Five Things You Need to Know About the “Fixed Rate” IT Support Plans

What is a “Fixed Rate” IT Support Model?

A “Fixed Rate” IT support program provides an unlimited number of monthly tickets for all the equipment listed under the scope of the contract. This plan is the most commonly used IT support plan among all Managed Service Providers (MSP). Primarily because it is easy to bill and it’s easy for the client to understand. However, it is not as cut and dry as one might think.

Pros and cons of the Fixed Rate IT Support Model:

We have gathered the pros and cons of the Fixed-Rate IT Support Model.

1. The “Fixed Rate” Monthly Cost IS Predictable

The number one reason clients love the “Fixed Rate” IT Support Plan is that it is a low-risk IT support model. Subsequently, the client doesn’t have to track the number of end-user calls or worry about unforeseen labor costs with their network equipment. Hence, everything is covered.

 2. The IT Support Provider Bears the Cost Risk

Unlike Adhoc, Blocks-of-Time, Use-it-Or-Lose-it, or Budget IT Support models, the Fixed-Rate plan puts the entire cost burden on the provider. For example, the provider would be on the hook to clean up a virus that hit all the computers at once. In other words, it includes unlimited calls. Obviously, clients LOVE this!

 3. The “Fixed Rate” Cost Only Covers What is Under the Original Scope

Unfortunately, unlimited is not exactly “unlimited.” Hence, the provider will only cover the assets that are under contract. For example, if the manager sets up a new computer, they must add it to the contract or pay a higher hourly rate for work performed. In addition, all new computers and server installs are considered “projects” and billed at high hourly rates. Only then is it added to your support agreement, and the monthly cost increases.

Further, your monthly cost will never change if you downsize and do not tell them to remove the computers. This may seem obvious to you and me, but you would be surprised at the number of companies that need to remember to renegotiate their contract at the time of renewal. In other words, they just let it roll over into a new contract under the same terms.

4. The “Fixed Rate” Hourly Rates Are Substantially Higher Than Other IT Support Models

Pay close attention because this is an eye-opener for most people.

That “per seat” or “per device” cost is not how it appears. Most MSPs will charge $75 to $175 per seat per month. Maybe more for servers. To the unknown decision-maker, this seems relatively reasonable. However, these service providers are not going to lose money. They need ensure a healthy cushion for unlimited calls and unforeseen events. Let’s take a look more closely.

MSPs determine their rates by the industry averages. For example, industry metrics show that the average computer takes 30 minutes monthly to support. Therefore, they can take care of 2 computers per month in an hour. This means that $75 per seat is equivalent to $150 per hour, and $175 per seat is equivalent to $350 per hour. Ouch!

It should also be noted that 80% of your IT support calls are entry-level calls. That means you are paying $150 – $350 per hour for entry-level calls!  (Insert shock emoji here!) Furthermore, project and add-on rates are charged even higher than that.

5. Not All “Fixed Rate” IT Support Companies Are the Same

As with all things, no two MSPs are identical.  Watch out for the following:

• • IT Maturity Level – The IT Maturity Level is more important than any other factor when considering an IT support provider. Most importantly, it measures the efficiencies of the people, processes, and technologies.
  • Additional Fees – Many MSPs will charge a travel fee (trip charge), onsite fee, or after-hours fee. Make sure you account for this when comparing prices.
  • Terms – Terms range from month to month and up to 10 years. Many will automatically roll over if the client does not give notice in a specific period of time. Therefore, it is essential to understand the terms.

A Better Alternative

A better alternative to “Fixed Fee” IT services is INSI’s Managed Services or Customized IT™.  INSIs unique structure offers decreased rates on helpdesk issues without sacrificing quality. This is because we charge entry-level rates for entry-level tickets, which constitute 80% of the IT support tickets. Further, we can manage the entire environment, fill in the gaps for an internal IT team, or break out the services to the client’s exact needs. Finally, we can do everything for a fixed fee.

The Difference Between “Fixed Rate” and INSI’s Customized IT™

If you would like to learn more about the different types of IT support programs to find out which one is best for you, go here.  You will be able to compare the types of IT support programs, their pros and cons, and great questions to ask the provider on each one.