How Much Do Managed IT Services Cost Small Businesses?


As a small business owner, you wear many hats. From managing operations to handling customer relations, your plate is full. One area that often gets overlooked but is crucial to your business’s success is IT management. You might be asking yourself, “How much do managed IT services cost for my small business, and is it even worth it?” You’re not alone. It seems that most small business owners feel the same way, torn between handling IT in-house and saving the cash, or outsourcing to experts.

You might also feel overwhelmed by the technical aspects of IT, worried about the costs, and fearful of potential security breaches that could harm your business. These concerns are valid, and you’re not alone in feeling this way. I’ve talked to so many business owners and these fears always present themselves in one way or another.  So… This article will break down the costs of managed IT services and compare them to the do-it-yourself (DIY) approach, so you can make an informed decision that best suits your business needs.  🙂👍

The first thing you need to know:
Managed IT services involve outsourcing your IT management and support to a third-party provider, known as a Managed Service Provider (MSP).
Managed cybersecurity services involve outsourcing your company’s cybersecurity to a third-party provider, known as a Managed Security Services Provider (MSSP).

So, Managed IT Services = MSP and Managed Cybersecurity Services = MSSP.

Sometimes, one company will do both of these jobs.  This is what we do!

Understanding Managed IT Services

Definition and Scope

These services cover a wide range of IT needs, including network management, data backup, cybersecurity, time-saving strategies/tools, and more. The goal is twofold: (i) To ensure your IT systems run smoothly, securely, and efficiently, allowing you to focus on your core business activities, and (ii) To ensure your team saves time on every interaction they have with technology.

Common Services Provided

  • 24/7 monitoring and support
  • Network and infrastructure management
  • Data backup and disaster recovery
  • Cloud services and support
  • IT consulting and strategy

Cost Components of Managed IT Services

Monthly Subscription Fees

Managed IT services are usually billed on a monthly basis. The cost can vary depending on the size of your business and the level of services required. On average, small businesses might pay between $100 to $200 per user per month for comprehensive managed IT services. For instance, a company with 20 employees might spend between $2,000 to $4,000 per month, while a company with 50 employees might spend between $5,000 to $10,000 per month​.  This is a big spread.  The reason for this is that not all IT services contracts cover the same things.  Some include troubleshooting labor, some even include project labor and hardware.  To understand what you should be paying, you’ll need to determine what you need.  This article may help you with that. 👍

Setup and Onboarding Costs

Initial setup and onboarding can incur additional costs. This includes configuring your systems, migrating data, and setting up new equipment. These costs can range from a few hundred to several thousand dollars, depending on the complexity of your IT infrastructure.  Some MSPs will include onboarding for free with a multi-year contract.  It’s never a bad idea to ask for this fee to be waived for a longer term of service.  😉

Support and Maintenance Fees

Ongoing support and maintenance are typically included in the monthly subscription fee. However, some providers may charge extra for on-site support or for resolving specific issues. It’s essential to understand what is included in your contract to avoid unexpected expenses​.


Most, but not all, MSPs quote project work separately from support and maintenance. These projects can be essential for improving your IT infrastructure, enhancing security, and ensuring compliance with industry standards. Here are some common types of IT and cybersecurity projects and their associated costs:

  • Network Upgrades and Expansions
  • Cloud Migrations
  • Compliance Audits and Remediation
  • Disaster Recovery and Business Continuity Planning
  • IT Infrastructure Overhaul

Factors Influencing Project Costs:

  • Project Scope: Larger, more comprehensive projects will naturally cost more.
  • Complexity: Projects involving complex systems or multiple integrations will have higher costs.
  • Urgency: Expedited projects or those requiring immediate attention can incur additional costs.
  • Vendor Selection: Different managed service providers may offer varying rates based on their expertise and the services included.

DIY IT Management for Small Businesses

Initial Investment in Hardware and Software

If you decide to manage IT in-house, you’ll need to invest in the necessary software. This includes management, backup, and security software as well as the cost of a tech-savvy employee to install and configure these products. Initial costs can be significant, often ranging from $5,000 to $50,000, depending on your business’s size and needs​. Numerous IT management and cybersecurity software packages include a minimum fee that covers an initial batch of license keys.  This can make the DIY approach challenging since MSPs are able to get economies of scale when they buy a package like this.  For example, the cybersecurity tool that we use costs a minimum of $3000 per month (as of June 2024) and still requires a knowledgeable employee to configure and manage this tool.

Ongoing Costs for Updates and Licenses

IT systems require regular updates and license renewals to stay secure and functional. These ongoing costs can add up quickly, averaging around $2,000 to $100,000 per year​​.

Cost of Employee Time and Training

In-house IT management necessitates experienced staff. The annual cost of employing a full-time IT professional ranges from $50,000 to $100,000. Furthermore, training and certification expenses must be considered to ensure your team remains current, as more cloud software providers are mandating specific certifications before granting IT professionals access to manage certain aspects of the software. Microsoft 365 and Google Workspace are recent examples of such companies with these requirements.

Potential Downtime and Productivity Loss

In-house IT management often leads to more downtime due to limited resources and expertise. This downtime can be costly, if you take into account the frustrating effect on you staff, the trust of your client, and the loss of productivity.

Using a Managed Security Service Provider (MSSP)

What is an MSSP?

