MSP Teams in the SMB
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@Carnival-Boy said in MSP Teams in the SMB:
I dunno, I've never ran the figures, but I'm not sure you have either so who can say MSPs are always better?
Of course we have, I'm surprised anyone hasn't. What would make you consider someone internally if running the numbers wasn't what made it make sense? Basic business practice is to run the numbers. I know our clients do all the time and can't beat what we cost. Why would you think we hadn't run the numbers?
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@Carnival-Boy said in MSP Teams in the SMB:
By employing internal IT staff, I'm cutting out the middle-man, and handling the expenses and management myself.
Yes, so you are handling expenses and management yourself. Are those things in your (company's) wheelhouse? Unless you are a payroll firm, handling payroll internally is not a benefit, that's why the Fortune 1000 firms try to avoid that. Is IT management in your (company's) wheelhouse? Unless that's your business (which would make you an MSP) then that's a negative, and generally a pretty huge one, to take on.
The middle man that you are cutting out is exactly the place where the value is. It's all the same functions that you have internally, so the idea that it is leaner to cut out the middle man and bring someone on in house is a false value center, each of those functions internally should be outsourced individually for maximum benefit (unless they ARE your business) so either you've eliminated more middle men or, more likely, taken on more cost and overhead - basically added middle men. Middle men are more likely internal than external.
How do you provide career growth, mentoring, training, variety, cross discipline support, scale and so forth with internal staff?
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@Carnival-Boy said in MSP Teams in the SMB:
My figures were purely an example. I'm interested to hear real world examples. When I worked for an IT company (many years ago), I was earning the company around $1,000 per day, but getting paid around $100.
$1,000 per day? That's $125/hr in profits. That's enormous. You've worked for some pretty high dollar companies. You are way, way outside of our range in this community. I've never heard of any MSP that earns that much, ever. Maybe the EDPs and IGSs of the world can make that because they change $500/hr. But even there I've not seen it, I'm just guessing. What were you doing that made your clients willing to pay so much? And why did they keep paying, what did you do that was worth so much?
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$1000/day profit implies billing rates of over $300... that's $175 for expenses and $125 for profit, per hour, and requires 8 hours every day to do it, so implies $450 - $600 / hour to keep that rate up. I can tell you that in the US, no MSP is even remotely thinking in those terms.
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@Carnival-Boy said in MSP Teams in the SMB:
...but getting paid around $100.
I assume that you mean paid around $100/hr, not per day.
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@scottalanmiller said in MSP Teams in the SMB:
@Carnival-Boy said in MSP Teams in the SMB:
My figures were purely an example. I'm interested to hear real world examples. When I worked for an IT company (many years ago), I was earning the company around $1,000 per day, but getting paid around $100.
$1,000 per day? That's $125/hr in profits. That's enormous. You've worked for some pretty high dollar companies. You are way, way outside of our range in this community. I've never heard of any MSP that earns that much, ever. Maybe the EDPs and IGSs of the world can make that because they change $500/hr. But even there I've not seen it, I'm just guessing. What were you doing that made your clients willing to pay so much? And why did they keep paying, what did you do that was worth so much?
and why were you personally worth so little? $100/day = 12.50/hr WTH?
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@scottalanmiller said in MSP Teams in the SMB:
@Carnival-Boy said in MSP Teams in the SMB:
...but getting paid around $100.
I assume that you mean paid around $100/hr, not per day.
If he did, and he worked 8 hours, that would leave the company with only $200 of overhead money...
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@Dashrender said in MSP Teams in the SMB:
@scottalanmiller said in MSP Teams in the SMB:
@Carnival-Boy said in MSP Teams in the SMB:
...but getting paid around $100.
I assume that you mean paid around $100/hr, not per day.
If he did, and he worked 8 hours, that would leave the company with only $200 of overhead money...
He said their profits were $1,000/day, not their billing. So no matter what he was paid, they were making $125/hr on top of all expenses, as I understood it.
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@scottalanmiller said in MSP Teams in the SMB:
@Dashrender said in MSP Teams in the SMB:
@scottalanmiller said in MSP Teams in the SMB:
@Carnival-Boy said in MSP Teams in the SMB:
...but getting paid around $100.
I assume that you mean paid around $100/hr, not per day.
If he did, and he worked 8 hours, that would leave the company with only $200 of overhead money...
He said their profits were $1,000/day, not their billing. So no matter what he was paid, they were making $125/hr on top of all expenses, as I understood it.
@Carnival-Boy said in MSP Teams in the SMB:
I was earning the company around $1,000 per day, but getting paid around $100.
