Should You Pay for Your IT Support Services On A Monthly Retainer or by the Hour? 

One decision could mean the difference between saving thousands of dollars on your IT bill and spending more than necessary and increasing your overhead bills. 

It’s the choice of the payment model. 

As a small business owner, you know that DIYing your business’s IT is not always the best idea, so the decision to hire outside IT support is a no-brainer. 

What is not a no-brainer, however, is deciding on how you are going to pay the IT guys. 

Most small business IT services near me offer two options. 

One: You could pay them a monthly retainer. In return, you get a suite of services that are included in the contract. 

Or two: you could work with the pay-as-you-go or PAYG model and pay them by the hour.

Deciding on the right payment model is crucial. While it may seem like a simple decision, in reality, it is more nuanced than you think. 

Both payment models have their pros and cons. What may work well for one business may not support the other all that well. 

Let’s quickly walk you through how the two payment models compare against one another for some of the most important business variables. 

Budget-friendliness

You are a small business owner. Of course, you want to ensure everything you do fits the budget and helps you save some dollars. 

So thinking about what payment model would help you save the most money is a basic question you should be asking. 

The answer, unfortunately, is not simple. 

There are clients – business owners – who chose to go from paying a flat rate on a monthly retainer contract to paying by the hour and ended up paying over 3x the monthly retainer amount every month. 

And then there are businesses that pay big amounts on an hourly contract early on, only for their bills to go down once the systems and networks are stabilized and running smoothly. 

So, budget-friendliness really comes down to your business, and the level of IT support it needs. 

An hourly contract is more cost-effective for businesses with minimal IT needs. You may get a big invoice if something happens, like a ransomware attack or a hacking event, but normally, your IT bill would stay low. 

If, however, your IT issues start to get prolific and you find your team calling the IT guys more frequently, then the hourly bill may quickly add up, and this model may end up being more cost-intensive. 

In this case, a monthly retainer model may become more budget-friendly. 

There have been instances where the IT guys were putting in more than 30 hours of work every month, but the business owners got to pay the equivalent of 10 or 20 hours only because they chose the retainer model. 

Billing Complexity  

You are a busy business owner. The last thing you want is one more complicated bill that you have to track, reconcile, and pay. 

As cost-effective as the PAYG model may be for some business owners, it has this one undeniable downside:  The billing can vary quite a bit from month to month as you  “only pay for what you use”. 

On the contrary, the monthly retainer model makes for simpler budgeting because you know exactly what you have to pay every month, regardless of how many hours you use. 

Long-term Commitment 

When you sign a monthly retainer contract, you are in for a longer time commitment. This sometimes works in your favor, especially when you need urgent, prioritized support. But other times, when, for instance, you want to switch providers, the contract ties you down and takes the flexibility away. 

That’s not the case when you pay by the hour. Working with a PAYG model allows more flexibility in terms of switching service providers. There’s no long-term commitment involved. You can work with a provider for as long as you want and be on your way when you are done. 

Scope of Work

The PAYG model allows you to enjoy more flexibility when it comes to the scope of your work as well. 

When you sign a monthly retainer contract, you agree to pay for a suite of services. If you need a service that is not included in the contract, you’ll have to pay more money on top of the agreed-upon retainer. 

This is not the case with the hourly contract. 

When paying by the hour, you can ask the provider for any service you need while only paying for the time they have spent doing what you requested. 

Proactive vs Reactive Approach

In most business scenarios, it is best to have a proactive approach, especially when it comes to your business’s IT infrastructure. 

The PAYG model, as appealing as it may seem to some business owners, offers a more reactive approach. 

You often end up calling for support after an issue has popped up and disrupted business continuity. 

This risks increased downtime and threatens to reduce profits. 

With a typical monthly retainer contract, you have your IT team working on your computers regularly, updating them when needed, doing the required maintenance, and ensuring proper security and backup in case the unthinkable happens. 

That is, unless you choose to keep a few computers excluded from the serviced network. 

One business decided to save some money and took a few “less used” computers out of the contract, thinking they wouldn’t do any harm. 

Guess what? 

Those very computers got infected and compromised much of the network. 

It took a lot of time and money to undo the consequences of the attack and resume business continuity.

Working with the Right IT Team is Crucial 

When you order off a menu, you pay for everything you order. In a buffet, though, you get to enjoy a variety of dishes while paying only a flat fee. And this variety usually covers everything you need. Unless you start craving something not on the menu like a Mexican steak at a sushi buffet. Then you may have to pay the additional cost. 

The same is the case for paying by the hour vs working with a monthly retainer. 

Both these models work for different businesses. Many small businesses with minimal IT requirements get better savings from the PAYG model. The bigger businesses that rely more heavily on their tech setup manage to save more dollars by hiring small business IT companies near me on a monthly retainer. 

So, the final decision comes down to your business’s scale, scope, goals, and requirements. But regardless of the payment model, you will experience real benefits only on one condition: 

If the IT team is experienced and qualified to offer the support your business needs. 

Landau Consulting, a small business computer support in NJ, offers tailored, expert-led IT services to businesses like yours. 

Your business needs expert-backed IT support to survive in the modern business landscape. Landau Consulting offers end-to-end services to ensure your business can have all the resources to match the pace of fast-moving business technology. 

You can learn more about Landau Consulting and its IT services at https://landauconsulting.com/it-services/ or contact them directly at https://landauconsulting.com/contact/. 

Read more of these infographics at the Landau Consulting blog right here: https://landauconsulting.com/blog/