Had a call last week from a CEO who asked me straight up: “How much is this going to cost me? Is it going to cost me one employee?”

Interesting way to think about it.

I told him, “Well, if you put it in those terms, you’re getting one employee but you’re actually getting about twenty people. Our operations team, help desk, account managers, project specialists. For the same cost as hiring one internal IT person.”

He paused. “And I don’t have to deal with payroll, benefits, training, any of that?”

“Nope. Plus we bring all our own tools.”

“What do you mean?”

“When you hire one person for internal IT, you get the person. Maybe they’re good, maybe they’re not. But they don’t come with monitoring software, security tools, backup systems, or any of the expensive stuff they need to actually do the job. You have to buy all that separately.”

Long pause. “Can you come visit us in a couple weeks?”

That conversation happens more often than you’d think.

The Hidden Costs Nobody Talks About

Most business owners think about IT costs wrong. They see the monthly MSP bill and compare it to what they’d pay one IT person. But that’s not really apples to apples.

What You Actually Get When You Hire Someone

Let’s say you hire an IT person for $65,000 a year. Seems reasonable, right?

Here’s what you actually get: One person. With their specific skill set. Their specific experience. Their specific gaps in knowledge.

And when they’re sick? When they take vacation? When they quit? You’re on your own.

Had a manufacturing client tell me about their previous internal IT guy. Good person, knew Windows servers pretty well. But when they needed help with their phone system, he was lost. Network security? He did his best, but it wasn’t really his thing.

So they ended up hiring consultants anyway. For the phone system. For security. For the specialized stuff their one IT person couldn’t handle.

The Tool Problem

This is the part that kills me. You hire an IT person, and now you need to buy them tools to do their job.

Monitoring software so they know when servers are having problems? That’s $200-300 a month minimum. Backup solution that actually works? Another $150-500 depending on how much data you have. Security tools, patch management, remote access software, ticketing system…

Add it up. You’re looking at $2,000-4,000 a month just for the tools. Before you even pay the person.

We bring all that stuff. It’s built into what we do.

What MSPs Actually Cost (The Real Numbers)

Most MSPs charge somewhere between $100-200 per user per month. Depends on what you need, how complex your setup is, what industry you’re in.

Let’s say you’ve got 25 people and you’re paying $150 per user. That’s $3,750 a month.

For that, you get:

  • Help desk coverage during business hours (some do 24/7)
  • All the monitoring and management tools
  • Security software and management
  • Backup and disaster recovery
  • Someone who knows what they’re doing
  • Account management
  • Project work
  • Vendor management

Compare that to hiring one internal person:

  • $65,000 salary + benefits (probably $75,000 total)
  • $30,000-50,000 a year for tools and software
  • No coverage when they’re out
  • Limited expertise in specialized areas
  • No backup when they leave

Do the math. MSP costs about $45,000 a year for 25 users. Internal person costs $100,000+ and you get way less coverage.

Wondering if managed IT makes financial sense for your business? Let’s break down what you’re actually paying for.

Where Internal IT Makes Sense

Look, I’m not trying to tell you managed services are always the answer. Sometimes internal IT makes perfect sense.

When You’re Big Enough

If you’ve got 200+ employees, you can probably afford a real IT department. Multiple people with different specialties. Budget for proper tools. Processes that don’t fall apart when someone quits.

When IT Is Your Business

Software company? Tech startup? Your IT requirements are probably too specific and too critical to outsource completely.

When You Have Weird Requirements

Some manufacturing environments have equipment that needs very specific IT support. Legacy systems that require specialized knowledge. Compliance requirements that need dedicated attention.

But for most small businesses? The 20-100 employee range? Managed services usually make more sense.

The Hybrid Approach (What Most People Actually End Up Doing)

Here’s what we see a lot: Company hires an internal IT person, realizes they can’t handle everything, starts hiring consultants for specific projects.

Or they have an MSP for day-to-day stuff, but keep someone internal for user support and vendor management.

Both can work. Depends on your situation.

But if you’re going hybrid, make sure everyone knows what they’re responsible for. Nothing worse than having a problem and your internal person and your MSP both thinking the other one should handle it.

The Questions You Should Actually Ask

Forget about per-user pricing for a minute. Here are the questions that actually matter:

“What happens when something breaks at 2 AM?”

If it’s critical, someone needs to be available. Most small businesses can’t afford 24/7 internal coverage.

“Who handles vendor relationships?”

Your internet provider, phone company, software vendors, hardware warranties. Someone needs to manage all that. With internal IT, it’s usually your IT person spending half their time on vendor calls instead of actually fixing things.

“What’s your plan when your IT person quits?”

Because they will. IT people change jobs. A lot. What’s your transition plan? How long will it take to find someone new? What happens to your systems in the meantime?

“How do you handle specialized projects?”

Server migration, security assessment, compliance audit. Does your internal person have experience with that stuff? If not, you’re hiring consultants anyway.

The Real Calculation

Stop thinking about it as “employee vs MSP.” Think about it as “what does IT actually cost me when I factor in everything?”

Internal IT:

  • Salary and benefits
  • Tools and software
  • Training and certification
  • Recruitment and turnover costs
  • Consultant fees for specialized work
  • Opportunity cost when things don’t get done

Managed services:

  • Monthly fee
  • That’s pretty much it

Most businesses are surprised when they actually add up all the hidden costs of internal IT.

What About Control?

“But if I have my own IT person, I have more control.”

Do you though?

You have control over one person. Who may or may not know how to handle your specific problem. Who may or may not be available when you need them.

With a good MSP, you have access to a whole team of people with different specialties. Account manager who knows your business. Help desk people who can fix immediate problems. Project team for bigger stuff.

And if someone doesn’t work out? They replace them. You don’t have to go through the whole hiring process again.

Making the Decision

Look, this isn’t really about money. I mean, it is, but it’s not just about money.

It’s about what makes sense for your business. How critical is IT to what you do? How much can you afford to spend? What happens if something goes wrong?

Some businesses need the control and specialization that comes with internal IT. Most don’t.

Most small businesses just need IT that works reliably without consuming all their time and attention.

The best IT solution is the one you never have to think about. Because it just works. Because someone else is handling all the details. Because you can focus on running your business instead of managing servers.

That’s harder to put a price on. But it’s usually worth more than whatever you’re saving by doing it yourself.