How do you know when a managed service provider’s (MSP) asking price is unreasonably high? Or when it’s too low and should raise red flags?
Intelligent Technical Solutions (ITS) is an MSP with over 20 years of experience, and we offer transparent pricing and service terms. We plan to give you the truth behind the prices.
In this article, we’ll dive deeper into why MSP pricing varies and give you tools to discover if the rate offered is fair.
5 Reasons MSPs Have Different Prices
Pricing among different MSPs can range from anywhere between $100/user to $400/user per month, and it is dependent on the following factors:
1. Service Offerings
The services an MSP offers are the biggest factor in price differences.
The breadth and depth of services offered can significantly vary between companies. An MSP offering a comprehensive suite of managed IT services (network security, infrastructure management, cloud solutions, etc.) will charge more than one that provides only essential services.
You need a clear list of services offered per price point so you can compare prices between two companies - especially if you need customized services. Some MSPs offer additional services or add-ons (training, consulting, ongoing maintenance, etc.) that can increase the overall price compared to competitors offering only basic services.
RELATED: How to Review a Statement of Work (SOW) from an MSP (5 Easy Steps)
2. Expertise and Skill Set
Established companies with a track record of delivering high-quality services usually charge higher prices. Reputation, customer satisfaction, and case studies showcasing successful implementations can justify higher pricing.
MSPs specializing in niche areas or with highly qualified technicians also command higher prices due to their team’s unique skill set and experience. For example, a company specializing in cybersecurity or regulatory compliance will likely charge more for their services than a company offering just generalized IT support.
3. Technological Infrastructure and Tools
Access to cutting-edge technology, advanced tools, and proprietary software influences pricing. Companies investing in the latest tech and tools might charge more for their services to cover these expenses.
MSPs with the latest tech are generally more efficient, secure, scalable, and adaptable. Higher quality tools result in less maintenance and improved service quality, pushing the price higher than companies using simpler tech.
This might push you into looking at smaller companies if you want low managed IT costs. However, some large companies leverage their size to get better rates. By using economies of scale, they can offer lower prices even when using the same tools - thus, it’s still worth looking at well-known industry leaders even if you are on a smaller budget.
4. Client Base and Industry Focus
Client base and industry focus don’t hugely influence MSP pricing, as your potential bill is still primarily influenced by your needs and the MSP’s expertise and resources.
However, it’s still worth noting that your bill might shift based on your MSP’s primary customer base. Companies that serve large enterprises or clients with complex IT infrastructures often charge higher prices due to the scale and intricacy of the services required.
On the other hand, companies targeting small to medium-sized businesses might have more competitive pricing structures to cater to their clientele’s specific needs and budgets
IT management companies focusing on niche industries, such as healthcare or finance, might also charge higher prices due to the specialized knowledge and compliance requirements within those sectors. Tailoring IT solutions to meet industry-specific demands requires additional research, development, and expertise, which can increase costs.
RELATED: The Pros & Cons of Small and Large Managed Service Providers
5. Location
The location of your MSP, like client base and industry focus, isn’t as important as service needs, tech tools and infrastructure, and team expertise. While it does affect the number of available MSPs, large, well-established providers will have standardized pricing regardless of the location.
However, companies based in metropolitan areas with higher rents, labor costs, and taxes may have higher service rates than those in less expensive locations.
Areas with high demand for IT services but limited competition may also allow MSPs to charge higher prices due to the scarcity of alternatives. On the other hand, areas with intense competition might drive prices down as companies compete for market share.
But location does matter if onsite technicians are important to you. MSPs offering onsite support or requiring frequent travel may charge higher fees than those providing remote services, especially if travel costs are factored into their pricing structure.
How Do You Evaluate an MSP’s Price?
An MSP can charge whatever they want because no scientific government-imposed price limit exists. However, the generally accepted price range is between $100/user to $400/user per month, depending on the previously discussed factors.
But knowing a ballpark range doesn’t immediately help you determine if an MSP’s price is fair. At the end of the day, it’s not only about the final bill - it’s about the value.
Evaluating an MSP’s price involves balancing your budget with the MSP’s offered services, expertise, infrastructure, and overall trustworthiness.
You need to ask questions such as:
- How much am I willing to pay?
- What services are non-negotiable versus just nice to have?
- What does this MSP charge for these services, and are there hidden costs?
- What is the MSP promising me?
- Can the MSP back up its claims with case studies and testimonials?
RELATED: 20 Questions to Ask When Choosing the Best Managed IT (MSP)
By asking the right questions and determining your priorities, you can decide if an MSP is charging a fair price.
So How Much Will Hiring an MSP Cost for Your Business?
Now that you know these factors, it’s time to determine how much you should expect to pay. What’s a good price point for the services you need?
ITS, an MSP with hundreds of clients across the United States, believes every business deserves a solid idea of what they truly need. Every managed IT partnership is built on a foundation of trust, and with the right knowledge, you can evaluate if an MSP is worth trusting. Schedule a meeting with one of our consultants for an honest evaluation of how much you should be charged for MSP services.
We also have the following resources to help you find your IT needs and what you might pay for those needs:
- [FREE TOOL] Pricing Calculator
- [FREE TOOL] IT Needs Analyzer
- A Complete Guide for Planning Your Managed IT Budget [EBOOK]
- ITS Pricing: How Much Do We Cost?