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Only Pay for What You Need – The Benefits of Not Having Fixed Fees

It’s not just about dollars and cents. It’s about innovation, resiliency, and service.

Every business or IT leader knows that, at some point, they will have to hire help with their tech stack. You might not have full-time IT help or you may be saddled with a staff that’s stretched to its breaking point. If this leads to big time-consuming problems, you can turn to a qualified IT managed services provider.

The next logical question is whether you want a fixed fee contract or to pay for services as needed. You might tell yourself that if you pay a fixed fee, you’ll have a predictable monthly expense versus having to come up with a reasonable number for your monthly budget.

A fixed fee contract might be great for some things, like leasing a car, but it could cost your company millions when it comes to something with fast-moving developments such as IT, not to mention unexpected spending and inflexibility. Here are the benefits of avoiding fixed fees with your MSP.

MSP offerings

First, let’s define what a managed services provider is. A managed service provider (MSP) delivers a variety of services that include your network, applications, infrastructure, and security with ongoing support and administration.

Generally, MSP offerings can be placed in four buckets:

  • Strategy. Planning and design of your network that maximizes your technology investment for your particular business.
  • Maintenance. Systems administration, security, and network monitoring.
  • Support. Day-to-day support is deployed via a Help Desk.
  • Projects. This includes migrations (such as to the cloud), additions, and changes to your network and/or infrastructure.

All of this is designed to ensure your technology is available, up-to-date, secure, and compliant. That’s what you want from an MSP. How you pay for it matters, and not just to the bottom line.

Fixed-cost contracts

A fixed-cost contract sets a price for service up front, and those prices last for the contract term. It appears to offer advantages but it contains associated disadvantages you might overlook.

  1. You get a predictable cost. A regular monthly fee may give you some security, but what happens if your income drops?
  2. That predictable cost comes at a high price. A fixed-price contract offers assurances for you, but for an MSP, it is more complicated. Since prices are negotiated up-front and future costs are unpredictable, you’ll be paying more.
  3. You might end up paying for services you don’t need or want. Most fixed-cost contracts come as “packages.” Like buying a cable TV package, you likely pay for unnecessary things.
  4. It’s set in stone. If you decide to get rid of software or cancel a project included in your contract, you’ll end up paying for it anyway. Similarly, if you decide to add a project or request new software, you’ll be paying an out-of-contract price. 
  5. They don’t work for large projects. Think about it. Large-scale projects are generally complex and sophisticated with dependencies, ongoing testing, modifications, etc. Avoiding cost overruns (which you haven’t budgeted for) is almost impossible. On the flip side, what if you decide to abandon a project that’s in your contract?
  6. Forget about innovation. In line with the fourth point, what incentivizes your MSP to innovate? They have your money every month, so why would they do anything for free, such as coming up with ways to make your business more efficient, so you keep more of your inflow?

The complexity of IT projects is one of the big disadvantages of fixed-cost contracts. In line with the fourth point, they also require a great deal of up-front planning, which is challenging when you don’t know when the next big thing will come along. You don’t want to miss out.

The benefits of not having fixed fees

So far, the only advantage of a fixed-price contract is a predictable monthly cost. Pay-as-you-go services, however, have a number of them.

  • It’s a cost-effective solution for businesses with a small tech footprint. If your company is small and not a big user of technology, you’ll save big paying as you go.
  • You only pay for what’s required. Who wants to pay more? Generally, an MSP that charges only for what you request has tiers, meaning you’ll pay more when problems are solved by a senior consultant, but you won’t pay that same fee for run-of-the-mill issues.
  • Avoid higher prices. As stated, that fixed price can cost you in the form of higher overall pricing. With as-needed pricing, you not only avoid that penalty, but your financial commitment is also minimized.
  • No vendor lock-in. Don’t like your MSP? With pay-as-you-go, you’re not stuck with a partner you don’t like.
  • You gain resilience. Change in budget or use? No problem. You get the flexibility required to respond to market changes, and an ITaaS model allows you to bob and weave with good times and bad.
  • Innovation. A pay-as-you-go agreement means you can use AI if you decide to, or add a VR experience to your website, either with no big cost add-ons to your fixed-price contract.

Maximize your budget with the ITaaS model. You have negotiating power with every project and service and a better level of service overall.

You hire an MSP for their expertise, which should extend beyond just keeping your technology running. You want an MSP that helps you identify opportunities for innovation and gives you the ability to respond quickly to change – that is what marks the resilient company and drives revenue.

Let Allari help

At Allari, our clients rave about the value our IT team delivers to their business while reducing costs. We are a true partner who prioritizes your unique requirements via a collaborative relationship with complete transparency.

Our clients enjoy a minimum of 40% savings and see a steady reduction in their total cost of ownership. Get the most from your tech, people, and business by paying just for what you need. Partner with Allari and see the difference we can make for your business. Schedule a call today.