Have you ever tried to get a straightforward answer on how much you should spend on IT support or how much managed IT services costs? Managed IT service providers (MSPs) do not want to publish their pricing. Most MSPs will not even give out a price over the phone. 

Why? The truth is: MSPs are afraid to divulge information to their competitors (secret shoppers) or lose a lead before they have a chance to explain their value proposition. 

This blog will let you peek behind the curtain of our industry and show you how to make a more informed decision about your service provider. Together, we’ll examine the core questions that will help you invest in the right technology partner:

• What are the different types of managed IT service providers?
• Why do MSPs guard their pricing?
• What is the going rate for IT services?
• What should your onboarding experience include?
• Questions to ask a managed service provider

What are the different types of managed IT service providers?

The dirty secret is that most Mature MSPs charge about the same amount of money per month to their clients when you add everything up.  So why keep pricing under wraps?  Let us explore the industry a little to get to the answer.  The industry has four distinct types of MSPs:

• Trunk Slammers : Small companies with 2 – 4 people, no processes, and a handful of clients. They may use the same tools as mature organizations and look like a mature MSP because of cloud-based tools and marketing, but they fall short on experience, follow-through, and ability to grow over time. These teams are usually technical but lack business direction.
• Value MSPs : Small companies with 8-15 people, reactive services, and clients interested in keeping IT support costs as low as possible. These teams provide a very inexpensive service which includes “break-fix” services and hourly options. Usually, they have a limited toolset and lack business technology consulting experience. Value MSPs often lack extensive internal processes and checks and balances on personnel or security.
• Bolt-on MSPs : Usually very large organizations. These companies have a core business competency that is not IT services, such as providing phone systems, printer rentals, insurance sales, accounting services, or audio/video solutions. These companies are looking to build a new recurring revenue stream by providing managed IT. However, most are not equipped to manage technology for other organizations the way a mature MSP does.
• Mature MSPs : Usually over 25 employees and have been in business as an MSP for over 10 years. These providers have documented processes which include onboarding, consulting, service, security and project management. They have distinct departments for the fulfillment of support, projects, purchasing, sales and account management. Their core competency is business technology support services and strategic consulting. Typically, these MSPs offer a monthly billable subscription or service model with a holistic approach to proactive and responsive IT support solutions.

Why do MSPs guard their pricing?

Understanding the four types of MSPs is a crucial part of understanding why providers tend to withhold public pricing. 

Mature MSPs all know one another. At conferences, we are often very friendly with one another. We all know that we charge about the same amount per person/computer per month for services. We like to compete with one another on new opportunities because most of the time, it is a matter of fit and scope — not price.

The real reason that most mature MSPs do not like to share their pricing is because of the other three types of MSPs. 

Without the overhead of accounting, training, security and business processes trunk slammers and value MSPs will often provide lower pricing during the sales process. Uneducated buyers may not understand to ask about the maturity of an organization or their ability to deliver service and how it would impact pricing.

Bolt-on MSPs will often lead with a very inexpensive offering and a professional sales team. Bolt-on’s are often unable to fulfill consultative technology service delivery due to their lack of operational focus on being an MSP. They often have other, more pressing business lines. Buyers tend to get caught in the inexpensive offer and then face increased contract pricing over time with add-ons and items not included in the initial proposal.

• Mature MSPs will often ask to review a client’s technology environment prior to pricing.
• They take the time to understand what the business needs are before detailing the cost of IT services. 
• They typically have solutions that include a variety of services and software as a bundle.

When everything is broken down, mature MSPs usually charge about the same as one another, although some may cost more due to vertical experience, customer experience, or specific client needs. But the reality is: the cost depends on exactly what services and support you need to protect your business and scale effectively.

What is the going rate for IT services?

The going rate for managed IT services in the United States is between $125 -$175 per person per month.  If you include advanced security solutions and consulting it may get as high as $200 – $250 per month per person.

MSPs provide different billing options, including:

• Charging per person
• Billing per computer or server
• A flat fee rate to cover everything

Regardless, the cost of IT services from a mature MSP should land around the same total figure per month. If a deal looks too good to be true — it is. If a proposal looks way too high, you need to ask how the proposal breaks down and what you get for the money.

So, let’s say for example that you are a company with 35 people and have two servers and do not require advanced security due to PCI, HIPAA, or other such requirements. You should expect to pay between $3,500 and $5,500 per month for managed IT services. This is pricing from mature MSPs and does not include licensing such as Office 365 or VoIP.

