We recently visited a business owner in Chicago who had never used Managed IT Services. He asked us how much they cost. When we gave him a monthly price, he didn’t know how to compare it to what it would cost to hire an IT employee.
This is a typical problem and a question we get asked all the time. It can be confusing to compare the cost of Managed IT Services because the pricing is never uniform. There’s no one-price-fits-all formula.
Because of this, it can be difficult to gauge what you should pay and if hiring an IT employee would be more cost-effective.
On average, Managed IT Services in Chicago usually run around $150 per user per month. However, the price will change depending on various elements.
Let’s check on Google to see what others are charging.
When doing your research, the key is to search for the correct term. It’s best to use the terms Managed IT or Managed IT Service.
I keyed in “Cost of Managed IT Services.”
This is what I found…
I searched again and then found this…
As you can see, these prices are per device per month, such as for desktops, servers and printers.
To get the cost, just multiply the number of devices by the per-device cost. This will probably equal out in the end when comparing to a per-user per-month price.
Let’s try this again. This time I’m going to search for “How Much Does MSP Cost?”
As you can see, this comparison is based on a user price per month.
Okay, let’s try something else.
I’m going to put some figures into an Excel spreadsheet to see if we can come up with way of comparing costs.
We’ll say our business has 10 users.
I’ll use the higher figure of $150 per user per month.
The monthly cost will be $1,500.
The yearly cost for Managed IT Services will be $18,000.
Let’s say this company has an annual revenue of $2 Million.
Now, let’s go back to Google to see what other companies this size are spending on Managed IT Services.
I’m going to look for “How much should a company spend on technology?”
Right away we see that the average small company spends 6.9% of their revenue on IT.
Below I asked, the same question a different way. “What percentage of revenue should be spent on technology?”
Let’s use this lower number (3.28 percent) for our business.
This comes out to $60,000 for a company with an annual revenue of $2Million.
Now, keep in mind that this $60,000 would include software and equipment.
You can see how the cost of Managed IT ($18,000) compares to the overall average ($60,000) for technology costs per year for a small business.
Let’s look at this from the perspective of how much it costs to hire an IT employee. Let’s say it’s $50,000 a year (which is on the low end for an IT professional).
As you can see, you have a choice of hiring an IT professional for $50,000 (plus benefits, vacation, etc.) compared to paying $18,000 for a team of IT professionals from a Managed IT Service company.
Remember that with Managed IT Services, you’ll have 24/7 support, around-the-clock proactive monitoring for cybersecurity and reliability, and your machines will be maintained so your employees won’t experience IT downtime. This provides the benefit of increased productivity.
The answer to: ” Is it worth paying for Managed IT Services?” becomes clear when you look at these numbers and the overall benefits. Managed IT Services are worth the price for a small business vs. hiring an IT employee.
What About Larger Businesses? How Does The Cost Of Managed IT Services Compare To Hiring An IT Employee For A Large Business?
Here are our new numbers:
When you compare the cost of Managed IT Services ($54,000) to what it would cost to employ an IT professional (not including benefits, vacation, etc. – $50,000) you can see that it’s almost the same.
At this point, you must consider the following:
1. Will this IT employee provide proactive, 24/7 maintenance?
Chances are, they will be busy putting out fires for your users. There will be little time left for proactive maintenance.
2. Remember that if you hire a Managed IT Service company, your IT team won’t require benefits and time off like an employee would. This is a huge benefit.
3. An IT employee won’t have the exposure to business challenges that a team of professionals from a Managed IT Service company will. With Managed IT Services you’ll have a breadth and depth of knowledge, skills and experience that you can’t get from one IT employee.
Our team works with new businesses every day… businesses that have different challenges with their technology. They see many different variations of issues. When you consider you get all of this knowledge for the same price of one employee, the answer is obvious.
The answer to: ” Is it worth paying for Managed IT Services?” becomes clear when you look at these numbers and the overall benefits. Managed IT Services are worth the price for a large business vs. hiring an IT employee.
We hope this answered most of your questions and now you know how to compare the cost of Managed IT Services vs hiring an IT employee.
If you need more assistance, we’re always here to help.
Did you find this article informative? If so, check out our Blog. Here are a few more articles that should help you make your decision.