5 Hidden Fees in a Managed IT Services Contract

managed IT service hidden fees
When budgeting for managed IT services, there are a few fees excluded from the contract you should be aware of.

When it comes to any product or service, the first question many customers have is how much they can expect to spend.

Managed IT services customers are no different. At The KR Group, the most common question prospective customers have about our managed services is how much they’ll spend.

We even wrote an article, “The Cost of Managed IT Services,” to help you estimate how much you’ll spend on a managed services contract.

However, there are other factors not thoroughly discussed in that article that might increase the total amount you spend on managed services.

At The KR Group, we’re committed to transparency with our customers, and we don’t want you to feel like you’re being “nickel and dimed.” We want to tell you of other charges you might see when you’re contracting with managed IT services:

  1. You’ll have to pay for an audit before starting services.
  2. You may need to purchase additional hardware.
  3. Adding a new user isn’t immediately covered under a contract.
  4. On-site services are excluded from remote contracts.
  5. After-hours or holiday support may not be included.

Aside from an audit, these “hidden fees” don’t apply to every customer, but if you find yourself in these situations, we want you to be prepared in case it falls outside of services covered in your contract.

Looking to avoid any and all surprises in your managed services contract? Check out our ultimate guide for more information.

1.   You’ll have to pay for an audit before starting services

Every managed IT services contract starts with an audit. This is required for your provider to get an idea of what your IT environment looks like and what you’ll need.

During an audit, a managed IT services provider (MSP) engineer looks for things such as what technology you have in place and if it’s compatible with their services.

They also determine what technology – hardware and software – you may need to implement or replace.

While this fee is incorporated into a managed IT services contract, it is a one-time fee and excluded from recurring payments.

And even if you don’t end up opting to go through with signing the managed IT services contract, this fee applies. As far as how much, you can expect to pay around $500 per site.

2.   You may need to purchase additional hardware

MSPs standardize their hardware and software across their customers. This allows engineers to work efficiently since they’re troubleshooting the same technology.

Most of our customers need to purchase a Meraki firewall, which can cost anywhere between $750 and $2,000 per site depending on the capacity.

If you’re running on non-enterprise-grade equipment or end-of-life equipment, you’ll also need to implement a plan to replace this with capable, up-to-date equipment. Your MSP will work with you to create this plan, find and price suitable hardware, and then spread out the capital expense.

3.   Adding a new user

Adding a new user falls outside the scope of most managed IT services contracts.

For most growing businesses, it’s expected that you’ll need to add users throughout your contract.

However, onboarding the new user and any new devices will fall outside of your contract. Your MSP will also charge additional fees for the software suite they require.

At the start of the new billing cycle, likely the next new month, the user will be brought under your contract, but until then, support for that user will also fall outside of your contract.

On average, this costs $250 for your MSP’s time and material but can vary depending on if the new user needs hardware configured.

4.   On-site services in remote contract

While the majority of managed IT services contracts include pre-scheduled and as-needed on-site support, some customers opt for a remote-only managed services contract instead.

These contracts generally cost around 15 to 20% less than traditional ones, in exchange for less on-site time with an MSP engineer.

On average, around 80% of IT needs can be addressed remotely. There is still that 20% that does require on-site assistance, though. MSPs account for this and may schedule quarterly on-site times.

However, if you do require on-site assistance, even during normal business hours, and need to call your MSP engineer in to help, you’ll be charged for time and material outside of your contract.

To plan ahead, your annual remote IT support budget should include 10% of your monthly cost for when you’ll inevitably require on-site assistance.

5.   After-hours or holiday support may not be included

Whether you have a traditional or remote-only contract for managed IT services, you can count on IT support 24 hours a day, 7 days a week, 365 days of the year.

This availability ensures you’ll have support even if a problem arises outside of normal business hours.

However, the cost of after-hours support typically isn’t included with a managed services contract.

Most MSPs will remind you of this when you make a request after hours and ask if you want to proceed.

Some requests that affect mission-critical systems can’t wait until the next business days, but your MSP will be able to tell you if your request falls under that category.

You can plan for this unexpected fee by annually budgeting 5% of your monthly cost.

Agreeing to a managed IT services contract   

While we know there are many benefits to signing up for a managed services contract, we know it can be a significant financial commitment.

Once you know the overall cost of a managed services contract in addition to the circumstantial costs covered in this article (additional hardware, new user, excluded on-site services, after-hours support), you’ll have an overall idea of how much you can expect to pay for managed services. This should ease your mind about signing a contract

Are you ready to take the next step and learn more about a managed IT services contract? Check out our free e-guide about signing a contract with The KR Group.

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