Apr 06, 2016
Pricing Made MSPeasy: 3 Simple Steps
If you’re an MSP struggling to develop a pricing strategy, then you’ve come to the right place. It doesn’t have to be trial and error. Instead, we’ve compiled some incredible resources to make it nice and MSPeasy for you with a few simple points.
Delivering managed services is all about making the margins you want. So, it is important to take a hard look at your own costs first when developing a pricing strategy. Once you understand your own costs, you can begin to think about what you will charge for services. MSPs use a variety of pricing strategies today, and yours will ultimately be dictated by your business’ specific needs. Per-user or per-device pricing is the most popular method, while others opt for fixed-price models or a hybrid of the two. There are also some newer pricing models emerging that may make sense for your company. Regardless of the structure you choose, there are many factors to consider.
MSP’s expenses typically fall into three categories: technology costs, staffing costs and overhead. Technology costs will vary based on the services you provide and the vendors you partner with. Staffing costs are important as well. When calculating these costs, you have to account for salaries, insurance costs, paid time off, and 401k or retirement plans. Lastly, look at the remaining business expenses. These can include rent, utilities, taxes, office supplies, etc.
Once you understand your own expenses, look at costs associated with particular clients. This starts with number of users, amount of data and number of servers. Support costs can vary widely from client to client depending on their specific needs.
Basing your pricing structure on the rates offered by your competitors is dangerous because it doesn’t take your own personal costs into consideration. Your costs may be higher than a competitor’s, requiring you to charge more for your services in order to make a profit. If two MSPs offer the same services, many customers will compare the two and choose the service that is cheaper. So, you also need to carefully consider how to differentiate your business from your competition and demonstrate the value of your services.
For more information on how you can determine the best pricing model for your needs, download our latest eBook, Pricing Made MSPeasy.