As managed IT services technology and best practices continue to evolve, understanding how to effectively price and package solutions has become increasingly complex. And while there’s no one-size-fits-all approach to MSP pricing that can guarantee success, it’s important to have a strong foundational understanding of today’s popular approaches in order to determine which is best for your business.
To provide an overview of today’s pricing landscape, we’ve published a new white paper: Pricing Profitably: Managed IT Services Pricing Strategies to Maximize Margins.
This white paper defines a number of different managed IT services pricing approaches including tiered, a la carte, all-inclusive and more – and leverages data captured in a recent Spiceworks survey commissioned by Continuum to showcase how popular each of these models are among MSPs today. Additionally, this piece explores key factors that influence pricing and profitability such as geography, competition and cost of service delivery, and also includes a bonus glossary of key terms, definitions and formulas needed to effectively calculate your margins.
Here’s a quick excerpt from this piece that explores the benefits and drawbacks of a tiered pricing model:
In a tiered pricing model, providers present a series of packages or service levels to potential customers – bronze, silver and platinum, for instance – each of which comes with its own solutions, services and support.
Benefits: This model helps make profit more predictable as MSPs can effectively calculate the cost of solutions, labor and service delivery at each tier to then set price points accordingly.
Drawbacks: If a potential customer is only interested in certain services or support, they may hesitate if they feel they have to pay for things that they don’t actually need. There’s also the risk that new customers will automatically flock to the lowest available service level (where margins are likely to be at their smallest) to minimize their investment.
Bottom Line: When leveraging a tiered pricing model, it’s important to develop strong marketing and sales messaging to drive potential customers toward your highest service levels. Include features that prospects are most attracted to in higher tiers, and really demonstrate how you’re bringing increasing value to clients at your highest service level. Show them the value that your premium service has to offer, and they’ll be willing to pay a premium price for it.
Download your copy of the complete white paper today to learn more!
By Courtney Swift
By Scott Wittstock