remote workforces.
- Per-user pricing is best for shared workspace companies.
- Tiered pricing models offer basic, standard, and premium tiers. More advanced security solutions are typically offered at the higher tiers. Businesses wanting IT services that scale with them love the flexibility of tiered pricing.
- All-inclusive or value-based pricing is connected to the business’s outcomes rather than the number of tickets.
- À la carte pricing allows small and medium-sized businesses to select only what they need in the moment. However, it sometimes creates a fragmented support structure with unexpected costs.
- Hybrid pricing models allow organizations to combine pricing models based on their infrastructure complexity.
Which Factors Affect the Cost of Managed IT Services?
Managed IT service costs are influenced by cybersecurity requirements, compliance rules, network infrastructure guidelines, disaster recovery and backup needs, and support expectations. Knowing these influencers is critical for businesses to align their IT support with their company goals. You will then be able to make informed decisions about your IT infrastructure, pricing model, and service needs.
Cybersecurity Requirements
Cybersecurity requirements include:
- Managed detection and response services
- Endpoint protection
- Email security solutions
- Security awareness training
- Zero-trust environments
Compliance Management Needs
Several industries must comply with specific data privacy acts in order to stay in business.These organizations must make compliance management a top priority when comparing the packages and pricing tiers of potential MSPs.
- Healthcare: Health Insurance Portability and Accountability Act (HIPAA)
- Finance: Gramm-Leach-Bliley Act (GLBA)
- Education: Family Educational Rights and Privacy Act (FERPA)
- Children’s websites and apps: Children’s Online Protection Act (COPPA)
Businesses in other verticals also need to ensure secure endpoints and protection for sensitive data to comply with state-level consumer privacy acts. All businesses must report all material cybersecurity incidents to comply with the SEC’s Cybersecurity Guidelines. MSPs that offer compliance management will make sure all necessary reports are written and filed promptly.
Network Infrastructure Complexity
Consider the complexity of your network infrastructure when choosing managed IT services. Your monthly MSP cost will likely be higher if your business involves several of the following:
- Different locations
- Multiple devices
- Remote workforce
- Cloud environments
- Legacy systems
Disaster Recovery and Backup Expectations
Your disaster recovery and backup expectations should include recovery time objectives and redundancy costs. Recovery time objectives (RTO) define the maximum time a system can be offline after a breach or cyber incident. This measurement correlates to the acceptable amount of time allowed before money and reputational damage are lost.
Companies looking for lower RTO times should partner with a professional managed cloud services provider to guide them to hot standby systems, automated failover mechanisms, and skilled IT technicians who are fully dedicated to the safety of your infrastructure.
Please note: Lower RTO times require higher redundancy costs. However, these are baked into the monthly price and typically pay for themselves by preventing losses from incidents.
24/7 Support Requirements
After-hours coverage increases service costs due to on-call staffing, quicker response times, and operational readiness outside normal business hours. Premium rates, including after-hours or weekend support, are typically 1.5 to 2 times higher than standard IT service costs.
If your 24/7 requirements are added as a flat monthly fee, they typically raise your overall managed IT services pricing by 15 to 50 percent. However, SMBs that use 24/7 support have quicker incident resolution and reduced downtime when issues occur. This has the potential to save you money in the long run.
How to Evaluate Managed Service Providers Beyond Price
The cheapest managed service providers are rarely the most cost-effective long-term solutions. Take the time to ask the right questions, look for red flags, and understand the importance of strategic alignment when evaluating prospective managed IT service providers.
Questions to Ask a Potential Managed Service Provider
Ask these questions when interviewing potential managed service providers. It is much easier to clarify procedures and terms up front than when you are already in a business relationship.
- How quickly do you respond to cyber issues?
- What cybersecurity standards do you follow?
- Do you offer strategic planning?
- How do you handle disaster recovery?
- What type of expertise do you have?
- What do you offer in terms of reporting and accountability?
Red Flags to Watch Out For
There are several red flags to look for when searching for a managed IT service provider. Watch out for these potential pitfalls BEFORE you sign up.
- Extremely low pricing
- No cybersecurity stack
- Reactive-only support
- Long-term lock-in contracts
- No strategic planning meetings
Why Strategic Alignment Is Important
Strategic alignment between your business goals and your managed service provider is essential for optimizing spending, decreasing inefficiencies, and optimizing communication between IT and leadership. Once you’ve done your due diligence and found MSPs with a proven track record, prioritize the provider that offers the best fit.
FAQ
What is the best MSP pricing model?
Per-user and value-based pricing models are preferred due to predictable monthly fees and scalability.
Are managed IT services cheaper than hiring an internal IT staff?
Many small and midsize businesses find that managed IT service providers offer broader expertise and 24/7 coverage at a lower cost than hiring internal IT staff.
How often should businesses review the service-level agreement with their MSP?
Businesses should review their MSP service-level agreement at least once a year to check for accuracy and make improvements.
Choose the Right MSP for Long-Term Growth
A managed IT service provider should act as a partner to your small or medium-sized business.It is essential to know what services are included in MSP pricing, which pricing models and tiers make the most business sense for your organization, and how to evaluate providers’ value for money and fit.
Before signing a contract, schedule a consultation, request an IT assessment, review your current IT spending habits, and evaluate your cybersecurity readiness. The right managed IT service provider generally pays for itself many times over in losses prevented and efficiency gained.
