Evaluating Managed Service Providers?

Michael Anderson
written by Michael Anderson posted on March 24, 2022

How to Assess Price Effectively When Evaluating Managed Service Providers

When business leaders first consider using a managed services provider (MSP), one of the first questions that comes up is price. Business leadership is often sold on MSPs by expected cost savings. So it’s not uncommon for IT directors to try to comparison-shop among different providers to assess which might be the cheapest. But using pricing as the sole criterion for choosing an MSP is a mistake. Not all MSPs provide the same range or type of services, so businesses often wind up making apples-to-orange comparisons when assessing different providers. Moreover, some businesses use price as a proxy for quality and purchase bundled services they don’t need or aren’t a good fit for their business.

Now, price is definitely an important consideration when choosing an MSP. But just how you evaluate the price and which other criteria you choose alongside price and cost savings can make the difference between overpaying, selecting a low-quality service provider, or finding the MSP that’s the right fit for you and your budget.

Evaluating Managed IT Services

How Should You Evaluate Internally Before Considering Price

Before you drill down on price, you must be crystal clear about the services you need and the frequency with which you need them. If you approach an MSP with only a vague understanding of the kinds of services you need, it will be difficult, if not impossible, to evaluate what they offer. You also may be upsold for services you do not need.

Many businesses choose to rely only on MSP services when something is wrong. This approach is usually cheaper. However, without taking advantage of ongoing maintenance and upkeep, such an approach leaves the business vulnerable to relatively larger (and more expensive) system malfunctions and cybersecurity issues.

In contrast, many businesses opt for the more strategic approach in which an MSP offers more comprehensive maintenance and support for a finite period. Over this period, the business will pay the MSP an agreed-upon monthly fee for their services. These services may include:

  • Network, server, and device monitoring and maintenance
  • Cloud solution provision and management
  • Access management
  • Technical support to staff
  • Compliance and risk management
  • Disaster recovery support
  • Cybersecurity
  • Custom-built productivity solutions
  • Fully or partially outsourced IT services

Diving deeper into any of these service offerings will unveil areas of potential additional fees. For example, you may pay a reasonable monthly fee for cybersecurity threat detection. But if you expect the company also to investigate each incident and respond to threats, you may pay a higher monthly fee. This is why it’s important to be crystal clear about what services you need.

How and Why Price May Vary

Some estimates hold that you can expect to pay between $70 and $200 per month per device managed or per employee for conventional MSP services such as network maintenance and monitoring, cybersecurity, and helpdesk services, among others. However, your exact pricing will vary considerably based on your specific IT needs, your location, the expertise of the MSP under consideration, and the pricing structure offered.

Typically, an MSP will offer a flat-rate price for a service to be applied on a per device or per user basis. For example, when using a per device structure, you may pay $70 per desktop per month or $300 per server per month. When a per-user basis is calculated, you’ll pay a flat fee that incorporates the bundled services you want the MSP to provide and multiply that by the number of end-users in your organization. So, if you’re a small business with ten employees, and the MSP offers a service package that costs $100 a month per user, you’ll pay $1,000 a month for the life of the contract.

Whether the MSP offers a per device or per user pricing structure, your flat fee will vary based on the services and add-ons you request. While more is not always necessarily better, many businesses opt for inexpensive packages that don’t fully encompass areas like regular upgrades and cybersecurity testing that leave their corporate networks exposed. And no matter how expensive an MSP’s monthly price may seem, the costs of a successful ransomware attack on your business will always be higher.

The flat-fee pricing structure means that your IT costs will be a predictable expense that you can build into your budget. However, your costs may also vary based on how complex your business is and your level of in-house IT expertise. If your small business operates using a few conventional programs, you should expect to pay less. However, your monthly expenses will be higher if your employees operate from different locations and use multiple enterprise-wide applications.

Your business’ complexity and IT needs will affect your final price in other ways. If your business is in an industry with rapidly evolving data security regulations requiring agile data security compliance measures, expect your costs to be higher than those of a local retailer. Or, as you grow your business, you may find yourself needing custom-built IT applications to scale effectively, which you cannot do in-house. In these cases, MSPs often charge a per-project fee that will vary based on the complexity of the application or initiative required.

How Can You Evaluate Potential Cost Savings?

If selling the benefits of an MSP to your business leadership requires you to demonstrate significant cost savings, it’s impossible to do so by simply asking each MSP how much they charge a month. And if you’re inclined to compare all of the MSPs in your local area by price alone, you’ll likely wind up inadvertently comparing different price structures and services to each other.

Rather than asking your local providers for a quote, you should:

  • Perform an internal assessment of the exact services you need. If you’re not completely familiar with the technical language you see on each provider’s site, outline the scenarios in which you need support and how you would expect a provider to respond in each instance. Be as detailed as possible so that when you speak with a provider that can provide you with a quote that encompasses the depth of service you expect.
  • Approach a couple of MSPs in your area with the expertise you need. Don’t just use their chatbot to ask for a quote. Speak with a staffer to explain in detail what you’re looking for, then request a quote. Make sure you understand whether their quote is based on a per device or per user structure.
  • Assess your costs internally for the services you’re providing. If providing the quoted level of service requires new full-time or part-time hires, calculate their recruitment, training, and salary/benefits costs in your assessment.
  • Compare your MSP quote to your assessment. Generally, small businesses and many medium-sized businesses will be able to see clear and significant cost-savings that make a compelling argument for using MSP services.

By approaching an MSP’s price in this way to measure expected cost-savings, you’ll be able to make a compelling case for using an MSP and ensure you get the services you want while avoiding the pitfalls of solely choosing a provider based on their price.

Getting Started With An Experienced MSP

When you start to assess providers in the Winnipeg, Saskatoon, and Regina areas, start with 365 Technologies. Our expert staff provides a wide range of IT services, including network management and maintenance, cloud-based services, cybersecurity, and more. We can ensure that your business has the resources it needs to grow and operate at optimal efficiency while keeping you well prepared to identify and defend against cyberattacks.

We’ve worked with many small and medium-sized businesses across industries, helping them achieve cost savings while improving their productivity. And we want to help you manage your IT so that you can focus on running and growing your business. Contact us today to discuss how your business can benefit from our expert IT services.

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