How to Renew (or Not Renew) a Managed IT Services Contract

Ninety days before your agreement expires, your MSP will ask about your intentions to renew or not renew your contract. You’ll have some time to think about what is best for your business, look over your budget, and consider if you want to renew or not.

managed IT services contract

At this same time, your MSP will provide you with a new contract, which will likely include updated pricing information and a new hardware profile.

The most critical part of this phase is to be transparent with your MSP. If you don’t get back to them on what you decide to do next, they’ll make an assumption about your plans based on their policy.

Within 30 days of receiving the new contract, you’ll need to decide if you’ll renew or terminate the relationship with your MSP?

What happens if you don’t make a decision?

Well, some MSPs might take the stance that you don’t wish to renew your contract and stop supporting your IT the first day after your contract ends.

Others may renew your contract at a premium rate since you didn’t communicate what was next for your partnership.

For these reasons, our MSP engineers at The KR Group urge you to work with us or whoever is your provider during this time. This is the best way to ensure you have a voice in the renewal or termination process.

We know you have several questions about this phase of your managed IT services agreement. Here are the most common we receive around the topic of renewing (or terminating) your contract:

  1. Can you revise your contract before the next term?
  2. If you choose to renew, will your rates change?
  3. What happens to hardware and software if you don’t renew?
  4. When your contract expires, does the MSP stop supporting your IT?
  5. How do you renew your managed services contract?
  6. What should you do if you don’t want to continue the contract?

Even if you’re years away from the final days of your managed services agreement, this information is still helpful to remind you to keep tabs on the termination date and what to do as you approach it.

 

Can You Revise Your Contract before the Next Term?

You can make changes to your contract, but the type of adjustment may affect cost.

For example, if you change the scope of your contract by adding new solutions or net new users, your MSP will increase your monthly rate to account for those.

Or, suppose you merge or acquire another company and want that new portion of your organization to be covered by the MSP. Then, you can have that new portion of your business incorporated into your existing agreement.

Generally, it’ll start as a project (billed outside of your agreement) where your MSP will get the new portion of your business up to your existing IT standards. Once that’s been squared away, they’ll be brought into your contract. Of course, your price will increase to account for the new users your MSP is supporting, but they’ll be part of your contract at that point.

 

If You Choose to Renew, Will Your Rates Change?

managed IT services contract While we’d love to tell you that your rates won’t change from term to term, that isn’t always the case. We’d rather prepare you for the possibility of a price increase than be misleading about this topic.

How rates change for your next term is dependent on many factors, including internal pricing decisions your MSP has made since the last time you signed or renewed a contract. 

Additionally, how your business consumes managed services compared to when you started can affect your price.

MSPs base their prices on per-user (what we do at The KR Group) or per-device numbers. So your new contract price will reflect the changes to user or device counts. 

 

What Happens to Hardware and Software if You Don’t Renew?

Your MSP agreement includes numerous software subscriptions and a handful of leased devices. If you don’t renew or transfer your IT environment, your subscriptions can potentially be paused or removed; either way, you stop receiving their benefits.

That means no more next-generation antivirus looking out for threats or phishing emails being filtered out of your inbox.

When it comes to hardware, you could be charged a premium for failing to return any leased equipment.

 

When Your Contract Expires, Does the MSP Stop Supporting Your IT?

Yes, if your contract expires, your MSP will stop supporting it at some point. managed IT services contract

Of course, you’ll also want to check with your MSP for what stance they take on the first day you are out of contract. Do they have a strict policy and immediately remove their solutions from your IT environment? Will they work with you for a month while you transition to your next provider?

Either way, you’ll want to have a plan for the next steps for your IT environment, including who will take over managing your technology and what subscriptions need to transfer.

Additionally, it is imperative to be honest with your MSP during this process about what decisions you are making. Doing so allows them to give you the best support until the very last day of your contract.

 

How Do You Renew Your Managed Services Contract?

Now that you know what happens when your contract expires and what you should keep in mind when renewing, let’s talk about how to renew your contract.

The process is similar to signing the initial contract. Your MSP will review the new contract line by line with you. They’ll pay special attention to the start, term, and expiration of your renewed contract and what services fall within and outside of the agreement.

Your MSP will also highlight any changes you made from your previous contract to your current one. Essentially, your MSP will make sure all expectations are clear before you renew your contract and implement any new or updated hardware and software included in your new agreement.

 

What Should You Do if You Don’t Want to Renew the Contract?

While MSPs hope you’ll stay with them and continue building the rapport you started during your first contract, every one of us has lost a customer over the years.

Whether you’re switching providers or starting your own in-house department, you’ll need to notify your current MSP you want to end your contract.

Most MSPs require you to pay your term in full if you want to end your contract before it expires. If your contract is nearing expiration or has expired, you’ll still need to notify the MSP of your departure, and most MSPs have a required out-clause to address this.

For example, The KR Group has a 60-day out-clause for MSP customers with expiring contracts.

This window allows MSPs to schedule the transition from their services to the successor.

 

How Can You Prepare for the End of Your Contract?

Whether you’re a relatively new MSP customer or know your agreement is coming to an end soon, it’s crucial to prepare yourself for your managed services contract ends.

You’ll need to decide if you want to renew or not and coordinate either process with your MSP.

Know that your rates may change, so if your contract ends during the middle of your fiscal year, you’ll likely want to start having renewal conversations during budget planning season.

Even though you’ve used managed IT services, you aren’t required to renew your contract. However, it’s best to be honest with your MSP, so they can schedule the offboarding process and hand over your IT information to their successor.

By communicating clearly about what is next, you can often get the best rate if you choose to renew. And if you decide to end the agreement, sharing your plans and coordinating offboarding with your MSP ensures there aren’t any gaps in your subscriptions or support.

For more information on what you need to know about a managed IT services contract, check out our free guide.

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