Billing model for small IT support Company....

[aboardandafish]

Greetings. My first post. Found this interesting forum via google. Thanks for having me. :)

Ok, here's situation. I've been doing small business support for 10 years now on the side. Working a regular tech job as well. I'm tired of working for anyone else. Always have billed 'hourly', but that doesn't seem sustaining doing that full time. I have one customer on a monthly basis. My question is...to come up with a model that I can charge current and new customers for based on annual service. Here's an example of where I think I'm getting the short end of the stick. I have one customer with 1 server, store pos system with 2 registers, 20 or so pc's. During a year where there isn't alot of upgrades, breaks, and whatnot, I might only bill them 4 or 5k for the entire year. To me, it seems as thought the IT end of the business is worth more than 1/4 of what someone cleaning the floors is worth. No offense to floor cleaners. Does anyone have something they use in general like this?

Thoughts greatly appreciated.
Thanks,
Bill

[BitBlt]

I won't presume to know enough about your specific situation to give you specific advice. What I will offer is other scenarios. Choose the one that makes sense to you.

A floor sweeper, as you have mentioned, charges by the hour. He automatically limits the amount he can earn by the number of hours he has to work.

An IT guy working for a company is usually on salary, where it doesn't matter how long or hard he works. He always gets paid the same.

A plumber usually charges by the hour, "plus parts and other expenses". In order to make his money, he might do the diagnosing of the problem or job himself, then hire others to do the "grunt work" while he goes out to find more work.

A construction contractor usually charges by the job. He creates a bid, then if he wins the bidding, makes the necessary arrangements to acquire materials and perform the work. In many cases it's flat-rate, with provisos for unusual situations such as acts-of-God, etc. He makes his money by bringing the job in ahead of schedule, or by saving money on materials or hiring less expensive labor to do the work.

An IT consulting firm usually has people who FIND the work, people who DO the work, and people who KEEP TRACK of the work. Usually there are way more people to actually DO work, but while they are doing their job, someone is out finding MORE work. That way there's always money coming in from somewhere.

When a lawyer charges, he either charges by the hour, by the service or he charges a "retainer" to make himself available to provide service as needed. Each of these methods has its own place; that is why a lawyer uses all three in different cases.

As you can see, each of these scenarios is quite different. So the question is, which one fits your situation best?

Good luck to you!

[ChrisPadgham]

you are in part thinking of this incorrectly. You are providing two services to your clients; the obvious one, providing your manpower billed on a time basis. You are also providing your availability (or response time if you like), that is your customers have developed an expectation that if they contact you for support that you will respond in a certain time. This expectation is potentially costing you money because there may be other opportunities that arise that you will not be able to take because of these arrangements. So, let's say they give you no work and you have turned down other opportunities in case they needed you, you have lost both ways.

You need to consider a annual support agreement with your clients where they pay a certain amount to guarantee your availability. As part of this agreement they will get the first X hours of support for no additional cost (up to the value of the retainer) then at an agreed hourly rate after that.

This will allow you some ability to plan/predict your income for future periods.