Managed Service Providers (MSPs) usually charge for their services using one of two basic pricing models. We will explore some of the pros and cons of each, and then discuss which model we prefer.
First, what is an MSP?
Managed Service Providers are specialist companies that deliver outsourced services. It’s a term that is commonly used to refer to IT service providers that deliver infrastructure, security, maintenance, and other solutions.
The Fixed Fee Model:
After an initial onboarding fee, you’ll pay a fixed monthly rate that typically correlates with your number of users.
This model provides predictability: each month, you know exactly how much you will pay. The model uses the idea that everything will even out. If certain months include a lot of work, particularly the early months, other months will be low maintenance. On the downside, the MSP has to protect itself from doing more work than the fee covers, meaning the set fee may cost more over time.
The Flexible Model:
Each month you’ll pay a fixed fee for certain services, and then pay hourly rates for the remainder.
This model’s strong point is that you only pay for the services you actually use. It removes the need to guess, which means the MSP isn’t “hedging their bets” against having to do more work than the monthly fee accommodates. By removing this safety mechanism, the flexible model costs less over time, particularly in a long-term client and provider relationship. On the downside, that means that the month-to-month costs may vary, removing the fixed predictability.
Which do we prefer?
We believe strongly in offering our clients the transparency and control afforded by the Flexible model. We have consistently found that this reduces costs overall for our clients, particularly as we emphasize developing long-term client relationships. If you’re curious to learn more, we’d love to have a conversation with you: https://seitelsystems.com/contact/
So, which do you prefer?
Join the conversation on our social media! Share which model works best for you and why: https://www.linkedin.com/company/seitel-systems