How Much Do Managed IT Services Cost A Small Business?
As technology becomes more integral to business operations, many small businesses struggle with IT costs. Managed service providers (MSPs) have emerged as a popular solution, but uncertainty remains around managed IT services pricing. This article provides small businesses with clarity on MSP costs and services to support IT budgets and planning.
Managed IT Services Cost for Small Business
The High Costs of Traditional In-House IT Teams
Most small businesses rely on in-house IT staff to handle technology needs. However, maintaining an internal team leads to exorbitant costs in several areas:
- Salaries - IT professionals command high salaries, typically $60,000 - $150,000 per employee. This adds up quickly for a small business. Hiring just one or two IT staff members can easily surpass $100,000 per year in salaries alone.
- Hiring Time - Filling an IT role internally can take up to 2 months, leaving positions unfilled. This extended hiring process leaves companies without vital IT support for an extended period.
- Ramp Up Time - It takes approximately 8 months for new IT hires to reach optimal productivity. During this ramp-up period, they operate well below peak efficiency while still collecting a full salary.
- Turnover - When IT employees leave, it costs between 100% - 300% of their salary to replace them. Between recruiting, training, and loss of productivity, turnover is tremendously expensive.
In addition to cost concerns, small businesses struggle to offer competitive compensation to attract top IT talent. MSPs leverage economies of scale to employ specialized, highly skilled IT experts. Small companies simply cannot match their offerings in-house.
Using a managed service provider helps mitigate these costs and personnel challenges prevalent with in-house IT teams.
How MSPs Price Services: Per User Licensing
Many MSPs utilize per-user licensing, charging for each employee using the software or hardware. However, pricing per employee when not everyone needs full access to the technology is unfair and inefficient.
LK Technologies, a Cincinnati-based MSP, only charges per user actually using the software or hardware. If a company has 50 employees but only 10 use the software, LK Technologies only charges for those 10 active users. This pricing model ensures companies only pay for what they truly utilize, instead of overspending on unused licenses.
Some MSPs offer unlimited user licensing, granting full access to all employees regardless of actual usage. This results in overpaying for unused services. Per active user licensing through MSPs like LK Technologies provides cost transparency and control.
Small Businesses Benefit Most from MSPs
Small companies experience the greatest cost savings using managed IT services compared to traditional IT staffing. MSP fees typically range from $150 - $250 per month per active user, depending on the complexity of needs. Even on the higher end of pricing, this results in significant savings for small businesses versus hiring in-house staff.
For example, a 10-person company with moderately complex needs may pay $200 per active user monthly. If 8 employees actively use the software, this equals $1600 per month, or $19,200 annually - far less than one in-house IT professional. Managed IT service providers provide comprehensive IT expertise catered to small businesses at a fraction of the cost of an in-house team.
MSPs also allow small businesses to convert fixed costs into variable costs, only paying for services utilized each month. With an in-house resource, the salary represents a fixed monthly cost regardless of workload. MSP fees rise and fall each month based on usage, optimizing IT spending.Factors Impacting Managed IT Services Pricing
Several variables influence monthly MSP costs
| Factor | Impact on Cost |
|---|---|
| Number of active users | More active users raise fees |
| Complexity | More complex systems cost more to manage |
| Software needs | Broad software requirements increase costs |
| Special services | Custom or extensive services mean higher fees |
| Service level agreement | Higher SLA demands increase pricing |
| Data security | More stringent security needs raise costs |
Understanding these factors allows for accurate budgeting. LK Technologies provides customized managed IT services aligned to each client's unique requirements and usage. Contact them to receive transparent pricing tailored to your needs.Comparing Quotes from Multiple MSPs
When evaluating MSPs, it is wise to gather several quotes based on your specific needs and environment. MSPs take different approaches that lead to pricing variations.
Key aspects to communicate when requesting quotes:
- Number of users and how many will be active
- Types of hardware and software required
- Desired service level agreement (response times, uptime, etc.)
- Data security standards
- Special services like backups, cybersecurity, etc.
With these details, managed IT services can provide apples-to-apples comparisons. Be wary of quotes with vague or incomplete information. The most reputable MSPs like LK Technologies offer detailed quotes outlining exactly what is covered.
Long-Term Cost Savings from Proactive MSPs
While MSPs require monthly fees, a high-quality provider saves money over time by optimizing technology and preventing issues. Proactive monitoring enables them to:
- Troubleshoot problems remotely before they disrupt operations
- Update systems and software regularly to avoid failures
- Make recommendations that improve productivity and security
- Provide ongoing employee training and support
- Maintain optimal performance by managing workloads
This proactive approach minimizes downtime and large emergency expenditures down the road. MSPs focus on prevention over reactive break fixes. The monthly fee leads to greater efficiency, resiliency, and cost savings long term.
MSPs Scale Services to Meet Business Growth
As a small business evolves, an MSP seamlessly scales their services accordingly. If you hire additional employees, they accommodate the new user licenses. If you open a new office, they handle the IT deployment and management.
With an in-house IT person, you must hire an additional headcount to support growth. Managed IT services for small businesses inherently provide easy scalability to match the needs of a growing organization. There are no large fixed costs or personnel constraints limiting expansion.
This flexibility enables small businesses to redirect resources toward core operations instead of IT staffing. MSPs foster scalability and future-proofing as companies aim to grow and improve.
Conclusion
MSPs give small businesses the IT support they require at a manageable cost, eliminating dependence on expensive in-house teams. When pricing services per active user and matching services to needs, they offer a budget-friendly approach to IT management. By partnering with MSPs like LK Technologies, small businesses can finally balance their IT budgets without sacrificing critical technology.
For small companies, MSPs provide a flexible, affordable path to advanced IT capabilities that support growth. No longer reserved for large enterprises, managed IT services empower organizations of all sizes with tools to streamline operations and reduce costs. Adjusting to per-user licensing, securing detailed quotes, and selecting proactive providers ensures small businesses maximize value from MSP partnerships. With the right provider relationship, companies gain an IT team focused on powering their success now and in the future.
At LK Tech IT company in Cincinnati, we provide top-notch support tailored to your specific needs, ensuring your systems are secure and running smoothly. Contact us today to discover how partnering with an experienced IT company can help your business!
