One of the most common question we get from new prospective clients calling our office is, “What do you guys charge for your IT services?”

While price certainly needs to be one consideration, it’s extremely important you make an informed decision and choose the right IT services company instead of using price as the main deciding factor.

This seems obvious, but the reality is that most managers don’t really know what questions to ask, or what to look for when choosing one IT company over another, and therefore just ask for a price quote, without understanding the criteria they should really use to evaluate IT companies.

You don’t want to be lured into a lowball quote from an IT company that cuts corners to lower their fees, and is unable to afford experienced and knowledgeable engineers, dedicated account managers, and the security tools they need, to ensure YOU are actually getting the security, stability and services you need.  I mean, if they charge extremely low prices, how can they pay for these essential items?

So, how much is “too much” and what are the signs that someone is underpriced?

Recently, an industry report from Service Leadership, the leading financial benchmarking organization in the IT services industry, revealed that a whopping 28% of MSPs (managed services providers, or IT services companies) were unprofitable, and nearly half of all MSPs were under 10% net profit.

While everyone likes a “bargain,” here are the reasons why “cheaper” is not the advantage you think it is when you choose an underpriced IT company:

  1. They are woefully short-staffed because the biggest expense in any IT company is the technical staff. THAT means if one of their techs quits, they’re quickly overwhelmed and unable to support your account, and response time suffers, not to mention critical security and backup maintenance that gets overlooked.
  2. The staff they hire are at the lower end of the pay scale, a lot of times IT college students, which means you’re not getting the most competent people working on backing up your data, keeping your network secure and handling the critical operations and data your business needs.
  3. They are unlikely to have a dedicated account manager and team to work on your account because they can’t afford to hire one.
  4. They are one or two bad months away from going out of business because they have no buffer. That means you could wake up one morning and find yourself without an IT company, scrambling to find a new one.
  5. They are not “operationally mature.” Operational maturity means their business has the people and professional processes aligned to provide the highest level of QUALITY services to the end client (you).

In general, according to Service Leadership, the average “per user” fee for managed IT services is $205.07 to $249.73.  These average rates can be a bit lower in Texas, around $165 - $230 per user.

So, if someone quotes you around $120 per user for managing your network, it might feel like a good deal, but you must ask yourself, how are they able to charge nearly 30%-50% less than IT firms that are operationally mature. The answer is obvious – they’re cutting corners, hiring cheap labor, and leaving out critical security and compliance services.

If you want to know what types of questions you should be asking your IT firm (Managed Services Provider), then click here to download our executive guide, “21 Questions You Should Ask Any IT Company Before Signing A Contract Or Letting Them Touch Your IT.”

This report discusses what to look for to get exactly what you need, without unnecessary extras, hidden fees, and bloated contracts. But most importantly, it will show you how to get the right support you want, to lower your risk, and eliminate the frustration of dealing with a less than competent IT company.