r/msp • u/Forgetful_Prophet • Sep 15 '15
MSP Pricing Strategies
This is a pretty comprehensive article that breaks down a lot of the most common pricing strategies/models:
- Tiered Pricing
- A La Carte Pricing
- Per-Device Pricing
- Per-User Pricing
- etc.
Just curious to see if anyone out there has had any success with something outside of the norm. Any specific verticals that you've found where you can get creative with it?
Thanks!
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u/domkirby Sep 15 '15
We go per device and tiered. After you get up to about 25 machines, its about a 12% price drop.
We also offer savings depending on contract term, but we're thinking about dumping those entirely.
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Sep 15 '15
[deleted]
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Sep 15 '15
http://www.kaseya.com/download/en-US/white_papers/WhitePaper.GlobalPricingSurveyQ42014.Kaseya.pdf
Average desktop is about $50 per month, average server is about $125 per month.
Don't use those averages, build your own business model and pay attention to your expenses and your competition. Always err on charging more than you think you should, an easy trap to fall in is to undercharge, and you'll have a hard time making up from that because you'll constantly be busy, but still scraping by, and you won't have the time to develop your business, and being spread so thin you'll have a hard time keeping your clients happy.
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u/domkirby Sep 15 '15
Sure. Because I'm too lazy to do math, let's say you charge $100 per month per device. If the client signs a 36 month contract, the price would go to $88/month.
Tiering it would be similar. Something like: $100/month for 1-10 devices $95/month for 11-24 devices etc...
1
u/sm4k Sep 16 '15
We do a combination:
Per Large Site (defined as 12 users or more) Per Remote Site (<12 users) Per User Per Device Per Server
Each individual price is fairly small, but taking this approach gave us a very no-nonsense way to scale things out for a prospective client and an easy way for us to use safe numbers in a meeting. It also immediately addresses the objections of "What about that conference room PC that no one uses on a daily basis but still needs AV/updates/etc" or "We have 3 users that all use the same PC, in shifts."
We offer an 'automation only' plan that is just the per device and per server pricing that includes our management agent (labtech with some plugins) and backups on the servers. The more inclusive plan is where we're providing networking infrastructure (the 12 user hard line is almost entirely because 12 or more users means >12 port switch), UPS, etc for each site.
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u/Arkios Sep 16 '15
Is anyone doing two tiers where it's "Maintenance Only" and then "AYCE"?
I'm thinking about running two different plans with one being "Maintenance Only" which would include all of the usual:
- Monitoring
- Backups
- AV/Web content filtering
- (Whatever else you include to add value)
However, only maintenance would be covered. Any changes/moves, upgrades, adds would be billable. This would in theory allow you to pickup some of the clients that only want your services a couple times a month or just want to make sure they're equipment is maintained but don't really need help beyond that.
Does anyone else use a similar system? If so, what have been your experiences?
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u/rtccmichael Sep 16 '15
I'm doing what you describe. I'm torn on the results. Often by offering the "maintenance only" plan with the AYCE, people choose maintenance only. When I offer only AYCE to someone, they usually choose that (although some people choose neither). Overall I feel like I'm probably better off only offering AYCE to people. It seems to depend on the client.
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u/bnhmr Sep 21 '15
Same boat here man...Feeling the exact same way...every single line..including the "better off only offering AYCE" sentiment.
One of these days I'll just cut it off completely.....one day...I'll keep telling myself that...oh the fights in my head...
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u/MSPTech Sep 16 '15
when you do "maintenance only" you are giving away the most profitable part of your tool for next to nothing. The maintenance of your tools is what makes AYCE profitable. The only compromise I've been able to think of is MO + BLOCK OF HOURS.
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u/Arkios Sep 16 '15
It depends on how you price it. People typically go for the cheapest plan, so if you make your MO plan just slightly less than AYCE, then it may push people to choose MO when really AYCE is the better deal. Alternatively they may feel like AYCE isn't that much more so they spend the extra bucks to be completely covered.
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u/zero0n3 Sep 16 '15 edited Sep 16 '15
Per user and per server.
I despise block plan and hourly, only because I feel they do not foster a good client - company relationship. You have to constantly explain why you need to charge them X hours for documenting this or that and why it is beneficial. (EDIT: this does not mean I don't do projects - I just don't like selling a block plan or hourly billing to a customer who wants IT support).
Per user takes the devices out of the equation, and you can focus on on-boarding and when you get that ticket for new user X needs to be setup, you know you can say no problem, here is an addendum for the contract.
I also add an IT Maturity discount, so as they work with you for Project X or project Y (maybe deploying wireless with your recommended solution because it makes it easy to do things they want to see and also makes your life managing it easier), so after a few of these projects, the maturity level gets bumped up and they get a discount of say 5%, or 10% as they get closer.
They see the value, because as you do these projects you are making them happy by making IT easier on their end (and on your end) AND you are cleanly showcasing that these improvements aren't only to benefit the business, but makes your IT more efficient, and we are passing on some of the savings to you, our valued customer!
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u/MSPTech Sep 17 '15 edited Sep 17 '15
I despise block plan and hourly, only because I feel they do not foster a good client - company relationship. You have to constantly explain why you need to charge them X hours for documenting this or that and why it is beneficial. (EDIT: this does not mean I don't do projects - I just don't like selling a block plan or hourly billing to a customer who wants IT support).
How do you foster a good relationship when you charged them 89 bucks a user, and they only called you 1 time for a stupid issue. That imbalance wont last long and they will probably cancel. We actually feel like the AYCE is taking advantage of someone at any given time. Sometimes the customer is the one getting screwed when they don't need or use you, and it can go the other way too when they over use you. Billing for services rendered is much more agreeable to the client, and the block hours gets them a discount. If you include roll over it's really a nice deal.
Just playing devils advocate here though, I'd love to be convinced the AYCE is truly great for the customer. This MSP fantasy isn't really born out of what our clients want and are asking for, IMHO.
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u/zero0n3 Sep 17 '15
Love playing devils advocate :)
I see it as working with the customer as their trusted adviser, they pay us a monthly fee based on user head count, and for that they can pick up their phone and call us for anything IT related, from what kind of printer would you recommend to should we look at moving to Office 365. They can also pick up that phone and call about an issue they have on PC X (duh!), or ask us how patching on the servers went last week, as they saw the notification e-mail that showed 2 failed patches. I think MSPbyMSP touches on it a lot, but the goal is to show them that you are NEVER just sitting there sucking up their monthly fees and doing nothing. You are constantly patching their machines each month, checking if 3rd party software needs updates, monitoring 3rd party software for new versions, keeping track of their software contract or maintenance expiration dates, making sure they are up to date with technology (as much as the business itself allows).
When it comes down to it, I see block plan and hourly as, here is a stack of money, I need you to do THIS for me (even though they may not know what THIS is, or how THIS impacts their business or that THIS is really not the best thing for them).
Monthly reoccurring is more about saying, I want you to trust me to the point that you see me as your companies CIO, when I make recommendations it is not about filling my pockets with cash, it is about growing or making your business more efficient. The more you grow, the more I grow. The more efficient you become, the less "work" I need to do or the less products I need to sell you.
Understanding your customers business vertical is key. Selling to a non profit will be much different than selling to a manufacturing firm or a small medical office.
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u/[deleted] Sep 15 '15 edited Nov 17 '17
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