What to Expect to Pay for Cloud Managed Services


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Cost of Cloud Managed Services Blog

Publish Date

April 26, 2022



Cloud Managed Services | Microsoft 365 Business Premium | Microsoft 365 E3

You are starting to think it might be a good idea to outsource or supplement your IT and are wondering how much you should budget. In a commodified world, you would hope there was a simple answer to compare ‘apples to apples.’ Due to the complexities of cloud managed services, there are things to take into consideration so you’re not looking at an ‘orange’ when comparing the price of a provider. This guide will help you choose what IT services you really need and what to expect when seeking out a fair deal.

The difference between managed services and cloud managed services

Taking a quick step back, let’s level-set what the term ‘managed services’ means.

Managed services include a suite of IT functions provided to a customer by a third party known as a managed services provider (MSP). MSPs provide consulting and ongoing IT services including help desk, cloud network design and maintenance, IT hardware procurement and warranty repair resolution, support on data backup and recovery, staff training, and a range of other IT-related services.

Every day, more small-to-medium-sized businesses are relying on MSPs to manage parts or all their IT. These businesses usually cannot afford an in-house IT team or don’t have the capacity to meet their own technology and cybersecurity needs. Outsourcing to an MSP is a cost-effective way to gain access to a superior-quality IT operations structure – due to economies of scale.

Cloud managed services are specifically designed to take a cloud-first approach and are not necessarily ‘cloud only’ tactics. You might think working with a cloud managed IT services provider means you can’t have onsite servers. Due to the need to run specialized onsite software, many companies are expected to hybridize their environment to keep these assets available to their organization’s members.

Managing your users’ identities in the cloud has proven to be an extremely secure method that companies can leverage. You can create a zero-trust environment, and align your security with many different compliance guidelines. Depending on how it is configured, it can also save you money on your cybersecurity insurance policy premiums. Companies of all sizes can benefit from the robust security and convenience offered by modern cloud technologies today.

The cost of managed services

This is where we get to the tricky part. MSP rates vary significantly depending on how much support is made available to the client as a part of the monthly service fee. Components that affect pricing include:

  • The number of employees
  • The level of sophistication of your IT systems
  • Whether you need to keep onsite servers as previously mentioned
  • Whether you are looking to outsource all your IT functions or only some of them

Do you need co-managed or fully managed services?

This is the first question we need to figure out. It will determine how much you will be paying for services. Here are the differences.

Co-managed services: If you already have an IT staff, but they don’t have the time or skills to assist with more complex IT issues, a co-managed option might make the most sense. While your team handles day-to-day activities, they hand off these tasks to your provider:

  • Escalation of the more complex IT problems that require specific expertise
  • Administration of cloud management services, licensing, and tenants
  • Simpler, more routine tasks that the in-house IT team cannot get to
  • Support for your team during busy periods
  • Support with hardware lifecycle management and warranty renewals

Electing co-managed services gives you the flexibility to choose what types of IT issues you need help with and when.

Fully managed services: This is outsourcing all your IT managed to a third-party. This is the best option for most small to medium-sized businesses that do not have an in-house IT team or have “an army of one.” This option gives you peace of mind in knowing your IT infrastructure will be taken care of by a resolute team of experts. Cloud managed services are becoming the norm, which requires you to stay educated on periodic changes to your cloud platform. A third-party will be invaluable in supporting your staff with a knowledgeable team of technicians that can get things done quickly and efficiently.

How does an MSP price their services?

Now that you understand the difference between co-managed and fully managed services, the next factor to consider is the pricing model. MSPs usually offer per-device pricing, per-user pricing, or a combination of the two.

At Arctic IT, we are keenly aware of the competitive nature of IT. Therefore, we offer a price for each user and device.  We split off a separate cost for a modernization project to bring your infrastructure to serviceable standards. Our per user and device cost breakdown is $20 per user, $35 per device, and $100 per server.

Modernization projects can vary significantly given where you are and where you want to be. These are quoted to you through a rough order of magnitude (ROM) document once we have investigated your environment specifics at no additional cost. To produce our ROM, we will have specific questions for you to help us answer. In more complicated networks, we have software we can run on your server to give us a broader view of your infrastructure and all its connected devices. The modernization project will be invaluable in aligning the value of your new services with your network’s capabilities.

As a Microsoft Cloud Service Provider (CSP), Arctic IT can help you obtain the appropriate licensing that we leverage to enable the Microsoft 365 cloud security functionality. We use Microsoft 365 Business Premium and Microsoft Defender licensing as a minimum requirement, which costs around $22/user/month for the license. Your organization may need enterprise level licensing, of which Enterprise Level 3 (E3) is our minimum at $36/user/month for the license. We also add on cloud-to-cloud backup licensing, which is a small investment for a huge peace of mind. We are qualified to navigate your Microsoft licensing questions and have the full support of Microsoft as a Microsoft Gold Partner.

This pricing structure allows us to remain cost-conscious – knowing that there will be users who do not have a company-sponsored device, and there will be those who have multiples such as a desktop and a laptop. Our per-device price ensures your endpoints are secured and maintained on the latest software and hardware updates. We know the human element and social engineering are the biggest factors related to cyberthreat for our clients, so our per-user pricing includes a suite of services to help your organization build a ‘human firewall’ such as:

  • Enablement and enforcement of Microsoft cloud security features and monitoring through MFA, the Microsoft Security and Compliance Center, and Intune
  • Weekly, instructor-led training on a revolving set of topics that include the full suite Microsoft Office tools and cybersecurity
  • Quarterly phishing email testing campaigns
  • Unlimited helpdesk support for when something looks suspicious, and your users would like an expert opinion fast

What to ask your prospective managed services provider

When it comes time to decide, you will want to gather as much information as possible to help guide an informed outcome for you and your organization. Some questions to ask include:

  • Do they have experience with the email system you already have in place?
  • Do they have experience migrating onsite email systems to the cloud? (This only if you’re not already there)
  • Do they have any cloud experts on staff? Accreditations?
  • Are they using cloud technology to manage your users’ endpoints?
  • Do they provide a security settings alignment consultation as a part of bringing you on board?
  • Are there limited help desk hours per month?
  • What exactly is included in an ‘all-inclusive’ service plan?
  • Are there any fees for on-site visits?
  • What is their plan for remote support?
  • What educational components are included in the service?
  • Does their standard offering include phish threat testing?
  • Can they provide customer testimonials?

About Arctic IT, a cloud managed services provider

As a highly trained Gold-level partner with Microsoft, Arctic IT helps organizations with these types of questions every day while leveraging the Microsoft suite of cloud products. The value that Microsoft offers in their Microsoft 365 email, Office software, and security bundles is unrivaled in the industry. It brings security and convenience of necessary and ubiquitous business tools to even the smallest organizations through a software-as-a-service (SaaS) model that can save your company money overall.

Reach out today for a conversation on cloud managed services, and we can be as technical or non-technical as you need. Having someone to dialogue with you during your decision-making process will ensure a cost-effective and forward-thinking approach for your next steps.

Andres G, Account Executive at Arctic IT

By Andres Gonzalez, Account Executive at Arctic IT