In the first part of our series from accomplished managed service provider (MSP) expert Gary Pica, he shared proven methods for creating an actionable business plan. Now, Gary gives guidance about packaging and pricing—areas that, if not done right, can seriously damage an MSP’s chances of success.
Over the past few years, very little has changed in what MSPs need to offer—clients have technology to be managed and maintained and want reliable, timely support. But how those services are offered continues to evolve.
As an MSP, service offerings and pricing are at the center of your relationship with clients. They impact your quality, margins, and ability to sell to new customers. As a world-class MSP, your service offering should benefit your bottom line while improving clients’ productivity and functionality, lowering their costs and giving them peace of mind.
With extensive experience training MSPs to package their service offerings, Gary points to these key elements:
Focus on the End Result
Identify the experience you want clients to have—not only with technology, but also the people and processes involved.
Limit Choices and Options
Define what is to be considered your right way and make sure every service offering delivers on that definition.
Draw a solid line between what’s included in your monthly fee and what’s not to eliminate any fuzzy areas or risks.
Remove Entrance Barriers
Make it easy for clients to do business with you by avoiding such things as complex contracts or requiring upgrades.
Offer a Unique Value Proposition
Be honest. Why would a client be better off with you than another MSP? Do you have a unique value proposition for positively impacting their business? Whether in process, people, resources, best practices, standardization or technology consulting, the more unique your approach (assuming it’s proven effective), the higher price you’ll command—and the more recurring revenue you’ll capture. Be different, it pays.
Keep it Simple
When pricing, don’t overcomplicate things. Use your average all-in seat price (AISP) as a guide. Take all your recurring revenue and divide it by the total number of seats you support to get the average. If you had 25-100 customers at this rate, would your profit margin where you want it to be? Or, should your per seat rate be higher?
Don’t over explain. Your clients probably aren’t interested in your pricing calculator details. They simply want to know how you’re going to impact their business and what it will cost them every month.
The 5-Minute Test
Gary suggests this quick way for MSPs to gauge their packaging and pricing prowess: In less than 5 minutes, can you tell me how you’re going to impact my business and what my investment will be without having to reach into your bag for a brochure or spreadsheet?
Learn more proven methods for becoming a world-class MSP from this seasoned expert.