June 16, 2016
Pricing Made MSPeasy: How To Consider Client Needs
As an MSP, you must first understand your own expenses. The next step is to look at costs associated with particular clients. This starts with the number of users, amount of data, number of servers, but, support costs can vary widely from client to client depending on their specific needs. Jordi Tejero, President of Cape Coral, FL-based CRS Technology Consultants, said this is one of the factors he considers when determining markup over hard costs.
“Our pricing starts with a fixed rate of $62 an hour, which is 1/22 of our total operating cost—the total cost per hour per CRS employee,” said Tejero. “From there, prices are marked up between 30 perecent and 50 percent.” To determine the exact markup rate, Tejero said that he considers a variety of factors. “Non-profits and low-risk customers that have been with us for a long time might get a 30 percent markup,” he said. “New clients represent a higher risk because so much is unknown. Or clients that have very complex IT needs. These represent a higher risk to CRS, so the markup is higher.”
The technology a customer has in place also has an impact on the effort it takes to support them. “Performing a network assessment when evaluating a client can help determine costs associated with older technology,” said Jeff Cohn, President of Sage Computer Associates. “It also presents an opportunity to recommend more appropriate technology.”
Many shops offer discounted pricing on new technology as a way to get in the door with the customer and establish a relationship. On the surface this may sound like a good idea, but when you offer a discount at the outset some customers may expect discounted pricing in the future. Discounts should probably be reserved for trusted, long-time customers, and even then should be approached with caution.
Tejero said that one-off projects outside of a monthly agreement with a customer, such as installing new technology, are billed separately. “Capital projects, which are projects that require more than eight consecutive hours of CRS time, are billed separately, as is after-hours support,” he said. “After hours is billed at a flat rate of $195 an hour. This is split equally between each employee to incentivize people to work additional hours when necessary.”
Depending on your clients, you may even be able to plan for/predict afterhours work. For example, Cohn said that Sage has a number of clients in the accounting field that require additional support during tax season. Finally, both Tejero and Cohn noted the importance of clearly stating what is and is not covered in your customer agreement to ensure that discussions about additional fees are straightforward.
Every MSP prices their services differently. Some have an all-you-can-eat model, while others opt for break-fix or a la carte. So what pricing model should you choose? For more information on all things pricing for MSPs, download our eBook, Pricing Made MSPeasy.