Why is managed IT so expensive?

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Why are fixed fee managed IT service agreements so expensive, and does it really cost that much to look after your IT requirements?

The short answer is, no.

So why then, is a fixed fee managed IT service so expensive?

The simple answer is that IT service providers determine the MAXIMUM amount of support you might require (Ie, how much time they might have to spend supporting you each month), apply their hourly rate to it, add some more, then give you a fixed fee all inclusive (Except for the exclusions) cost per month for their service. Doing the “managed” bit of your agreement is quite inexpensive.

Most providers will then analyse each agreement monthly to determine the effective hourly rate. When the consumption of your agreement reaches a point where the effective hourly rate is less than their standard hourly rate, they will either increase your agreement cost, or drop you as a client.

The main problem with this is that you (The client), will never receive the full amount of service you are paying for, and they really only provide value to businesses with more than ten seats.

But is there a way to overcome it without sacrificing the advantages of a managed service?

At ServiceScaler, we have moved to offering hybrid agreements, where you pay a low-cost fee for the “managed” part of the service, and then pay only for the support you consume. To date, this has saved some of our clients in excess of 50% of their IT service expenditure, whilst maintaining the managed IT service standard they are used to. This has also enabled us to offer an affordable managed IT services to clients ranging from sole practitioners, through to medium sized firms.

If you’d like to know more, feel free to get in touch with our team!

(02) 9146 6339 / enquiries@servicescaler.com

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