How to Avoid Being 'Nickel and Dimed'

We have all heard the saying “getting nickel-and-dimed” in regards to being charged for small items associated with a larger purchase. The statement is a sage observation. However, it sets you on a path to underestimating the impact of unbudgeted costs.

When the term was first coined in the early 1940’s, it was expensive to get nickel-and-dimed by a vendor.  So let’s do a simple comparison of the term then and what it means in today’s time.

In the 1940’s you could buy a hotdog, a 12 ounce Pepsi, or a loaf of bread for 5 cents.  If you wanted to buy a loaf of bread, a hotdog or a Pepsi today, you would spend a quite a bit more money. To be factual, a nickel in 1940 is equivalent to $.84 today and a dime is worth a $1.68. The value of a nickel and dime gets more distorted because the cost of goods has increased dramatically. You cannot buy a loaf of bread for $.84 today.  

In this respect, the term sets a dangerous pattern of thinking in front of you.  To avoid getting nickel-and-dimed today, you should try to place a monetary value set in today’s market so that you can get a better idea of what you are about to buy into.  When you are trying to find a Managed IT Service (MSP) for your small to medium business, this way of thinking can help you understand the IT Provider’s value.

It is important to understand that you will only get what you pay for. Everything else is considered “additional charges”, the nickel-and-dime of the IT Vendor. 

The first questions to ask yourself when evaluating a Managed Service Provider for your business, is “what does your business need from the relationship and how much of it is included in the MSP’s contract”. 

Everything you forget can easily become a nickel-and-dime situation for your SMB Budget. This can be a costly mistake and some IT Service providers make a great deal of extra revenue from this behavior.  Many consider this a revenue stream in and of itself. Be sure to ask what is covered and what is not in your agreement. 

The MSP should know exactly what they do and do not cover in a service contract.

As a comparison, imagine you have your own IT employee and you decide you want a faster video card for your computer.  You relay your needs to the IT person, they specify the required part, purchase it and install it.  You are up and going for the cost of the video card and the cost of the employee’s time. 

Many MSP’s will provide the same service – installing a video card in a laptop - but they will also charge you for the site visit, the time needed to install the video card, and an upcharge for the new card.  In this case, the budget is blown and all you wanted was a faster video card. 

This is a small example that would not be nearly as costly as a more severe issue – say a network outage. 

It is very important to make sure that your MSP choice is not one of the companies that look for ways to upcharge your account.  You cannot make this determination by price, but rather you can make the choice based on SLA’s, Contract Coverage, and equipment plans.

View all blog posts »