Pricing and Packaging for Profit

July 25, 2019

Pricing and Packaging for Profit

By Annie Stroud

As a managed service provider (MSP), you know that prices need to be high enough to drive profits, while still being competitive in the market. However, MSPs struggle to develop a pricing strategy that works and some may not even realise their pricing model is not as great as it could be. In our latest eBook, How to be an MSP: 7 Steps to Success, we take a look at the seven strategies you need, to make sure your MSP business is running efficiently, including how to conquer pricing! Why not take a look at our second step, to find out how the right pricing will accelerate your business! 

Step Two: Pricing and Packaging for Profit

While offering more affordable pricing sounds simple enough, MSPs must avoid dropping prices too low in order to profit. So how can MSPs achieve this? Start by looking at your own costs when developing your pricing strategy. Once you understand your operational costs, you can begin to think about what you can charge for services.

Successful MSPs implement pricing that’s straightforward and easy for SMBs to understand. One popular pricing strategy for MSPs is to bundle solutions and services into three tiers. Tier 1 would be a basic package like a BCDR solution and basic computer maintenance, for example. Tier 2 could then include a BCDR solution as well as networking. Tier 3 could then include a combination of packages one and two, plus regular testing and patching. For MSPs, make sure your prices are high enough to drive profits (again, considering those operational costs first), while still being competitive in the market.

A bundle can be whatever you want it to be. Bundling services gives MSPs an opportunity to demonstrate the value of their services in a straightforward way, that even the most non-technical prospect can understand.

Others may prefer to offer services in an à la carte manner, meaning that they allow their clients to select which part of the services they would like to take. This can make their business more appealing to clients who aren’t ready to commit to a monthly, recurring fee. 

Regardless of the approach you take, you need to be able to quickly and effectively communicate the value of your services. For some, bundling and standardisation are key to delivering excellent service. For others, giving clients a greater level of flexibility and working with the technology they already have in place also delivers value. As with most choices, it depends on what you are trying to accomplish as a business.

To learn more about pricing and packaging your services, make sure you check out our eBook, How to be an MSP: 7 Steps to Success today!

How to be an MSP: 7 Steps to Success

We cover the seven strategies for breaking up with break-fix and moving on up towards monthly recurring revenue, or MRR, as a managed service provider.

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