Today, there’s a wide range of billing models and prices across the IT industry because of the trickiness of understanding managed IT services cost. Every organization should understand and have a precise overview of IT providers’ most common pricing models. Having this knowledge will enable companies to select the most cost-effective managed IT services for all their operations.
Looking into managed IT services and not sure how much to pay? See what’s right for you in this guide to managing IT services cost.
How Technology Has Changed Over Time
Doubtlessly, technology has changed, is changing, and will further change our lives. Tech-driven tools like the internet have now given everyone global equal access to information. Modern technology has paved the way for multi-functional devices like the smartwatch and smartphones.
Recent data from the International Telecommunication Union show that 4 billion people now use the internet. At 51% of the entire global population, that’s an astounding figure! With the staggering increase in the use of the internet, learning how to manage the pricing of information technology services is now necessary for both small and large businesses.
What is Managed IT Service?
Managed IT service refers to the outsourced monitoring of an IT network. An IT service can either be co-managed or fully-managed. However a managed IT service is executed, it helps in handling all tech-related operations and complex strategizing.
In more robust terms, managed IT service is outsourcing the responsibility for maintaining the need for a range of functions to improve operations. The individual responsible for maintaining IT services is called the Managed Services Provider. The service provider is concerned with performing on-demand services.
The Evolution Of Managed IT Services Pricing
The evolution started when application service providers emerged in the 1990s, who helped lay the foundation for remote support for IT infrastructure. Although their primary purpose was to manage servers and networks, they expanded to include remote firewall administration, management of security, and print services.
In 2005, Karl W. Palachuk, Amy Luby, and Eric Simpson were the pioneers of the managed services business model. However, in the current economy, IT manufacturers are currently moving from a ‘‘box-shifting’’ resale to a more customized way of managing service pricing.
According to research, the managed services market foresaw the growth from 152.45 billion dollars in 2017 to 257.84 billion dollars by 2022, portraying a compound annual growth rate (CAGR) of 11.1percent. To bring about the sustenance of business goals, there has to be a drive of all IT business operations.
Considerations for IT Service Pricing
Recently, there has been a variance in managed services’ pricing, denying potential customers the ability to get the same price they anticipated. For example, a conservative estimate of the Atlanta market reveals it has over 400 IT companies. Such numbers create room for excellent options available for different budgets.
However, there are factors to consider when thinking of managing your IT services; they are:
- What are my needs?
- What’s my budget?
- What are the possible financial and legal risks of not meeting these needs?
Although organizations should consider their financial capacity before embarking on projects, they must set IT service maintenance as one of their top priorities.
Companies should evaluate their threshold for vulnerability. In a situation where their budget is lower than their security needs, they should be concerned with the possibility of staying vulnerable for a short while.
3 Popular Managed IT Services Pricing Models
A range of options exists to generate revenue by popular managed services pricing models. The ability to reach favorable bargains for IT services is crucial and requires careful deliberation. Here are different pricing models and their core attributes:
1. Tiered Pricing Model
The Tiered Pricing Model is the most popular model among managed services providers. The theory is to build several managed IT services pricing packages that provide better services to the customers.
With the Tiered Pricing Model’s help, a ‘’silver’’ desktop managed services package might include essential remote support or virus removal for the entry price level. In contrast, a ‘’black’’ desktop service package might include emergency after-hours support. This is undoubtedly the highest-priced package.
2. Monitoring-only Pricing Model
The monitoring-only pricing model provides monitoring services and is mostly sold by managed service providers in small and medium-sized businesses, alongside midsize enterprise environments.
Managed service providers get to perform all incident resolution for the customer’s IT staff. Another service level might be where managed service providers participate in basic incident resolution for even more advanced support.
3. À la carte Pricing Model
The À la carte pricing model differs from all-inclusive managed services pricing models. This pricing model allows a managed service provider to sell discrete services that address specific customer needs.
À la carte pricing gives customers the ability to choose and pay for the services they need. They can also select various offerings to create a personalized package of managed IT services.
Factors To Consider While Managing Services Pricing
Fortunately, IT companies employ a host of information technology talent and experts of specific segments to aid their building of a comprehensive team. However, some factors must be a consideration for the effectiveness of this maintenance. These factors are explained below;
1. Compliance Considerations
The employment of a team of IT professionals for one internal staff’s price is an excellent advantage to leveraging the service provider’s expertise. So, it’s only reasonable for managed service providers to take on responsibility for remaining current privacy regulations.
2. Service Level Agreement
There’s a need to ensure a comprehensive service level agreement between your company and the service provider.
3. Firewall Protection
This is the physical device that serves as a guard between your company’s network and the outside world. It helps to block specific data that your internal IT specialist manages.
No one can keep up with the constant advancement of technology. It requires so much money to hire someone who understands the recent developments in the IT world. Hiring someone who understands the most recent developments in information security is expensive.
Benefits Of Managed IT Services
Adopting managed services is an effective way of staying up-to-date on technology. Also, having access to quality services at a reasonable cost. Here, you’ll learn a few benefits of managing IT service pricing.
Protection from downtime costs
Downtime is the unplanned cost you incur when your technology goes offline. Avoiding the downtime cost will mean that you have to protect your network with the best cybersecurity practices, making fair use of a virtual server for when your in-house server goes down. Also, you’d need to back-up your important files to the cloud.
It’s essential to keep in mind that downtime can bring about reputation damage, especially if malicious actors have ample time to infiltrate your defense networks and cart away your sensitive data.
Exposure to experts
With the continual increase of cybercrime and sophistication of hackers, it’s become impossible for a single IT professional to have all the experience in handling all IT problems. It’s important to remember that IT companies that handle your company’s security problems learn from every client in their portfolio. This exposes them to get better, even when there isn’t a problem with your firm.
Every company would like to consider its financial capacity when it involves choosing a managed IT service provider. Luckily, there’s a wide range of options available to companies, depending on their financial ability.
Managed IT service providers are easy to employ because they don’t require all the benefits available to internal employees, such as healthcare, vacation, or annual leave. Additionally, they will work remotely, which gives your organization the flexibility it needs for maximum productivity.
Every business owner is concerned with generating more revenue, which would aid their goodwill in the global space. However, most companies have missed out on various opportunities due to their ignorance of managed IT services pricing.
The Denver Post reported that 60 percent of small businesses affected by security breaches never recover and are quickly out of business. With managed IT services pricing, you’re at peace, knowing that other options are available for you in case of such an emergency.
RSI Security is America’s leading cybersecurity firm that offers a wide range of services involving your cyberspace protection. We’re concerned with the protection of your company’s network from outside threats. Our team of experts will walk you through a seamless process to strengthen your organization’s cybersecurity architecture. Reach us today, and let’s work together to ensure your organization’s cyber protection.