Does Olympia’s lower cost of living compared to places like San Francisco significantly affect co-managed IT costs?
As a co-managed IT and managed IT service provider with over 20 years of experience, Intelligent Technical Solutions (ITS) is intimately familiar with explaining pricing to our partners.
In this article, we’ll tackle the relevant information your Olympia-based business needs to know about co-managed IT, such as:
- What’s the total cost of co-managed IT?
- What are the factors that affect the price of co-managed IT?
- Will you save money with co-managed IT?
By answering these questions, you’ll have a clearer understanding of how much co-managed IT can cost and if the investment will be worth it in the long run.
What Is the Cost of Co-managed IT in Olympia?
In all honesty, your location doesn’t significantly affect your co-managed IT bill. Other factors are much more critical in determining your co-managed IT bill. Whether you're in Washington or Dallas, co-managed IT costs all fall under the same range.
Multiple factors can cause your bill to fluctuate between $100/user per month to $500/user per month.
According to Dan Izydorek, ITS’ Chief Revenue Officer, co-managed IT is typically two-thirds of the price of fully managed IT. So, let’s say it’ll cost around $150/user for a fully managed department; co-managed IT would then cost about $100/user.
If your company has minimum IT needs, it could be about $100/user per month, plus extra fees like onboarding and equipment procurement. If you have more robust needs - such as SOC 2 compliance or HIPAA regulatory requirements - you can expect prices to swing up higher.
So, all in all, co-managed IT costs around two-thirds of managed IT plus onboarding fees.
What Factors Affect Co-managed IT Pricing?
Fortunately, it’s easy to guess if you’ll fall into the high or low end of the price range.
The following factors determine your bill:
1. Number of office locations
The number of locations directly impacts your MSP’s ability to provide co-managed IT services. They must ensure their services reach the second (or third) office location.
So, the more locations you have, the more computers they need to set up and manage, which will push up the costs. The reverse is also true; the fewer computers you have, the lesser the cost.
2. Number of users
Co-managed IT is usually priced per user. The more users there are, the more people need responsive IT support to keep them productive.
The reverse is also true: the fewer your users, the cheaper your IT bill will be.
Usually, businesses benefiting from co-managed IT are typically larger companies with 50+ staff users.
3. Current IT setup
The last but most important factor is your current IT setup. Your current IT setup will directly affect your co-managed IT plan.
You need to ask yourself what your IT department looks like and identify where an MSP needs to step in to support your company.
There are usually three kinds of setup at an IT company looking for co-managed IT, according to ITS Chief Experience Officer Rob Schenk: the one-man show, a leaderless team, or a project-needing team.
Each scenario will dictate the price you can expect to pay, as each situation needs something different from your MSP.
If any of these situations describe your IT department, it’s a good time to start looking into co-managed IT.
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The One-man Show
The one-person show describes an IT department with a single staffer who does everything related to IT for the company.
You typically find this in smaller companies with fewer resources to address tech needs.
However, when a company grows, the one-person setup running the IT department will be quickly overwhelmed.
Schenk described the cons of a one-person show. “There’s not a lot of strategic thought because they’re so busy dealing with day-to-day stuff and keeping the lights on,” he said. “They can’t do a bunch of research, and they often don’t understand where the company is going from a strategic point of view.”
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The Leaderless Team
Some IT departments rely on one person to get the team through the day. You may have staff, but keeping around a high-level technician is difficult in today’s employment market.
When a team leader resigns, it can leave your department floundering. MSPs are usually called to step in when these situations arise.
Schenk talked about his experience with a business that went through this exact experience.
“The leadership left, and they’re like, what are they going to do? [The company was] worried about this because the IT guys left were tier 1 and tier 2; they’re not updated on security and latest Windows server-related stuff.”
He continued, “We had to fill in, manage, and train up the IT members. We were functioning as the strategic head and helping the client from a strategic point of view.”
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The Project-needing Team
Some companies need a long-term partner to do the large projects their IT department can’t do.
“We do project augmentation. In this case, they’re so busy doing their day-to-day stuff that they don’t have time, expertise, or knowledge to do some important projects,” Schenk said. “Maybe they will move from on-premise exchange to Microsoft 365, but they don’t have the expertise to make this big move.”
According to Schenk, at the end of the day, these projects serve to make the IT department look good. “MSPs can help fill gaps your company currently has.”
Will You Save Money with Co-managed IT?
When you take all the benefits of co-managed IT and contrast it with a purely in-house IT department, the answer is yes.
Izydorek said, “The cost of one IT person might actually be about the same or less than hiring [an MSP for co-managed IT], but we’re bringing the toolset.”
He continued, “We’re providing licensing that you don’t have to buy. We’re providing backup servers you don’t have to buy. You don’t even have to buy firewalls; we buy and replace all that.”
“The math will work out where it’s going to be cheaper overall with [an MSP].”
However, comparing your monetary savings between co-managed IT and a fully managed IT department is a bit trickier. In general, co-managed IT is cheaper, but depending on the size of your in-house IT department, getting a fully managed IT plan may make more sense.
Related: Co-managed IT vs. Managed IT (Pros and Cons)
Want a Specific Co-managed IT Quote?
Co-managed IT, despite being cheaper than managed IT and a whole in-house IT department, is a big budget adjustment for companies. And it’s not just your finances you need to consider; you’ll still need to audit your IT resources, evaluate your needs, and do a deep dive into possible companies.
As a co-managed IT provider for multiple Olympia businesses, ITS knows you still have a long way to go before finding the perfect co-managed partner. To help you out, we’ve prepared free resources you can use on your co-managed IT journey:
- The 4 Best Co-Managed IT Companies in Olympia
- 5 Co-Managed IT Concerns to Address Before Partnering with an MSP
- An Honest Comparison of Olympia IT Support: ITS vs. PC Technologies
- Co-Managed IT: A Complete Guide For Businesses
It can be frustrating not to have an immediate answer about the cost of co-managed IT for your business. Luckily, we have a quick fix – try our free, no-registration-needed MSP pricing calculator.