Why pay an onboarding fee and how much do MSPs charge for onboarding?

Paying an onboarding fee when getting started with a new MSP helps cover the initial setup costs associated with transitioning to their services, including assessment, planning, configuration, and deployment. This fee typically reflects the time, resources, and expertise required to onboard a new client effectively, ensuring a smooth and successful transition to the MSP’s managed IT services. You might expect to pay about the same cost as a month of your service plan to onboard with a mature MSP.

The onboarding process involves various tasks such as assessing existing infrastructure, configuring systems and software, migrating data, and training staff, all of which contribute to the overall cost.

The exact amount may vary depending on factors such as the complexity of the client’s IT environment, the scope of services required, the level of customization needed, and the size of the organization. Onboarding fees may range from a few hundred to several thousand dollars, with some MSPs offering flat-rate packages or tiered pricing based on the extent of onboarding services provided.

You really don’t want your MSP to skimp on the onboarding process because you get what you pay for. The cost of IT services onboarding reflects the value of the expertise, support, and resources you will receive. The right MSP will make your transition as seamless and beneficial as possible.

What should your onboarding experience include?

The onboarding process sets the tone for the working relationship between managed service provider and client. A well-executed onboarding should provide great client experiences from day one, tighten up security concerns and provide a clear roadmap for clients as they plan for the future. 

Let’s explore three key benefits you should expect when paying for onboarding with your managed IT service provider.

Exceptional Customer Experiences

A proper onboarding experience should prioritize excellent customer experiences and set you up for a successful partnership with your MSP. You should feel confident you’ll receive top-level support starting with the first phone call and lasting throughout the entire lifetime of the partnership. Your MSP should offer an onboarding process that benefits your team.

Maximized IT Security

When a client is properly onboarded, the MSP will gain a solid understanding of the client’s IT systems and security posture. This part of the process is extremely important as it helps the MSP identify key security concerns. When a provider comes in, they should take time to understand the environment, note security flaws, and develop a plan to remediate any issues.

Strategic IT Planning

A proper onboarding experience will paint a clear roadmap of what the client needs to focus on immediately and what to budget for in the future. At IronEdge, our clients receive an IT strategy roadmap that outlines initiatives for the next 1-3 years.

Behind the scenes of a well-vetted onboarding, technical teams visit client sites to look at the current IT environment before support starts. After all, there’s nothing more frustrating than partnering with a company that doesn’t know their client’s network environment and initiates discovery on the fly during the first call for help.

When it comes down to it, a thorough, well-vetted onboarding takes time, resources, and hours of planning — not to mention the hard costs associated with it. 

The goal of a well-vetted, paid onboarding process is for both client and MSP to create a custom plan, establish a working relationship, and be able to hit the ground running as soon as support is needed.

Questions to ask a managed service provider

While most mature MSPs charge the same costs, not all providers offer the same expertise or services. Here are the questions you should ask when looking for a managed IT service provider.

Ask each MSP what is included in their package:

• Do all of our employees get to call the helpdesk directly?
• Are there limits to help desk requests or inquiries?
• How do you prioritize tickets or emergency requests?
• Do you offer other services? (this may be a red flag if the services are too broad)
• Which security applications are we getting for each computer?
• Do we get user security training?
• Can we get a breakdown of all the applications and services we get with this package?

Then ask questions about their business maturity:

• Do you require multi-factor authentication (MFA) on all of your tools that support our business?
• Do you have a change management process for all clients and your systems?
• How often do your technicians have to get certifications in the technology that I use in my business?
• What technology experience do your account managers have?
• How long have you been in business?
• Tell me about the history of your firm. Were you always a technology services provider?
• How many people work for your firm as W2 employees? Are they background checked?

Ask about the business model:

• Do you outsource any of your core services that support my business?
• Will we be working with you as a point of contact or will someone else be assigned to our account?
• Do you have someone dedicated to account strategy? 
• Is our point of contact (or account manager) also doing the technical work and wearing multiple hats?

Then ask for referrals:

• Do you have two long-time client referrals?
• Can I get a referral from a client my size or in my vertical?
• Will you provide a referral from a client where things were rocky and got better?

Looking for a new technology provider is not easy, But with some education, you can take a lot of the guesswork out of it and make a decision that looks beyond the cost of IT services alone. 

Want to learn more about what to look for in a managed services provider? Download the guide here or contact IronEdge for further questions.

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