Computer Support Rates - When Cheap Really Isn't

What's in a labor rate?  Why are some IT companies more expensive than others?  Our company is neither the most expensive in our market nor the cheapest.  Some companies lead with a low price but then tend to take longer to finish tasks than others.  Comparing by hourly rates alone can be very misleading.

Recently we ran into an instance where we were asked to replace another IT support company charging much less than what we charge on an hourly basis.  The client had about 75 PCs and 4 servers along with the standard mix of peripherals that needed support.  Based upon our experience with similar organizations of that size in that industry I provided an estimate for the number of hours we'd need to support them annually.  My estimate was met with stunned silence in the meeting until finally the client admitted that the old support company was billing them for 5 times that number of hours.  Our hourly rate was going to be higher what the old guys charged but we were still going to save the client thousands of dollars per year.

Rates don't mean as much as many people think.  It's the bottom line that matters.  What's cheaper?  A $75/hour tech that takes 3 hours to perform a job or a $100/hour tech that does it in 1 hour?  Some IT companies have a reputation for taking too long and billing for every minute no matter how long it takes.  For over 25 years, we've had a "Fair and Reasonable Promise" for our clients.  We tell you how long a job will take before we start and we stick to our estimate.  You shouldn't have to pay a premium because a tech is having a bad day and takes longer than expected.

How can you avoid the rate disparity debate?  Define what you want done thoroughly and ask for a fixed price (also called a Flat Fee job).  That should even out the playing field for vendors with different rates.  After all, isn't that what you really care about?  The Bottom Line, right?