Perhaps the most frequently asked question regarding IT support is, “How much does it cost?”
As you may know, at our sister company https://whitelabelit.com, we work with a whole host of IT companies and other MSPs, which gives us unique insights into how our industry prices and values its work! We have also worked with start-up IT companies to help identify their niche and price their services accordingly.
However, if you’re interested in running a successful business, not just an IT company, a more helpful question to ask is:
“How much should I charge for IT support to sustain my business and help it grow?”
While we don’t have all the answers, we can certainly provide you with the guardrails and talk you through how to look at you’re pricing to ensure it can keep base with your growth.
There are some fundamental numbers you need to understand in business to keep yourself competitive but also profitable. Cash is the lifeblood of any business, so you need to charge whatever is needed and add the value to justify your charges.
How much to charge for IT services per hour?
Most IT support technicians will work at an hourly rate, whether your company invoices per hour or per day, is irrelevant, ultimately all IT companies need to know what the cost of their engineer is on an hourly basis.
They should also know what the hourly cost of their business is… i.e., to keep the lights on!
You also need to build in some wastage into that cost, i.e., people are not 100% productive. Learn how much to cover as wastage in our downloadable PDF.
To put some numbers around the subject, however, the market currently dictates upper and lower hourly rates for most IT support companies, and they can also vary greatly based on the client’s industry and requirements, the technician’s skill level and the region or area. As an example, IT support provided to financial companies may often demand a premium compared to say, estate agents.
To determine how much you should charge an hour for general IT support, compare your skills and qualifications against other IT support companies, but also don’t be afraid to do some market research and call prospects, asking them outright if they know what they’re currently paying per hour. Most will be quite open. However, you will probably determine the following:
In the UK, approximately £120/hour is the highest hourly rate. While in the US, general IT support won’t exceed $200/hour.
Choosing where your number needs to be should directly correlate to other outcomes you’re trying to achieve in your business. Again, how they actually determine what your number should be a process rather than a guess. Learn more by downloading our PDF.
How to ensure your pricing is appropriate
However, if you’re still looking at this from a broad brush perspective and just need to work out an hourly rate based on your skills quickly, the general market is a good place to start, but your price should reflect much more than a simple hourly fee.
Before setting your IT support services fees, consider the following questions:
- Are you set up to provide the best support possible?
- What do you need to invest in the business to be able to react to emerging threats and new technologies?
- What are your overheads?
- How many people does the business support?
- What are you offering your clients?
- How much money do you need to keep your business sustainable for future growth?
Your fees shouldn’t just reflect your current skillset and business services, they should reflect your plans. Your company will need cash to grow, as such, don’t shoot yourself in the foot by charging the bare minimum just to win business. Most new business that you win solely based on price won’t be the long-term successful relationship you hope for.
The hourly rate for your MSP or IT company must, at some point take into account the gross margin needed for the business to survive. So even if you’re setting a headline figure now and you’re not willing to do the work of calculating your exact cost. Know that sooner or later, you will have to do the work to factor in your true costs.
As a rule of thumb within the IT industry, an MSP that wants to grow will need a sensible gross margin of 45-60% of its turnover to be able to reinvest in the future as well as cover general overheads and associated costs.
Calculating your charges and working backwards to reflect an end-of-year net margin of around 15-20% is what every MSP should aim for. With these margins and numbers, you should be able to charge a reasonable rate while preparing for sustainable growth.
Still not sure what to charge your clients?
Finding a balance between charging a competitive fee and making enough to sustain your business takes time. IT support companies and MSPs (they’re not the same) are often unsure of how to position their services in the market. As a successful MSP, we’re always happy to help other IT companies progress and learn from our successes (and mistakes) over the years.
As such, if you feel this blog has been helpful, please take the time to download our PDF, which will provide you with the steps you need to work backwards to determine your exact hourly rate.