I recently had a conversation with a company that had been paying £40 per hour for I.T. support, it’s important to mention that they were far from happy with the service from their current supplier and that’s why we were having a conversation. But before you start searching online for “cheap business IT support in [insert area here]”
It’s immediately obvious why this arrangement doesn’t work, assuming this current supplier is a one man band and works from home. £40 per hour equates to £48 gross once VAT is added. A five mile travel expense would equate to £4.00 in a sensible vehicle, corporation tax £7.60 per hour. Net profit is therefore £28.40.
Not shameful if you can bill 6 hours a day (accounting for travel time), but the issue is, and we’ve seen this every month for fourteen years. By under pricing your time you need to “sell volume” and thus these suppliers end up rushing jobs, thus letting the customer down.
The figures however look a bit different if there’s office costs or one member of staff, now any I.T. engineer should be on at least £13 per hour but we’ve already established that a “cheap” I.T. supplier is going to cut corners so lets work it out on minimum wage of £7.83, on a 35 hour week the employers contributions are going to be £31.20 a week for Pension and NI contributions and around £115 office costs (for a small office).
This all means that the supplier needs to bill 15 hours a week just to break even, so assuming they are fully booked and billing 6 hours a day Monday to Friday their profit per week is £85.20. Now let me tell you, they are not billing 6 hours a day consistently, it just doesn’t work like that. So the reality is that they are scraping by or as we’ve found with some suppliers loosing money and having to make cost cuts.
All this aside, the best course of action when looking for I.T. support for your business is to build a picture of your needs, the value of your IT equipment and what the cost of not being able to access your systems might be. For the average company with 5 employees company wide downtime costs £75 per hour in labour charges, that’s without factoring delays to proposals and quotes and the loss of business that brings from a quicker response from your competitors. All in all the hourly loss to most companies from downtime is around £150 per hour.
Most companies will provide a 4 hour turnaround (though not guaranteed) on incident support so expect to pay around £70-£80 per hour for reliable support.