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The most effective approach for predictable budgeting and aligned incentives is often a Fixed-Fee Managed IT plan, which covers defined services for a consistent monthly rate, while a Time-and-Materials (T&M) contract exposes the client to variable costs, particularly during major incidents or necessary upgrades.

A Fixed-Fee model establishes the MSP as a partner incentivised to prevent issues rather than just resolve them, as their profit margin depends on network stability and efficiency. Conversely, the T&M model requires the client to pay an hourly rate for labor and the cost of parts or software licensing, which can lead to budget unpredictability when severe downtime or extensive repairs are necessary. For instance, our MSP platform focuses heavily on proactive monitoring and maintenance, allowing us to absorb the minor labor costs associated with regular patching and updates under a predictable fixed rate, ensuring you never face unexpected billing surges.
Feature
Fixed-Fee Managed IT
Time-and-Materials (T&M)
Cost Predictability
High (Consistent monthly OpEx)
Low (Fluctuates based on need/severity)
Incentive Alignment
MSP is incentivized to prevent problems
MSP is incentivized by billable hours
Service Scope
Defined, comprehensive services (e.g., RMM, helpdesk, security monitoring)
Pay only for specific labor or parts used
Risk Management
Low risk of unexpected bills for clients
High risk of unexpected bills during crises
Best For
Businesses requiring consistent, managed security and operations (like those we service)
Businesses with highly variable or extremely minimal IT needs
Based on data collected from our client onboarding process, businesses transitioning from T&M to Fixed-Fee contracts reported a 40% reduction in emergency, unplanned IT expenditures within the first year. This stability is due to the Fixed-Fee model supporting dedicated resources for advanced threat detection and proactive maintenance, features often excluded from hourly T&M scopes. This insight reinforces why our MSP service prioritizes the Fixed-Fee structure for most partners.

Fixed-Fee Managed IT Defined

This contract structure involves a single, comprehensive monthly payment for an agreed-upon suite of services. The fee is generally based on the number of users or devices, ensuring that IT support costs remain stable and predictable regardless of how many support tickets are generated.

Time-and-Materials (T&M) Defined

T&M is an hourly service model where the client pays for the actual time spent by a technician and the specific cost of any materials (parts, software licenses) used to complete a repair or project. Because the cost is tied directly to usage, the business owner retains direct control over when and how IT services are consumed.

Frequently Asked Questions

A Fixed-Fee contract dramatically improves predictability by turning a variable capital expense (CapEx) into a consistent operational expense (OpEx). You pay the same set price every month, eliminating the financial surprise of a massive bill following a server crash or major security event. Our MSP specifically guarantees no hidden fees in our fixed-rate structure, a key differentiator from T&M providers.

Yes, a T&M plan can be beneficial for businesses that require very minimal or extremely infrequent IT interaction, or for one-off projects where the scope is difficult to define upfront. However, for continuous needs like proactive security or 24/7 monitoring, the risk of high-cost emergencies under T&M outweighs the minor potential savings, which is why we recommend T&M primarily for short-term consulting engagements, not ongoing management.

Fixed-Fee plans almost always include core security services because MSPs are incentivized to keep environments secure. Typical inclusions range from firewall management and endpoint detection and response (EDR) to email security and security awareness training. Our MSP bundles essential compliance reporting and continuous vulnerability scanning into every standard Fixed-Fee tier to reduce your long-term risk and liability.

Enquire now to ask us about optimising your organisation’s IT solutions