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How to calculate IT support costs?

How to calculate IT support costs?

In today's fast-paced digital world, many companies not only wrestle with the question of why IT support is important but also how to improve IT support so it can be leveraged to its fullest potential. However, good IT support doesn’t come cheap. 


IT costs can be a significant portion of a company’s operating expenses. When improving IT support services, business owners and decision-makers need to be mindful of the total cost of ownership. This figure includes all direct and indirect costs incurred throughout an IT component's lifecycle, from acquisition and installation through management and support to its end-of-life retirement and replacement.


Here’s a guide from Xvand, a leading IT services company in Houston, about how to evaluate IT support costs:    


What Are the Costs Associated With IT Support? 

Direct Costs

These are costs directly associated with running your IT support group, such as hardware and software purchases, salaries for IT staff, the cost of the network infrastructure, and any cloud or subscription services. These are tangible expenses that are easier to track and manage.

Indirect Costs 

These costs are not directly billed but are associated with IT operations, such as the time employees spend on IT support-related tasks that are not part of their primary role, the cost of productivity loss during system downtimes, or the cost related to data breaches and security issues.

Future Costs

This includes planned upgrades, system replacements, and scalability as the company grows. It's vital to forecast these expenses in your IT budgeting to avoid unexpected costs down the line.


Costs to Consider When Maintaining Support Systems In-House

Some of the detailed line items to include in a budget for in-house IT support include:

Salaries and Benefits

This is often the largest expense. It includes the wages for IT managers, administrators, specialists, and any other technical personnel needed to provide support services. In addition to salaries, businesses need to provide benefits for full-time employees, including health insurance, retirement contributions, paid time off, etc.

Recruitment and Training

Think about the costs associated with advertising job openings, conducting interviews, and onboarding new employees. Costs for ongoing training to keep your IT support team updated with the latest technologies, industry trends, certifications, and courses are also included.

Infrastructure, Equipment, and Software

Expenses related to maintaining a secure, stable, and scalable IT infrastructure need to be considered. These might include network setups, data centers, and server rooms, to name a few. You need to add in the cost of computers, servers, networking hardware, and other equipment necessary to provide support to your internal and/or external customers. 

Take into account software costs, upgrading software licenses, and periodic hardware upgrades. Don’t overlook implementing and maintaining robust cybersecurity measures, including firewalls, antivirus software, encryption, and other security tools.


Should You Have an In-house IT Support Team or Outsource?

One potential advantage of in-house IT support is the ability to better control costs. If your business requires a high level of IT support, having a dedicated team on the payroll could be more cost-effective in the long run than paying hourly rates or recurring fees to an external provider. 


An in-house team can also prioritize tasks based on the organization's needs and demands, saving money associated with critical operations and downtime. That said, outsourcing IT support can be a more cost-effective solution for small to medium-sized businesses or those with less complex IT systems. 


With outsourcing, you can avoid the costs associated with hiring full-time employees, such as salaries, benefits, and training. You also have the flexibility to pay only for the services you need, whether on a project basis or as a fixed monthly fee. 


This type of arrangement allows for predictable budgeting. Plus, because IT service providers work with various clients, they have broader experience and can often resolve issues more efficiently, saving time and money.


External IT Support Cost Structures 

The cost of IT support from an external provider will depend on the business model, size, and specific needs. Here are a few common methods:

Per User

This is a straightforward method where you pay a certain amount for each user (or device) that will be supported. This is often used by businesses with employees who use one or more devices for work.

Per Incident

In this model, the business pays for each support issue. This can be a good approach for companies with infrequent IT issues, but it can get expensive for businesses with frequent technical problems.

Block Hours 

IT providers offer a certain number of prepaid hours that can be used during a designated period. The unused hours may roll over or be lost.

Managed Services 

This model provides unlimited IT support for a fixed monthly fee. This includes round-the-clock monitoring of systems, preventive maintenance, and fast response times.

Value-Based Pricing 

This model charges based on the value provided to the company rather than the number of hours worked. For example, if an IT service helps a company increase its revenue, it may charge a percentage of the increased profit.

Project-Based Fee Structure

If a company needs IT support for a specific project, it may be charged based on its scope and duration.


Get Affordable IT Support with Xvand

Are you feeling overwhelmed by escalating IT support costs? Take control by outsourcing support activities to Xvand. Enjoy top-tier services without the overhead costs of an in-house team!


Andrey Sherman

Andrey Sherman

Andrey Sherman serves as Xvand’s vice president of technology and is one of the company’s co-founders. He is the leading architect of the Xvand system.


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