Business IT Support in Hourly Vs. Flat Rate


While you may find it hard to believe, switching over from an hourly rate system to a managed IT solution can save you money.

When you own a business, you’re always looking for ways to cut costs while getting the best service from your partners.

When dealing with an IT contractor, it may seem more cost-effective only to call them when a problem occurs with any computer and therefore pay them an hourly rate. However, this can prove to be more costly to you and can cut into your profit margins.

So exactly how can changing from an hourly rate system to managed IT services be more affordable?

Maximize IT Service

Firstly, managed IT services allows you to increase the amount of service you receive without escalating costs. This is mainly because providers usually charge a typical flat rate per month and in the time you can get your contractor to come over and fix any and all problems that arise during the month. Your IT contractor is responsible for rectifying any and all IT issues irrespective of the size or complexity.

However, when you opt for the hourly rate system, you have to pay the IT technician every time a problem arises, and they come over to attend to it. If you only need IT services a handful of times a year, then it might seem beneficial; however, most businesses need a lot more support than that. So every time a problem occurs you got to fork out money whereas you pay one flat fee per month and then have your technical issues resolved when you need it. According to specific case studies, the following was revealed:

-13 percent cut annual IT costs by a whopping 50 percent or more
-46 percent cut annual IT costs by 25 percent or more
-50 percent cut annual IT costs between 1-24 percent

So according to the studies, almost half of the companies that changed to managed IT services saved a quarter of their IT costs each year. With that said, managed IT services is apparently the way to go to increase profit margins while cutting costs.


Increase and Manage IT Efficiency

Managed IT services also increases the efficiency of your IT technician. Ultimately, your IT contractor wants to make as much money as they can, but this desire can either work against your business or for it.

When working on an hourly rate system, your IT technician may be motivated to take longer to repair individual projects rather than complete them sooner. Therefore by increasing the amount of time or the number of hours they work on a problem they grow their earnings. So while this arrangement may work for your contractor, it ends up hurting your business, costing you money and merely delays the problems.

When it comes to managed IT services, you pay a flat fee, and your IT contractor works as efficiently as possible to increase their earnings. Ultimately, by working as fast as possible to resolve your problem, it increases the amount of work they can take on from other clients as well and ultimately increases the amount of money they make.

Ultimately, managed IT services also means more money for your IT technician. It enables them to take on more clients, and you can pay less for their services. So this works for both parties involved.

Decrease Downtime Due to Repairs

Thirdly, downtime due to technical repairs is reduced when it comes to managed IT services. This is crucial to any business because as you know downtime costs every company money.

Downtime also leads to loss of productivity from your employees who cannot work during this period and may also damage the reputation of your company. So precisely how can managed IT services decrease your downtime?

As mentioned previously, companies are more likely to contact the IT contractors when any issues arise because they’re not paying per hour or for each project. This means that you can reach your IT contractor as much as you want. This also makes them more familiar with your system ultimately, once they are familiar with your system they can work quicker and identify problems easier thus decreasing downtime.

In addition to that, by taking care of all your technical issues, your IT technician also has an opportunity to correct small errors before they become more significant problems. As Bill Gates once said, “treatment without prevention is simply unsustainable.” So ultimately what that means is that you can avoid many issues by taking preventative measures and eventually eliminating downtime and technical errors.

So while the hourly rate system may seem like you are getting a better deal initially, you end up spending more money when you calculate all of the costs involved. With managed IT solutions, you get access to the contractor as much as you want, they work faster and ultimately your costs are reduced.


Hourly Vs. Flat Rate IT Support

When it comes to selecting an outsourced IT provider, Sydney small businesses have a variety of choices for you. There are local companies, nationwide chains, Moonlighters, some mix of reliable and competent IT companies and then there are those that leave much to be desired.

So how exactly do you choose the right type of managed IT services for your small business? Here are a few points to consider:

  1. Do they have the right reputation?

    You can start by asking for references and reading their online reviews. Try and find out how enjoyable their salespeople are. There is a lot of information available about each IT provider, to ensure that you do your research before making a final decision. Ultimately, remember that your essential business data is going to be made available to this company, so ensure that you are dealing with transparent and honest businesses.

    2. Do they have a plan for your network and its security?

    This is something that can’t possibly be stressed enough. It is highly likely that your small business will be hacked within the next couple of years, according to the FBI. So you need an outsourced IT company that is going to be on the ball. Furthermore, don’t be talked into spending an arm and a leg or thousands of dollars just to secure your network. Give the outsourced IT provider an opportunity to tell you exactly how they are going to secure your network, let you know exactly where your vulnerabilities lie and let you know exactly what protection they can offer. Ultimately, even they cannot eliminate every single vulnerability, as even major organisations like the Pentagon get attacked. However, they should be able to assist you to some degree.

    3. How will they on board your company?

    You need to have a stable and consistent IT support provider. So what you can do is ask them if you have a proven process that will allow you to transition your network into their care. You should stress to them that your employees and yourself cannot be subjected to any downtime. Ask about the network security they can provide during the transition just to make sure that they are capable of keeping things under control.

    4. What is it going to cost you?

    More often than not, you will receive more or less the same pricing from different outsourced IT providers. However, there are a few ways to determine the value that an IT provider can bring to your business, so here are a few things to look out for:

Length of IT support contract

Being tied down to a long-term deal is not recommended. Instead look for a provider that offers a month-to-month agreement. This way they need to work hard in earning your business every 30 days consistently.


Type of managed IT services contract

They are three standard models when it comes to service contracts. Ultimately, it will depend on what you prefer and the amount of risk you’re willing to take on. Time and material contracts allow you flexibility with no commitment. However, they also hamstring your provider’s ability to offer the best. Ultimately, if your IT provided is not spending enough time on your network, they won’t know it the way they’re supposed to.

Hourly contracts give you a certain amount of hours per month. If you use less, you still pay the full amount, however, if you use more you should be prepared to pay extra. The advantage is that on the hourly rate for the agreed-upon amount of hours. The disadvantage is that as a small business your needs will change spontaneously and erratically.

The third option is perhaps the most reasonable and beneficial to you. Your IT provider will charge a flat fee and offer unlimited support based on the number of computers you have and the amount of service on your network. So the more stable and secure your network is, the less they take on in giving you unlimited support. Ultimately, the whole purpose of hiring an outsourced IT provider is to keep your network secure and stable.

What about tech peripherals?

Having a company that will take care of the tech peripherals is priceless. Ultimately you need to find out whether your IT support group will bear the financial responsibility for financial security. When it comes to things like unlimited server backups and printers that are not working will they take on the fiscal responsibility?

Finding an outsourced IT service provider in Sydney is not a challenge, however finding competent and dedicated companies could present a problem. If you want to find excellent IT providers, ensure that you ask the right questions and understand exactly where they stand when it comes to pricing and more importantly value.