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Don’t Get Nickel and Dimed to Death

By: ARRC
August 6, 2019

As a business owner, you need to decide what level of IT support is right for you. Small businesses frequently operate under the “break-fix” model. Break-fix is exactly what it sounds like: you run your business normally until something breaks, then you pay an IT support company to fix it. Large corporations usually have an in-house IT department to take care of their computers, servers, networks and phones. Then’s there’s the middle ground. Managed Services offers a monthly service agreement to handle all of your IT support, but not all managed services is created equal – don’t get nickel and dimed.

Break-Fix Model

While the break-fix model appears the simplest out of the gate, it ends up costing more than you think. The ‘breaks’ cost you more because you’re stuck with unexpected hardware and software costs, and the ‘fixes’ cost you a lot more due to downtime, outages, and lost potential revenue. At some point, you’ll get tired of your CFO running into your office with a stack of bills from all of last month’s fixes.

In-House IT

You’ll then probably ask yourself, why don’t I hire a full-time IT person to take care of my needs? Well, that is certainly an option, but when you take a deep look into the ROI you’ll notice a huge gap between hiring one person vs. contracting with a fully staffed company. Let’s break down the costs.

We’ll keep the math simple and say that a full-time IT person will run around $50,000 a year, starting salary. That’s $24.50 an hour, Monday through Friday at 8 hours a day. The actual cost will be a whole lot more! Your new hire will need a desk, a computer, a laptop (for remote work), maybe a gas card or car if you have more than one office, a cellphone and high-speed internet access. And they’ll also cost you vacation time, sick time, holiday pay and probably a lot of overtime. At the end of the year, you’re probably close to paying out twice their base salary. And you’re still basically operating under the break-fix scenario because that individual is not available to do everything you need 24/7.

Managed Services

There are really two lists of services to consider when it comes to Managed Services.

Permission to Play Services

A good list includes the following permission to play services:

Real Managed Services Providers Also Include

Good Managed Services providers go above and beyond this list to include:

Managed Services Costs

If you’ve looked at hiring a Managed Services Provider before, you may have experienced sticker shock when they quoted you the price of their monthly service agreement, especially if it included all of the above at a flat rate. However, if you examine the benefits of a monthly agreement you’ll see that it will work well with your business plans and help take your company to the next level without unexpected costs of break-fix or the added costs of hiring a staff person.

There’s A Problem in the Industry Today

However, there’s a problem in the IT support industry today. When offering Managed Services, some people say they’ll cover everything with a ‘flat rate.’ Then, they end up sending you a bill at the end of the month for drive time, after-hours service, or parts. They may have promised you a clear-cut agreement, but then nickel and dimed you to death with a pile of invoices. Doesn’t sound much different than a break-fix arrangement at that point does it? With Managed Services you should be able to budget for a set monthly rate. As you look for a Managed Services provider make sure you ask about the things that are not included in this ‘flat-rate,’ so that you know if you’re about to be nickel and dimed or if you’re working with a quality Managed Services provider.