How much should you be paying for IT management and support cost a small to medium business?

How much does IT cost from an expert working in the field who has bid, proposed, and closed 100's of deals in this space.

In today’s digital age, the role of IT Managed Service Providers in business operations cannot be overstated nor can their costs. For Australian businesses, particularly small and medium-sized business (SMBs), navigating IT costs is crucial for maintaining competitiveness and efficiency. As passionate IT professionals we have done the research and provided the context to understand how much your IT should really cost. The estimate prices are based on lived experience and market research but please make your own judgements when purchasing IT services.

*And yes there will be an actual number below of market average prices.

Scope of this article

In order to follow the KISS principle (Keep it simple stupid), we will focus on just the material cost that you as a owner, operator or technology manager might see on your invoices. We will not include the costs associated with productivity lost or employee dissatisfaction among other effects of “bad technology”. That ol’ chestnut is difficult to calculate, and this article is long enough without that rabbit hole of productivity and financial analysis.

We have also deliberately left off project costs. This article focuses entirely on per user, per licencing cost and the infrastructure required for a business to operate.

Second we define the buyer

This is for small to medium business as defined by the Australian Bureau of Statistics which comprise 0-20 staff for small and 20-200 for medium sized businesses. There are always going to be businesses that don’t fit our method for defining tech price and technology solutions are subjective. This guide should be seen as a guide created by an individual with to much time on their hands and a large chip on his shoulder about fairness and his industries lack of transparency.

The Key Factors Influencing IT Costs

Tech stack

I hate to be that guy but the cost of your technology comes down to you… and what I mean by that your choice of core business applications will determine the cost. These applications are the core technology that allow you to make money, conduct business and deliver outcomes for customers. It might seem obvious that these are a high cost but first we must understand the technology context. We are trying to understand where they live..and I don’t mean their summer house. Are they based in a server, cloud server or are they SaaS based? These factors will greatly determine what IT Infrastructure you have in your business which in turn determines the solutions, cybersecurity and costs that you pay your IT provider.

Legacy Technology

Legacy technology is the bane of all IT providers and will be rightly used to justify charging you with high costs as they tend to be similar to that over the top mother in law…noisey, boss and hard to soothe. What is legacy technology you might ask? These are old systems, such as servers, computers, network equipment or applications that are out of date or life. These “old” systems mean they are longer supported by their creators, be surpassed by competitors, were bad in the first and/or are prone to breaking, going offline unexpectedly or being breached.

Sometimes legacy is just a cold hard fact of your industry – I’m looking at your engineering, architecture and manufacturing.

System Architecture

Closely related to that one annoying and probably the a@#hole friend in the technology group (legacy), is system architecture. What is system architecture you ask? This is how your corporate IT systems are designed, engineered and managed. Another way to look at is how many steps people have to take to access the technology “things” they need to do their day to jobs. If your system architecture is overly complicated to cater for legacy technology, servers or rigid systems the cost and pain for your employees can quickly escalate.

Cybersecurity

It goes without saying, cybersecurity is a risk and cost… However, if you are planning on taking this seriously (and you should, google what happens if you don’t), there is a cost associated. How much it costs is actually an article on its own (linked here) and for the purpose of this article, we will factor in the technical delivery side of secure infrastructure and their associated costs related to IT and Managed Services.

When we talk about technical controls we refer directly to workforce Identity, device, domain, DNS and IT infrastructure cybersecurity alongside typical add-ons like user education, threat detection and vulnerability management.

The key in being cybersecure without the cost is taking into consideration the first three points of this article. If you tech stack is light (not on prem), you have removed technology legacy and have a thoughtful system architecture, the cost of cybersecurity can decrease and provide efficiency gains through centralisation and automation. If you or your provider insist on using on-prem equipment, fixed and ring walled networks, they will incredibly be expensive to buy, maintain and ultimately support. That is before you look at the soon to be required compliance and government pieces or regular vulnerability management, threat detection, response and 24/7 Security monitoring.

Your IT provider

This seems obvious that the choice of your IT provider will determine the cost of your technology but hear me out because while we might all be a bit odd, each has their own speciality, solution and design ethos. The cost of your solution will be reliant on several key characteristics of your provider mentioned in this article – tech stack, design or system ethos, legacy, and cybersecurity. Of course, this can be combined with standard business factors such as pricing, quality, capacity, internal skillsets and resourcing of skilled staff.

If for example your IT provider is fond of fixed network technology such as VPN’s your solutions will be focused on those outcomes, if your provider is using next-generation cloud solution these will affect your solutions and cost outcomes.

Read more about the industry relationships that define your experience with technology here – The truth behind the relationships – IT Services, Vendors and the Customers – Kavira IT

Market trends

As an industry specialising in technology, IT providers are largely shaped by their ability or desire to adapt to market trends. If your provider has tried and true methods, they will deliver a higher quality service but the solution might be based on technology that might have become obsolete. Other provides might automate so much of their service that you feel furlong missing that white glove service. More modern, more automated, older, needs more TLC – find the right fit for you and remember to ask their design ethos.

A note on quality

Quality is the last and most important factor for pricing IT services and is of course the hardest thing to identify for any purchaser of IT services without a technical background. Unfortunately, low quality or high quality does not necessarily determine price. As there are many great providers who keep costs low and terrible providers who charge an arm and a leg.

In the interest of helping people, these red flags could let you know that your provider is giving you a low quality service at a low or high price.

Things like onboarding new users break or are manual.
You have best in market tools, but they were deployed with no feedback from you or the team.
You have no reporting on what your provider is giving in return for your money.
Your provider has no project plans when onboarding or providing other projects.
Your provider cannot explain what they provide you.
You don’t ever hear from your provider unless something breaks.
Your provider contract has no stated deliverables.
Your IT systems have no stated cybersecurity goal – for example Essential 8 Level 1 compliance or does not follow a cybersecurity or IT management framework like ITIL or ITSM.

There are also of course instances where quality is poor and all these things are in place, but by looking out for these red flags you might, you might be able to keep your provider accountable.

So how much does it all cost?

So after you’ve digested all my ramblings, what does it all cost…? Well, here is a diagram! We are basing the prices on market research and
experience bidding on 100’s of IT services contracts. This is not a perfect formula and was created as a guide, there are many variables that go into price and how it works for your business and IT provider.

Technology Stack	Complexity Rating	Estimated Low Range*	Estimated High Range*	Licences costs per user*	Infrastructure licences and costs	Infrastructure Hardware costs
SaaS	Low	$100	$180	$55-85	$0	$0
Public Cloud	Medium-High	$150	$250	$250-350	Starting around $1500 per month	$0
Private Cloud	High	$150	$350	$250-$500	Starting around $3000 per month	$0
On-Prem	High	$150	$350	$100-$250	Starting around $1500 per annum	Starting at $50,000+ every 3-5 years.

*All Prices are per user per month