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Quick-Start Guide to Pricing and Packaging Managed IT Services

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As managed IT services technology and best practices continue to evolve, pricing and packaging models are becoming increasingly complex. And while there’s no one-size-fits-all method that can guarantee success, understanding the differences between popular pricing models and how to find success within each is an important first step in growing your business and increasing profitability.

This Slideshare provides an overview of today’s managed IT services pricing landscape, and offers important definitions and insights you can use to be successful in your business.

Published in: Technology
  • Really interesting Slideshare--lots of information for various ways to price managed IT services.
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Quick-Start Guide to Pricing and Packaging Managed IT Services

  1. 1. Quick-Start Guide to Pricing & Packaging Managed IT Services
  2. 2. For managed IT services providers, pricing and packaging is all about margins.
  3. 3. There’s no shortage of available pricing models today, and there are many factors that can impact pricing strategies.
  4. 4. So which approach is the right one?
  5. 5. Spoiler alert! There’s no one-size-fits-all pricing method that can guarantee success.
  6. 6. And that isn’t necessarily a bad thing.
  7. 7. “Customer development is crucial to getting your pricing right. You need to talk with them about where they see value in your product and their willingness to pay for what you're offering” Patrick Campbell Co-Founder & CEO Price Intelligently
  8. 8. PS – Get valuable MSP insights about pricing, packaging and dozens of other topics delivered straight to your inbox. Subscribe to our MSP Blog today!
  9. 9. In a recent survey of 150+ managed services providers, respondents reported an average of 25-30 percent margins for core services. Data Source: Continuum MSP Pricing Research, December 2015, Spiceworks Voice-Of-IT
  10. 10. Software/ Apps Backup/ DR/ Storage IT Department Outsourcing/ Contracting Strategic IT Consulting End-User Support 33% 35% 36% 36% 39% Typical Margins Per Service
  11. 11. Typical Margins Per Service Hardware Security Network Management Cloud/ Virtualization Network Monitoring 23% 28% 29% 32% 33%
  12. 12. And in order to maximize their margins, many MSPs leverage multiple pricing and packaging strategies rather than putting all of their eggs in one basket.
  13. 13. When asked how core services are priced, there was no clear front-runner among surveyed MSPs – and quite a bit of overlap. Tiered 51% Flat Fee 61% Per Device 49% Per User 43%
  14. 14. So what are they key differences between today’s popular pricing strategies?
  15. 15. Flat fee pricing allows MSPs to adopt an “all or nothing” approach and present a complete outsourced IT solution to potential customers. It’s sometimes known as a chocolate cake model…
  16. 16. Rather than selling individual ingredients like flour, eggs and butter, MSPs offer the finished product as an all-encompassing solution with no service tiers or optional add-ons.
  17. 17. Pro: Allows for premium pricing and effective margin calculations. Con: This model can be a difficult sell as not all customers will be attracted to the “all or nothing” approach.
  18. 18. PS – Learn more about MSP pricing and packaging strategies in this informative article – part of our MSPedia library! MSPedia
  19. 19. A tiered pricing model presents customers with multiple packages or options like Bronze, Silver, Gold and Platinum. Each of these comes with their own services and support.
  20. 20. Pro: By understanding the cost of solutions, labor and service delivery at each tier MSPs can accurately calculate margin potential and set prices accordingly. Con: New customers might automatically flock to the cheapest service level or may hesitate if they feel like they’re paying for services they don’t actually need.
  21. 21. Per Device pricing allows customers to pay a flat rate for each device being supported by an MSP – like desktops, smartphones, tablets, servers and other endpoints.
  22. 22. Pro: Customers can easily add or remove devices from the plan as needed and their bill adjusts accordingly. Con: To set effective prices, MSPs need to accurately calculate the cost of these different device types - customers may feel that paying for each device isn’t worth the investment.
  23. 23. Per User pricing is similar in its approach to per device, with the exception that billing is based on the number of users at a given customer site - regardless of how many devices each person uses
  24. 24. Pro: This makes for an attractive value proposition because clients can simply pay one price per seat and know that everything is being supported. Con: MSPs need to be careful and establish pricing that accounts for multiple devices and won’t eliminate margins if additional endpoints are added.
  25. 25. “With per user pricing, a customer knows they have a certain number of employees and that it’s going to cost them X dollars per seat – that’s easy for them to grasp and to have some control over as well.” Paul Rouse President Rouse Consulting Group
  26. 26. Regardless of which pricing model you choose to leverage, there are a number of different factors that impact how MSPs price and package their offerings. In the survey, these three factors stood out above the rest.
  27. 27. Other influencers reported in the survey included: How complex is the billing and payment process for customers? How difficult is it for the MSP to actually calculate the cost of services and solutions? What other partnerships or solutions are required to support services an MSP is offering? How is the length and complexity of the sales process impacted by pricing?
  28. 28. So what do your peers think about their financial futures?
  29. 29. For MSPs, the Future is Bright! 67 percent of survey respondents reported an expected revenue increase in 2016!
  30. 30. For MSPs, the Future is Bright! With an average increase of 23 percent!
  31. 31. For MSPs, the Future is Bright! And only 3 percent of MSPs reported an expected decrease.
  32. 32. The key to realizing this growth is understanding which pricing and packaging models make sense for your business. And that’s where Continuum can help.
  33. 33. Discover Your Profit Potential Continuum’s IT management platform and pay-as-you-grow model are designed to maximize margins and facilitate MSP growth - and our partners are some of the most profitable in the industry. Download this presentation and receive a free bonus webinar!

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