Awww.. so he did, I read it that the company was sending a bill for $1000/day.
So what was the actual bill @Carnival-Boy was it $1100, or $1800 or was it $1000, and you got paid $100 of that?
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If the company was only charging $125/hr, or $1,000 for an entire day, as a total number, that's not all that much at all. That's Best Buy / Geek Squad numbers. They literally charge around $125/hr and pay around $12.50 / hour. But they have loads of costs on top of that, so their profits are nowhere near $900. There is a base overhead of costs for insurance, billing, taxes, etc. If $125/hr is the total amount, that owner was not making much money. Some, certainly, but not a lot.
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@scottalanmiller said in MSP Teams in the SMB:
If the company was only charging $125/hr, or $1,000 for an entire day, as a total number, that's not all that much at all. That's Best Buy / Geek Squad numbers. They literally charge around $125/hr and pay around $12.50 / hour. But they have loads of costs on top of that, so their profits are nowhere near $900. There is a base overhead of costs for insurance, billing, taxes, etc. If $125/hr is the total amount, that owner was not making much money. Some, certainly, but not a lot.
Exactly - so I'm just wanting to make sure @Carnival-Boy understands that just because he sees a huge (to him) bill going to the client, and he's getting a small portion of it, that the company still has a ton of overhead costs that that money has to pay for.
Let's not forget that you probably get paid wither you are working on a client job or not, so they need to charge more so they have money left over to pay you in the time you're not billing.
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$1000 revenue, not profit.
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@Carnival-Boy said in MSP Teams in the SMB:
$1000 revenue, not profit.
$1,000 in revenue is nothing, no one was getting rich off of that. That's $125/hr.
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I disagree, but let's not get bogged down in specific numbers, it was a long time ago and costs are very different between the US and Europe.
Does anyone else on ML work for an SMB and employ internal IT staff or am I the only one? I'd like some support
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@Carnival-Boy said in MSP Teams in the SMB:
Does anyone else on ML work for an SMB and employ internal IT staff or am I the only one? I'd like some support
Most everyone IS the internal staff, rather than the hirer of that staff, you are somewhat unique there, very few of them are managers or hirers. But they don't want their numbers being run against an MSP
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@Carnival-Boy said in MSP Teams in the SMB:
I disagree, but let's not get bogged down in specific numbers, it was a long time ago and costs are very different between the US and Europe.
Without those numbers no one can really have a real discussion.
Does anyone else on ML work for an SMB and employ internal IT staff or am I the only one? I'd like some support
I work for a SMB and I am an internal IT staff member - I'm the classic one man IT shop.
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And do you think you offer good value to your company or do you think they'd be better off outsourcing your position?
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If someone has internal staff and wants to do an MSP cost comparison, that would be interesting. However it is SUPER hard to do unless you want to do a direct replacement, which we have done before and saved the company money because they couldn't hire the same quality of people that we could as an MSP because we have better career prospects, because an MSP works totally differently, needs to assess how the internal staff is being used inefficiently and generally is asked to do drastically more than internal IT was asked to do. So the costs often go up, because much more work is being done.
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@scottalanmiller said in MSP Teams in the SMB:
If someone has internal staff and wants to do an MSP cost comparison, that would be interesting. However it is SUPER hard to do unless you want to do a direct replacement, which we have done before and saved the company money because they couldn't hire the same quality of people that we could as an MSP because we have better career prospects, because an MSP works totally differently, needs to assess how the internal staff is being used inefficiently and generally is asked to do drastically more than internal IT was asked to do. So the costs often go up, because much more work is being done.
Exactly.
Also companies that employee MSPs typically understand the importance of IT, and have a better chance that they will do things right. Of course this requires that they choose a good MSP, because as much as a good MSP can help, a bad one can kill their company. -
@Carnival-Boy said in MSP Teams in the SMB:
And do you think you offer good value to your company or do you think they'd be better off outsourcing your position?
I'd argue that we can prove this in this simple way...
His position could be outsourced to an MSP. The customer could request him back as a full time resource. His cost to the company would be essentially the same, but with the benefit of the MSP infrastructure. No real change in cost, but with improvement in working arrangement. Any additional variation made to that, moving him to part time, bringing in other resources, would all be done solely because they were evaluated as being additionally beneficial.
Basically, if you need traditional resources, MSPs can do that as well as in house staffing (we've proven this in the real world, it's dollar for dollar the same) but the moment you need anything different than that, MSPs offer value you can't get any other way. So it's always break even... or better.
