You’ve signed on with a managed IT service provider (MSP) and work is underway. Then, the provider informs you that the price you agreed to at the time you signed your contract has changed. Even worse—it’s substantially higher.
Or, you find out well after the fact that those extra support calls you had to make because of ongoing connectivity issues bump you over a monthly support cap, resulting in additional charges to your business.
Such billing challenges in managed IT services can stem from many factors such as a lack of billing transparency, human error, outdated billing and payment processing technology, or inflexible billing structures, among other reasons.
A managed IT services contract is designed to be a predictable monthly expense.
Being able to take advantage of an MSP's full complement of IT experts with specialized skills and broad industry knowledge along with advanced IT tools and resources can allow you to reduce overhead and labor costs.
It also allows you to scale services as your business evolves to help you gain a competitive advantage.
Related Article: 10 Reasons For SMBs To Hire A Managed IT Services Provider
That said, getting hit with a significant, unexpected cost increase could leave many small businesses scrambling to pay the bill.
To be clear, this is by no means a blanket indictment of the industry as a whole. As a family-owned and operated managed IT service provider ourselves, we have worked tirelessly over the past four-plus decades to deliver exceptional, reliable IT support to help our clients succeed.
What it does mean is that you should use caution and discretion when considering which managed IT services provider (MSP) to work with.
We provide articles like this not to convince you to work with us or even to champion why we might be a better choice than another provider.
In fact, we’ve been consistent in strongly recommending that businesses do their homework to thoroughly research several providers and get referrals before signing on with an MSP. That way, businesses can make sure that the provider has the specialized skills and resources needed to solve their IT challenges within their budgets.
After all, no two businesses are exactly alike. So, choosing the right MSP for your organization will depend on factors such as your industry, your IT needs, and your short and long-term business goals.
In this article, we’ll discuss some deceptive billing practices to watch out for when choosing or working with an MSP. With this information, you’ll be able to sit down at the negotiating table armed with tips to spot potential red flags and ways to avoid costly billing surprises.
Using ambiguous or highly technical language in the provider contract and monthly billing invoices will undoubtedly cause confusion and potentially lead to conflicts between the provider and client.
Such jargon-filled word scrambles are a key red flag because customers or prospective customers may not fully understand what they would be getting for their money, or what’s considered out of scope as an add-on expense.
Related Article: What Are Common MSP Pay Terms And Billing Practices You Need To Know?
Hidden fees that are not disclosed to the client can also cause irreparable harm to the client-MSP relationship.
Managed IT service providers that use aggressive, manipulative tactics to persuade clients into signing a contract or adding unnecessary “extras” that will serve little purpose except to pad the bill.
While making customized recommendations for strategic IT investments is an essential part of managed IT, using strong-arm sales pitches to convince an organization to agree to extraneous services and IT tools will only weaken client trust.
Using complex billing structures or outdated payment processing systems could also lead to overcharges.
The use of legacy billing and payment processing software could result in system glitches when trying to integrate with newer software.
Managed IT solutions are not one size fits all, and neither should their billing structures be.
If the MSP has a rigid billing structure, the client might make the unpleasant discovery that it’s being overcharged when trying to scale support to meet changing business needs.
Before clients sign a formal managed IT service provider agreement (MSPA), the MSP generally performs a thorough discovery to understand the client’s infrastructure.
IT service providers also take inventory of the client’s IT environment, including users and devices that fall under the project’s scope, before presenting the client with a detailed quote, as outlined in a Statement of Work (SOW).
The provider should present clients with an SOW that itemizes the services/resources to be delivered, with clear cost breakdowns and timelines. It should also outline the customer’s responsibilities. If not, this could be another example of questionable billing practices.
Informing a client belatedly that services that were initially included are now considered out-of-scope, or not clearly conveying this information up front, are other signs of poor business practices.
To promote transparency, it’s important that the client and customer agree to well-defined service level agreements (SLAs).
SLAs will outline the performance standards, responsibilities, and expectations for ongoing support. It also details the escalation process for critical issues.
Providers can review the SLAs during quarterly business reviews (QBRs) to go over the progress of work performed, assess performance, and address any issues.
Failing to provide regular status updates to customers to keep them in the loop about any issues that come up (and any additional costs required to fix those unexpected problems) can also cause client frustration and splinter the client-MSP relationship.
Businesses should carefully review their contracts, SOWs, any related change orders, and monthly MSP invoices to make sure they completely understand what IT services and support they’re paying for. This will also allow them to verify that the information matches their previous communications with the provider.
If a client has any questions, the provider they’ve hired or are considering hiring should be willing to readily answer any questions or concerns that have been communicated to them.
Keep in mind, however, that there are certain issues that are out of the MSP’s control that will impact a customer's monthly MSP bill.
For instance, if a change order is needed because the customer introduces or removes devices or users, or makes other changes to their original agreement, then there will be some price fluctuations in the monthly bill.
In addition, if a software vendor increases licensing or renewal prices, or a cloud-services provider raises their subscription prices, for instance, then the client’s monthly MSP costs will go up accordingly.
Ensure there is open, responsive communication on both sides. This means that providers will keep clients updated on the status of projects and work progress so that potential issues can be quickly addressed.
At the same time, client stakeholders are expected to respond to requested information and provide necessary approvals in a timely manner to prevent potentially costly delays or missed opportunities for procurement cost savings.
As we’ve mentioned, clients also have some responsibility when it comes to ensuring the accuracy of their MSP billing costs.
For instance, companies are expected to provide full access to their IT infrastructure during the discovery process for a thorough and accurate inventory evaluation and during the performance of the work, as needed. This will help ensure that resources and users are properly documented and billed.
Likewise, the client is responsible for informing the MSP well before a known event, such as a planned expansion or bringing on new hires or equipment. This way, the MSP has time to prepare and can adjust the SOW accordingly.
With managed IT, you instantly gain an entire team of IT experts and powerful tools to help you leverage your technology to propel your business into the future.
At the same time, businesses working with a managed IT services provider expect that the price they agreed to pay for services and support is the price they’re getting.
While some billing mistakes are innocent errors that are promptly corrected, there are instances when unscrupulous providers will intentionally try to use a slight of hand to nickel and dime clients.
At Kelser, we offer responsive helpdesk and call center support, with flexible support levels that can be tailored to fit your business needs.
We know that managed IT isn’t right for every business. If you are not currently working with a provider, or you’re looking to switch MSPs, however, we can’t stress enough how important it is that you do your due diligence in picking the right MSP for a mutually beneficial, lasting partnership.
To learn why more small and mid-sized businesses are turning to managed IT, read this article. Find out How Can Managed IT Services Drive Your Digital Transformation?
New to managed IT and curious how much it might cost your business? Use our pricing calculator to get an instant, no-obligation cost estimate.
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