A Managed Security Service Provider (MSSP) is a specialized type of MSP focusing on cybersecurity. MSSPs provide services such as threat detection, incident response, and vulnerability management to protect your business from cyber threats.

Services Offered by MSSPs

MSSPs offer a range of cybersecurity services, including:

  • Cybersecurity Sofware called Managed Detection and Response (MDR)
  • Security Information and Event Management (SIEM)
  • Firewall and intrusion prevention
  • Endpoint protection
  • Compliance management
  • Simulated Cyberattacks or Penetration Tests
  • Cybersecurity Assessments and Implementations

Benefits of Using an MSSP

Using an MSSP can provide several benefits, including:

  • Access to advanced security tools and expertise
  • Proactive threat detection and response
  • Reduced risk of data breaches and cyberattacks
  • Compliance with industry regulations
  • Peace of mind knowing your business is protected

Cost Comparison: DIY vs. MSSP

Employee Salaries and Benefits

Hiring an in-house IT team can be expensive. An IT manager’s salary ranges from $60,000 to $120,000 per year, while a cybersecurity specialist can cost between $80,000 and $150,000 per year. Adding benefits and training costs increases the overall expense​ (Kaseya)​.

Cost of Security Tools and Software

Investing in security tools and software is crucial for protecting your business. This includes firewalls, antivirus software, and MDR tools. These can cost anywhere from $5,000 to $20,000 annually, depending on the level of protection required​ (Kaseya)​.

Time Spent on IT Management

Managing IT in-house requires significant time and effort. This time could be better spent on core business activities. The cost of lost productivity can be substantial, with small businesses potentially losing thousands of dollars each year​ (Kaseya)​.

Impact on Business Operations

IT issues can disrupt business operations, leading to lost revenue and customer dissatisfaction. Managed IT services help minimize downtime and ensure your systems run smoothly, allowing you to focus on growing your business​ (MuniBiz Security)​.

Total Cost of Ownership

When comparing the total cost of ownership, managed IT services often prove to be more cost-effective. The average small business might spend $5,000 to $10,000 per user per year on in-house IT management & cybersecurity, while managed IT & cybersecurity services typically cost $1,200 to $6,000 per user per year.

Hidden Costs and Risks of DIY IT Management

Security Vulnerabilities

Without the expertise of an MSSP, your business is more vulnerable to cyberattacks. Data breaches can be devastating, with costs including legal fees, customer notifications, and potential fines. The average cost of a data breach for small businesses is around $200,000​ (Kaseya)​.

Compliance Issues

Many industries have strict regulations regarding data security and privacy. Failing to comply with these regulations can result in hefty fines and damage to your reputation. MSSPs ensure your business stays compliant with relevant laws and standards​.

Potential Data Breaches and Their Impact

Data breaches can lead to significant financial losses and damage to your brand’s reputation. Customers trust you with their sensitive information, and a breach can erode that trust. Managed IT services help mitigate these risks by providing robust security measures​ (Kaseya)​.

Benefits of Managed IT Services Beyond Cost Savings

Access to Expertise and Latest Technologies

Managed IT service providers have a team of experts who stay updated with the latest technologies and best practices. This expertise ensures your IT systems are efficient, secure, and up-to-date​ (MuniBiz Security)​.

Enhanced Security and Compliance

MSSPs provide advanced security solutions and ensure your business complies with industry regulations. This reduces the risk of data breaches and legal issues​.​.

Focus on Core Business Activities

Outsourcing IT management allows you to focus on what you do best – running your business. With IT concerns handled by professionals, you can dedicate more time and resources to growth and innovation​ (Kaseya)​.

Choosing the Right Managed IT Service Provider

Key Factors to Consider

When selecting a managed IT service provider, consider the following factors:

  • Range of services offered – Are you covered completely?
  • Experience with your industry or similar industries – Do they know what you need?
  • Customer reviews and testimonials – Do their clients like them?
  • Pricing and contract terms – Are they competitive?  If not, why?
  • Level of support and responsiveness – Do they make you wait when you are in pain?
  • Do you have goal alignment – Are they more profitable when your stuff is broken, or are they more profitable when you have no problems?

Questions to Ask Potential Providers

To find the right provider, ask questions such as:

  • What makes you different from other providers?
  • What services are included in your packages?
  • How do you handle data security and compliance?
  • Can you provide references from businesses of a similar size?
  • What is your response time for support requests?
  • Do you offer scalable solutions to grow with my business?
  • Do you offer user training and how much does this cost?

Evaluating Service Level Agreements (SLAs)

Review the SLA carefully to understand the provider’s commitments and guarantees. Ensure the SLA covers important aspects such as uptime, response times, and support availability.


In conclusion, managed IT services can be a cost-effective solution for small businesses. While DIY IT management might seem cheaper initially, the hidden costs and risks can add up. By using a MSSP, you can save money, reduce risks, and focus on your core business activities. The cost savings can be significant, ranging from $20,000 to $50,000 annually, depending on the size of your business and the level of services required​​.

Investing in managed IT services not only provides financial benefits but also ensures your business is secure, compliant, and efficient. This peace of mind allows you to concentrate on what truly matters – growing your business, serving your customers, and enjoying life!  Life’s too short not to enjoy it. 🤘