Working with an MSP: 3 Reasons to Choose a Fixed-Fee Model

Let’s face it: you’re not in the IT business (and you probably don’t want to be)! Maybe you’ve been “wearing the IT hat” for a while, but as your business grows it’s tough to maintain all of your company’s equipment, cybersecurity, and other technology needs. 

Furthermore, neglecting your company’s IT infrastructure can get expensive. The average cost of a data breach, for example, hit $4.24 million in 2021–the highest in the past 17 years. And this isn’t just a threat for large companies; cyber attacks on small- and middle-sized businesses have increased by more than 400% in the last two years.

To help mitigate this risk, and to support other business IT needs, one option is to work with a managed service provider (MSP). If you’re going down this road, you’ll want to choose the right services and payment model to support your business goals. In most cases, a fixed-fee model is actually the right solution. 

What Services Can an MSP Provide?

Most MSPs provide a host of IT services. Typical offerings might include the following: 

• Managed IT services: Fully outsourced, often remote administration and maintenance of all your business IT systems

• Managed security services: Cyber risk strategic planning, assessment, remediation, maintenance, and monitoring

• Network access control: Visibility and control over both managed and unmanaged devices on your network (wired, wireless and virtual)

• Cloud services: Storage and monitoring of cloud-based systems and software

• VoIP services: Internet-based business communications services that include not only regular phone service, but also integrations with other communications and business technologies

Your MSP partner can help you tailor a plan that fits your business needs, strategy, and growth goals. 

Payment Models for MSP Services

There are several common pricing structures for MSP services, each with its own benefits and drawbacks:

• Per-device: This straightforward pricing model is based on a set cost for each device that the MSP maintains or monitors. While per-device pricing might seem simple to calculate, it can get complicated when you start adding more devices like smartphones or tablets, or if you have a bring-your-own-device (BYOD) policy with your employees.

• Per-user: Another relatively simple model, per-user pricing is all inclusive based on the number of users supported. This model might be a good fit when each user has multiple devices, but it’s not ideal if your employee number fluctuates, or if employees have disparate usage needs (i.e, your accounting team is on the computer much more often than your cleaning crew). 

• Fixed-fee: Also known as value-based pricing, the fixed fee model is based on delivering all-inclusive services for a flat monthly fee. With this model, your MSP managers your entire IT infrastructure and essentially becomes your IT team. 

• A la carte: With this model, you choose only the services and monitoring that you need, rather than getting an all-in-one solution. Although a la carte pricing might save money in the short term, it can get expensive if you have complicated IT problems to solve, such as a data breach, because you pay a higher rate for the provider’s time. 

Every MSP has its own pricing philosophy and model, so it’s important to think through your business needs, IT capabilities, and budget to choose the best fit. 

Get More Value with the Fixed-Fee Model 

In recent years, we’ve seen more businesses transition to a fixed-fee model because it simply delivers the most value. While the monthly fee might seem more expensive than other options, you’ll save time and money in other ways. 

#1. Reduce your overhead on internal IT staffing and resources. 

Who’s actually the “IT guy” for your company? If you’re running a law firm, you’re losing money when you’re the one who spends time on network security or replacing a broken router. For small and medium businesses, there’s often a hidden cost associated with managing your own IT: all the time you spend on IT is time you’re not working in your actual business function! 

Conversely, a full-time, on-site IT employee represents a considerable (although relatively fixed) expense. Working with a trusted MSP offers a way to reduce that overhead, while still maintaining a stable cost for IT maintenance and monitoring. 

#2. Get more proactive service. 

Say there’s a small hole in your roof. You can wait till it rains to discover the leak–then you have to fix the leak and repair the water damage. Or you can regularly check your roof and patch the hole before that next thunderstorm. Which sounds more cost effective?

The same principle holds true for your IT services: it’s simply much better to identify potential problems and fix them before they get worse. And a fixed-fee model actually incentivizes your MSP to be proactive, because they’ll be the one to absorb the extra cost if a small problem becomes a big one. For example, your MSP should take care of software updates and security patches right away, to reduce risk of a costly security breach. 

#3. Eliminate unexpected IT expenses. 

IT emergencies can get expensive quickly. If a critical business system goes down, you may lose money, not to mention the cost of hiring a professional to come and immediately fix the problem. 

With a fixed-fee model, you get the service you need, whenever you need it–all for your regular monthly price. It’s an ideal solution for containing your monthly costs and budgeting accurately for the future. 

#4. Maintain your uptime and increase employee productivity. [Bonus!]

IT downtime is expensive. Consider these statistics: 

• The average employee loses 22 minutes per day to IT issues, which translates into about two weeks per year for each full-time employee.
• Gartner estimates that network downtime costs an average of $5,600 per minute–more than $300K per hour. 
• For small businesses, the average cost of a single IT outage incident can range between $82,200 and $256,000. 

In light of these numbers, it’s obviously critical to maintain as much uptime as possible. Fixed-fee MSP services generally include remote, 24/7 monitoring, to ensure that any issues are addressed immediately–not the next morning when everyone comes into the office to find out that the internet is down. 

Meanwhile, updates and other maintenance that might require downtime can be conducted during off hours, so they have the least impact on your business operations.  For instance, system upgrades might be conducted overnight, so that employees don’t lose time during regular business hours.