Costs of Hiring IT In-House vs An MSP

Technology is a big part of any business – from planning business continuity to securing important data in the cloud. But even with how important technology is for a company, most businesses, especially small to mid-sized ones, don’t have their own IT department they can reliably turn to to keep their infrastructure safe. 

The cost of hiring an entire in-house department isn’t always the most cost-effective solution, and with managed service providers on the market, outsourcing your IT needs every month is a more viable option for long-term protection. 

So how much would hiring your own IT department cost compared to an MSP? When starting an IT department, you must pay for hardware, software, data services, and support & maintenance. These factors could cause the budget to bloat. On the other hand, an MSP would offer different pricing schemes that would better suit a growing company or one with evolving needs. 

How Much Should You Spend on IT Services?

Different businesses require different IT solutions. Creating a budget for your business’ IT needs can be difficult since it has multiple components: from acquiring a reliable antivirus system to setting up a reliable remote access network. Because of the scope of cybersecurity and just IT in general, most businesses are uncertain about the specifics of their IT budget. 

American Structurepoint, Inc. recommends at least 4% of the business’ revenue to be allocated for IT needs. But for small businesses, this 4% might not be enough to buy a single endpoint device, much less fund a whole IT department. 

This is where managed service providers come in. MSPs have the skills, tools, and flexibility to work with any business size. They offer pricing models that can adapt to any business.

Preparing for In-House IT: A Budget Breakdown

There’s no denying that technology is crucial for any business size – that’s why many companies are considering creating their own in-house IT departments. It’s easier to just head down the hall and call someone instantly to fix a crashing computer after all.

But the biggest downside to this is that preparing for an in-house IT team isn’t cheap. Aside from hiring an IT expert, there’s also the right equipment and computer models to think about. Here’s a budget breakdown that any business should consider before creating their own IT department:


The budget allocation for hardware includes all the current equipment costs that the company incur, as well as any new additional hardware you’ll be adding in the future. Routine hardware implementations, such as computer upgrades, should also be taken into consideration. Other items included in the hardware category are:

  • Servers
  • Firewalls, Routers, and Switches
  • Warranties, Licenses, and Renewals
  • Cabling

Keeping up with hardware is especially tricky if you’re using machines that aren’t easy to replace. Entire units might have to be upgraded when repairs and other maintenance work don’t fix a certain hardware issue. 


Much like hardware allocation, you must also set a part of the budget for old and new software for the company. Installation and testing of new software on a computer or other devices should be included too. Here are some of the items in the software category:

  • Anti-virus
  • Anti-spam
  • Backup software
  • Licenses and renewals

Support and Maintenance

A part of the budget should also be reserved for the maintenance of the company’s IT environment. This includes all expenses required for user support, including the salary of all IT staff. It also consists of:

  • Costs for external IT consultants
  • Training for IT staff
  • Data network expenses (VPN, ISP links, and WAN connections)
  • Outsourced IT costs like monitoring, patching, spam filtering, etc. (if any)

Backup and Recovery

In case some of the systems malfunction, the business can still function using backup and disaster recovery plans. This category includes software, mirrored data, and other backup solutions.

MSP Pricing Models to Choose From

For businesses that don’t have their own IT team, outsourcing an MSP will take care of their technology concerns. MSP prices usually depend on several factors – the client’s location, business type, competition, and the amount they are willing to pay.

What’s great about hiring MSPs is that they offer different service packages to fit their clients’ needs. Selecting the right plan can help a company save more money in the long run. Here are four of the most common pricing models offered by the majority of MSPs in the industry:

Monitoring Only

This MSP plan is probably the simplest (and most affordable) one a provider can offer. In this model, an MSP will remotely monitor issues in the client’s system. They will alert the company of any issues that might come up, but it must be resolved by the company’s IT team. They can be hired to fix the problem too, but that would require extra fees.

Monitoring only pricing is recommended for businesses that have their own IT department but not the tools required to monitor the network.


For more flexible usage, most businesses opt for per-user services from MSPs. This plan charges the company a monthly flat fee per user. It covers the IT support needed for individual employees, regardless of how many devices an employee uses for the company.

Per-user pricing works best if you want to be connected with employees 24/7 on multiple devices. 


This plan is also simple, flexible, and a lot similar to per-user pricing. A per-device agreement charges a monthly flat fee. But instead of counting users that can use multiple devices, it bills the devices which the MSP monitors. The pricing will depend on the device included in the monitoring – laptop support will cost less than server support.

As the business continues to grow, it’s easy to add more devices to this pricing scheme.


The tiered pricing model allows clients to pick which services they want to select and how many devices will be included in the plan. The MSP will offer a basic service package first and depending on the business’ needs, the services will be upscaled with the right price. 

If you want to be sure that the MSP will provide the exact IT solutions your business needs, tiered pricing is the way to go.

Selecting the Right IT Services for Your Company

For a small business, it might be more ideal to opt for MSP because they provide expert IT solutions with affordable plans that will suit your needs. Choosing the right MSP can be difficult. A provider has to understand the goals of the company to help them get there.

With Abacus, we can guarantee to provide you with the managed services your company needs. We have years of experience when it comes to helping businesses reach their goals by providing expert IT solutions at flexible rates. Reach out to us at (856) 505 6860 to learn more. 

author avatar
The Abacus Blog Team
At Abacus IT, our blog is authored by a team of IT experts with a wealth of experience in various facets of technology. Our primary blog author is a seasoned IT professional with over 20 years of experience in the industry. With a deep understanding of cybersecurity, cloud solutions, network infrastructure, and IT management, our author provides valuable insights and actionable tips to help you optimize your IT operations.

    Share On: