Kaseya Community

The Price Is Right

  • We are a VAR and have been thinking about posting this for some time now. I have been using Kaseya for some years now and its been profitable. I have revised our managed services agreement a couple of time and once again revising it. However, in the past year, I have encountered some odd situation that I feel warrant further research, thus, this posting for open discussion.

    We (MSPs) create our managed services agreements with what we feel is what a managed service agreement should consist of. Since this is relatively a new industry, there is alot of guestimating going on. And, it has been working out for the most part. But, naturally, there are those incidents that make you reevaluate your agreement.

    Now, the big question is pricing. We basically sell knowledge to clients at an hourly price. Having been in the industry for many years, I have seen prices all over the place, especially from newbies in the market (which we call mouse jockyes. They can click a mouse and now they are self proclaimed engineers. Oh, by the way, if you are a "mouse jockey", thank you for all the business you have brought to us.) So, how do you structure your pricing and what services are you willing to expend on that pricing structure?

    For example, say you have an agreement for $199/$299 a month on a server, which is suppose to include unlimted remote support. The client has an issue with thier backup software on a server and you provide remote support to resolve the issue, but, the issue continues to exist. You spend hours on the issue and have determined that an upgrade would possibly fix the problem. However, the client does not want to spend the money on an upgrade. So, more man hours are dumped into resolving the issue which keeps arising. Lets say you have $1000 of potentially billing time gone because of the $199 agreement. And the client has no workstations on the agreement, so there is no compensation on the income from workstation fees.

    So, on one side of the coin, the client gets a great deal, but you loose out on billable time. On the otherside of the coin, you have the reoccurring revenue (which is a big point), but are at a loss for the man hours that it took to resolve the issue and not billed.

    There is the balance. Pricing services to fit while not loosing your shorts.

    I can see that we may be putting a limit on hours per incident in our agreements, say 3 hour limit per incident. Over that is billable time at a discounted rate. OR, include something like 8 hours a year per server for remote support are included and hours over that are billable. But I do see there is probably a need to cap services on agreements so clients can not milk free labor for problems that require additional costs, such as product upgrades.

    I would be interested in any feedback on this issue. We all pay engineers & staff, so the overhead is always a concern, and giving up bill time for reoccurring revenue via managed services is a balancing act.

    What do you as an MSP feel is a reasonable pricing/labor structure under a managed services agreement per machine?

    Legacy Forum Name: The Price Is Right,
    Legacy Posted By Username: shickey
  • Please remember this is my position on this.

    I will not do an all inclusive service contact on just the server without having all workstations and servers on a service program (even if at a lower level). Basically I look at it this way, it could take you 4 hours to find out a workstation is causing an issue on the server, and even though the server was not the issue, you were looking in the server. So in the customer’s eye this should not be billable because the server has unlimited service.

    Remember this is just like an insurance policy. If it is not listed on the policy it is not covered. This is where all the damn fine print comes into play. If they are not willing to follow your recommendations to fix an issue, then you have the right to terminate the contract. But you have to be a bit careful not to use that just to get rid of a client. Except for attorneys, I would not put them on a program like this. Smile

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: jtipton
  • Scott, I think you need to get out of the hourly game. Put a fee on services. The whole point of automation and managed services is to reduce the amount of time needed to do things. The value of what gets done doesn't change and in fact should go up since you can do a better job, more timely, better customer response, satisfaction, etc. etc.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: kaseya
  • In regards to your example with the backup software being problematic... In all of my Managed Services contracts I make sure that it states the client is responsible for maintaining contracts with their primary software vendors that they expect us to support. This especially includes Backup software. And if the client has a service contract, you'd be able to upgrade (and hopefully fix) their issue. If they do not, then you can draw the line in the sand and tell them the next step is for them to get the maint beforeyou can move forward.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: boudj
  • kaseya
    Scott, I think you need to get out of the hourly game. Put a fee on services. The whole point of automation and managed services is to reduce the amount of time needed to do things. The value of what gets done doesn't change and in fact should go up since you can do a better job, more timely, better customer response, satisfaction, etc. etc.


    Oh, I have had one foot in the hourly and one in the MSP for some time now. Obviously, if the client is not on a managed agreement, then it is hourly. I am trying to look at options on the incidents as shown in the backup issue. Options are good, so all the feedback from everyone is appreciated.

    I prefer to move all clients and prospect to managed contracts. The trick I find it fixing the problems in the existing contracts (as in the example) and how to get prospects to bite on manageded services. I am looking at tweaking the existing contracts so they appeal to prospects more as well.

    I am about to launch a marketing campaign, but want to bring an agreement to the table that I can live with and the client can live with, without spending another year of putting up with a situation I have not covered under my existing agreements. I have gone thru tons of agreements and God, you can end up with a 48 page contract for clients to sign if you want to cover all the ins and outs. I think the feedback here will be more productive than all the agreements and guestimated prices I have poured over. AND, hopefully others will benefit from the feedback here as well.

    But, all in all, the hourly is a baseline for pricing and labor. And of course, in this economy, pricing is a big topic to the IT directors and bean counters. Its not so much an issue of what you get for the money, its the totaly monthly outlay and annual IT budgets the bean counters yak about.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • boudj
    In regards to your example with the backup software being problematic... In all of my Managed Services contracts I make sure that it states the client is responsible for maintaining contracts with their primary software vendors that they expect us to support. This especially includes Backup software. And if the client has a service contract, you'd be able to upgrade (and hopefully fix) their issue. If they do not, then you can draw the line in the sand and tell them the next step is for them to get the maint beforeyou can move forward.


    We too require them to maintain the maintenance agreements with the OEMS, just for this reason. However, there is always some little gotcha lingering in the dark that pops up by surprise. This is one of them. So, no agreement and I am not going to brush off a customer because of one issue. So, I need to look at the options, plan and adjust for this in the future. I don't have alot of clients on the MSP model and only a few clients that do not have all machines on an agreement. But, there are a couple of them with only a server and a few machines. This too is an issue since the revenue stream is smaller with only a few machines on an agreement.

    Once again, another marketing question on pricing in such a way to create an incentive to put more machines on an agreement instead of the break/fix path.

    Was considering allowing them 1 hour per machine, per year (pooled hours) for onsite services. The more machines, the more pooled hours they could have.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • jtipton
    Please remember this is my position on this.

    I will not do an all inclusive service contact on just the server without having all workstations and servers on a service program (even if at a lower level). Basically I look at it this way, it could take you 4 hours to find out a workstation is causing an issue on the server, and even though the server was not the issue, you were looking in the server. So in the customer’s eye this should not be billable because the server has unlimited service.

    Remember this is just like an insurance policy. If it is not listed on the policy it is not covered. This is where all the damn fine print comes into play. If they are not willing to follow your recommendations to fix an issue, then you have the right to terminate the contract. But you have to be a bit careful not to use that just to get rid of a client. Except for attorneys, I would not put them on a program like this. Smile


    Well, initially, I was kinda leary on the Kaseya product. Spent 6 months pouring thru LPI, and all the others. Kaseya seemed to be the best approach for SMB market and more in line on the pricing vs an enterprise product costing $xxx,xxx.oo. Not too thrilled with it at first, but, it has come around to where I am more confident in it. The next release is what I am really waiting for. So, now maintaining desktops is much better, while there are still questions and concerns on server monitoring. So the insurance policy example is more of what I am looking at these days. But, have not considered the "All or nothing" approach. Have to give that some thought.

    Ok,,,,,,,thought about. You may have something there. The $199/$299 or what every approach for server only is loosing potentially $xxxx.oo of hourly bill time. Why play around with the $300 a month when more profit is available on an hourly basis. Good point. Worth giving this more thought.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • shickey
    Well, initially, I was kinda leary on the Kaseya product. Spent 6 months pouring thru LPI, and all the others. Kaseya seemed to be the best approach for SMB market and more in line on the pricing vs an enterprise product costing $xxx,xxx.oo. Not too thrilled with it at first, but, it has come around to where I am more confident in it. The next release is what I am really waiting for. So, now maintaining desktops is much better, while there are still questions and concerns on server monitoring. So the insurance policy example is more of what I am looking at these days. But, have not considered the "All or nothing" approach. Have to give that some thought.

    Ok,,,,,,,thought about. You may have something there. The $199/$299 or what every approach for server only is loosing potentially $xxxx.oo of hourly bill time. Why play around with the $300 a month when more profit is available on an hourly basis. Good point. Worth giving this more thought.


    Our clients must satisfy pre-requisites before signing all you can eat agreement, for example:

    All equipment must be compliant with our standards (like on site warranty, no white boxes,etc)
    They must pay initial audit and also set up fee to bring site in comliance with standards
    ....
    SOE is billed separetly

    For now it works well.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: rudi
  • rudi
    Our clients must satisfy pre-requisites before signing all you can eat agreement, for example:

    All equipment must be compliant with our standards (like on site warranty, no white boxes,etc)
    They must pay initial audit and also set up fee to bring site in comliance with standards
    ....
    SOE is billed separetly

    For now it works well.


    We do basically the same thing. In order to sign on, the machines must meet our standard, which requires them to pay to cleanup the machines to a point that we feel is stable and manageable. We also seize control of the machines so users can not fudge them up and create problems for us.

    BUT, there are those time, under a "Unlimited Support" topic, where an issue creates lots of man hours to resolve. So, where does one draw the line on the amount of man hours poured into an issue? I see this "Unlimited Support" statement in many agreements, including ours (at this time).

    Yes, there is pros and cons to it. 50 machines at $30 a pop is $1500 a month. But, what if there are not 50 machines at a site, and only, say 10. That is something like $300. 3 hours of support time burns up that gross profit. So, should there be a limit on the amount of time per incident, per month, per year ?

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • Like many others here we have certain standards/requirements that must be in place before we deploy agents. Things like up to date maintenance contracts on all software, warrantied hardware, etc.

    Where we differ it seems is how we price/quote and how exactly anal we are in with our clients. We don't price by machine count at all, nor do we have different levels of SLA's (Gold, Bronze, etc.). We do a complete flat-rate "covers everything" quote. Charging $30 per desktop or $299 per server doesn't make sense to us, and leads to clients picking and choosing what they want managed or not. You have to remember, that many of your clients have no idea what they actually need in terms of their IT. We do.

    We also do not compete on pricing. If a potential client comes back to us and says company X can do it for Y cheaper. We say go with them. If they are only looking for the best deal, they aren't looking for the best service, and won't be a good client to have. Instead, they will be hesitant to upgrade something or purchase something that they may need.

    Using the example with the backup in the original post, if we had a client that refused to purchase an upgrade to FIX the problem, we'd drop them. Fast. It may seem harsh, but we want clients that will understand that we know IT, they don't, and what we recommend is the best for their company and network.

    Now, the time issue is one that we also had a tough time dealing with early on. The unlimited support issue was scary at first for the very reasons listed. However, with requiring maintenance agreements time isn't that much of an worry anymore. We will call support for the clients software/hardware and make them fix it if an issue is taking too long, that's what maintenance & support agreements are for. Escalate the issue to someone that can fix the issue quickly and correctly the first time.

    To be perfectly honest though, we rarely have to call the vendor support. There is a wealth of knowledge just a Google away. If the common solution (on the first or second page of results) to the problem is "upgrade to version X", well....

    I guess all this really depends on what your definition of Managed Services is. Our definition is to bring our clients' networks up to a high level where problems rarely exist and charge a monthly fee to maintain that level. You really have to break free from hourly break/fix altogether. Both in how you think about service, and how you practice it.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: CeruleanBlue
  • CeruleanBlue
    Like many others here we have certain standards/requirements that must be in place before we deploy agents. Things like up to date maintenance contracts on all software, warrantied hardware, etc.

    Where we differ it seems is how we price/quote and how exactly anal we are in with our clients. We don't price by machine count at all, nor do we have different levels of SLA's (Gold, Bronze, etc.). We do a complete flat-rate "covers everything" quote. Charging $30 per desktop or $299 per server doesn't make sense to us, and leads to clients picking and choosing what they want managed or not. You have to remember, that many of your clients have no idea what they actually need in terms of their IT. We do.

    We also do not compete on pricing. If a potential client comes back to us and says company X can do it for Y cheaper. We say go with them. If they are only looking for the best deal, they aren't looking for the best service, and won't be a good client to have. Instead, they will be hesitant to upgrade something or purchase something that they may need.

    Using the example with the backup in the original post, if we had a client that refused to purchase an upgrade to FIX the problem, we'd drop them. Fast. It may seem harsh, but we want clients that will understand that we know IT, they don't, and what we recommend is the best for their company and network.

    Now, the time issue is one that we also had a tough time dealing with early on. The unlimited support issue was scary at first for the very reasons listed. However, with requiring maintenance agreements time isn't that much of an worry anymore. We will call support for the clients software/hardware and make them fix it if an issue is taking too long, that's what maintenance & support agreements are for. Escalate the issue to someone that can fix the issue quickly and correctly the first time.

    To be perfectly honest though, we rarely have to call the vendor support. There is a wealth of knowledge just a Google away. If the common solution (on the first or second page of results) to the problem is "upgrade to version X", well....

    I guess all this really depends on what your definition of Managed Services is. Our definition is to bring our clients' networks up to a high level where problems rarely exist and charge a monthly fee to maintain that level. You really have to break free from hourly break/fix altogether. Both in how you think about service, and how you practice it.



    Good point made. Have not given much thought to the "all or nothing" approach on a client piecing things together. Now, if I stand back with that perspective (can't see the forest for the trees), the workstation and the servers do interact and effect each other on the network. Definetly something to think about now.

    I only have a couple of client that are no totally on. Perhaps, I need to make the stand with the all or nothing as you pointed out. I do like the MSP approach much better, and in testing the waters in the past few years, it has worked out for the most part, except for a few incidents.

    The levels of pricing is something I have really been grinding on since it offers the clients budget some options as to what they are going to / can spend. especially non profits.

    The maintenance contracts is an issue we are dealing with on basically keeping track of all of them for all the client products. IF the OEM agreement was up to date, it would have been a different issue. But, since it was not, the nasty bugger started up, thusly resulting the post here.

    Good points...thanks

    Do you provide the "Unlimited Support" or how do you limit the labor?

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • shickey


    Do you provide the "Unlimited Support" or how do you limit the labor?


    Yes we do provide unlimited support (both remote and onsite) and unlimited HelpDesk. However, we kicked the break/fix stuff to the curb over lunch one day and haven't looked back. The support actually works itself out because honestly, after we take control of the network and tell our clients what to do/buy/implement, there are fewer problems to support. If you continue with the break/fix thinking and don't do everything in your power to get your clients network to top shape they will milk that "unlimited" thing and put you out of business. Your job as an MSP is to "limit the unlimited" for yourself by ensuring that there are few problems in the first place.

    You not only have to change your thinking about break/fix but you are going to have to change all of your clients thinking as well. It's not easy by any means, and some businesses will never get it. When you land a client that does get the full concept of managed services though, it is a world of difference.

    Labor isn't exactly limited. More like timed. Level 1 support (basic troubleshooting, helpdesk, common user issues) is limited to no more than 45 minutes once the task is assigned, after that it is escalated onto Level 2 and so on. If we can't fix something after 4 hours (at most) of troubleshooting/fixing/Googling/configuring we call the vendor and have them handle it. Once it is in the vendors hands, we are more than happy to let them put in tons of hours fixing their own hardware/software.

    Let's take your scenario for example:

    The client has an issue with thier backup software on a server and you provide remote support to resolve the issue, but, the issue continues to exist. You spend hours on the issue and have determined that an upgrade would possibly fix the problem.


    Support request comes in. If the issue is within the scope of the L1 techs knowledge, they troubleshoot the issue for 45 minutes, then escalate to L2. L2 has up to 2 hours to either resolve the issue OR at least have the solution planned. If L2 has no idea how to solve it they are required to at least run a web search before escalating to L3. Search results say to upgrade to newest release -or- change a billion settings, replace this file and that file, etc. etc. that is well out of L2's scope of knowledge. L2 updates ticket with "solution is to buy the latest version". Why? Well because the newest version not only fixes that single issue, but is probably better (generally speaking) for the client anyway. The alternative? Escalate to the L3 engineer and possibly wasting both your time and your clients time by never really solving the issue. We don't do "possibly" so this issue stays at L2's recommendation. So now support for this issue is on-hold pending reply from client. Your company spent maybe 1-3 hours on this issue. Now when client updates the ticket with "ok order it", it then becomes a billable "project".

    Let's be perfectly honest here, even a "Level 1" tech can fix Exchange using Google (we don't let them obviously). These days it shouldn't take all that long to find the solution you need to provide to the client. Remember those "mouse jockey's" are all over the internet asking questions that someone always has the answer for. You can knock them all you want, but they will eventually save your company time and money because you can keep your L3 Engineer on issues that actually need those skills. I see no sense on wasting an engineers time when the answer is the first search result you know? Obviously, nothing beats experience and knowledge but there are better avenues to direct and use that experience and knowledge. If something doesn't show up on a search result then up to L3 or off to vendor support the issue goes.

    Don't forget to tell your clients what the difference between what support is and what a project is (in your SLA/Managed Agreement if you can). Make this as clear as possible. Projects are major revenue generators. With projects you can forecast the time and materials needed and throw it all up in a nice single quote for your client.
    Migrating from Exchange 2003 -> Exchange 2007? Project.
    Adding a user to exchange? Support.
    Installing a patch for Acrobat? Support.
    Removing Acrobat 8 and installing Acrobat 9 on all machines? Project.
    Mapping a drive using Group Policy? Support.
    Completely overhauling Active Directory and implementing proper Organization Units in order to apply different policies for groups of users so only that group has a certain mapped drive? Project. Big Smile

    Anyway, the reason that we don't price based on device count is because our first month as an MSP was hell. We settled on that way of pricing first. The response we got from potential clients was "well, that Exchange server over there seems to be running ok, so I don't need to pay $299/Mon. to support it and why do desktops need to be backed up if everything is stored on the server?"

    Lastly...


    The maintenance contracts is an issue we are dealing with on basically keeping track of all of them for all the client products. IF the OEM agreement was up to date, it would have been a different issue. But, since it was not, the nasty bugger started up, thusly resulting the post here.


    Are you using a PSA like Connectwise or Autotask? You should look into them. Keeping tabs on client licensing and warranties are a breeze. You enter in the info, set up a workflow to email you X-days/months before license expires, email client. Couldn't be easier. Not cheap, however.

    If your client is hesitant in purchasing the proper solution, maybe try a different avenue. Instead of focusing on the fix, try to get them super excited about the new features and how they would directly benefit from those features with or without you. If it's not the features but the price they are worried about maybe the best thing to do is charge as little markup as you can (we charge only 1%) or give them a link to the lowest price yet still vendor supported you can find. I'd imagine at this point even if you sold it to them at cost you would save more on labor than you lost on product markup. What about reselling it to them and bumping up the monthly fee a few bucks, or having them financing it. That has worked for us in the past.

    How much exactly is this client sucking down in unlimited labor and at what cost? Is it greater than the cost of the software itself?

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: CeruleanBlue
  • Shop talk is a good thing.

    You hit the nail on the head with:

    "The response we got from potential clients was "well, that Exchange server over there seems to be running ok, so I don't need to pay $299/Mon. to support it and why do desktops need to be backed up if everything is stored on the server?".

    I now am starting to think that I am fudging with the numbers to resolve the issue as you stated above. Justifying the expense is the hurdle I run into with prospects. I just have not found a good pitch for Managed Services and the numbers justifcation.

    Any suggestions?

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: shickey
  • Sure I do. First here are some resources that we have found useful:

    1. Events / Tradeshows / Conferences

    If you haven't attended a conference like Kaseya Connect or one the MSP Alliance or other industry related conferences you are really missing out. Hundreds of MSPs from all over the world attend these and EVERYONE loves talking shop all day. You get to hear first hand from successful presenters and other MSPs on how they got where they are, some secrets of doing business and they are all open to emailing at any time to trade tips and offer help. When I attend these, I honestly can't write fast enough because some of the information is just too good to pass up. The open discussion among MSPs is really nothing like I've ever experienced before. It's pretty refreshing to be honest. The tech industry can be so tight lipped at times.

    2. Industry Organizations

    Join organizations like MSP Alliance, MSP Partners, MSP University, MSPSN and any others that you can find. Costs to join are minimal and if you walk away with even one thing that you put in to practice it's worth it. I'd argue that even if you don't implement something it's worth it just because they get your brain thinking more about business than the technical stuff. Kaseya also has the emPower program that has proven to be useful to us.

    3. Books, Blogs and Webinars

    I may sound like a shill for some of these books, but I only recommend them because they were of use to us.

    Books (in case you are wondering, yes we have bought all of these):
    The Guide to a Successful Managed Services Practice
    The Best I.T. Sales & Marketing Book Ever!
    SLAM: Service Level Agreement Model
    A Guide to SELLING Managed Services
    A Guide to MARKETING Managed Services
    Service Agreements for SMB Consultants

    Protip: SMB Books is run by Karl Palachuk (I believe) who also wrote the last book there. The first two books are written by Erick Simpson who is part of MSP University. Most books are available on amazon.com (where we bought most) however I linked to smbbooks.com because they have some pretty decent combo packs available and they are industry related.

    Blogs:
    MSP Mentor
    Small Biz Thoughts by Karl Palachuk
    Mike and Josh from Everon
    SBSC & MSP Buzz
    SMB Thoughts by Brian Williams
    MSP University Blog
    MSP Alliance Blog
    CRN Managed Services (You have to create a custom feed on the RSS page)
    Kaseya's Blog
    THINK IT Services
    Vladville by Vlad Mazek

    Webinars/Conference Calls:
    Kaseya
    CRN
    Small Biz Thoughts
    MSP Mentor

    Ok, now that I got all those resources out of the way...

    What we do when we quote is use a modified version of Erick Simpson's "Cost Analysis" that we found in the first book I posted. Coincidentally, this is almost the same exact thing to what Terry Hedden from Infinity Business Systems presented at Kaseya Connect with "Pricing Strategies: Developing the ROI Value Proposition". I know that Kaseya filmed all presentations, but I am not sure when they are releasing the video. Anyway, without getting into too much detail we have a sheet that we fill out with figures after asking potential clients (and their employees) key questions. We then calculate the cost of downtime is/was, lost productivity (employee wages, etc.), true cost of previous break/fix IT support and come up with an overall figure.

    Commonly this figure is fairly large, but clients have a hard time refuting it because all the figures are derived from their own payroll and employees mouths. Example: If their Exchange Server was down for 8 hours last year and it severely effected the productivity of all 50 employees and the average salary is $45k/year (or $23/hr) that is a "soft" loss of about $9300. That's just lost productivity from the result of downtime. Then you add what the previous IT provider charged them to fix it (say 4 hours of work at $100/hr) and that figure goes up to $9700 just for the Exchange Server alone. Figures quickly add up when you take into account workstation issues and all the other problems that they faced.

    We also add in the time that "Bob in accounting" spent doing the daily computer help "because he knows computers". Well, they hired and pay Bob to do the accounting, and not IT right? How much do they lose by Bob doing 8 hours a week helping co-workers with their email? If they hired Bob to do their accounting at $50k/yr. and he is spending 416 hours a year doing computer stuff they are losing $10k that could be made by keeping Bob in accounting. Remember Bob makes the company money when he is doing accounting, not when he is fixing computers.

    Soon enough, you have a sheet in front of them that says they either spent or lost $30,000 last year without you or your managed services. Sure most of it is "soft" costs, and you will get people that object and say "my employees can continue to work with the server down", but let's get real here. Downtime is the most unproductive time ever. The boss might think that employees will continue to work, but both you and I know that is not the case. Even if that were the case, there is time spent on catching up with that downtime.

    So we take this sheet into them and go over it. We deflect objections as well as we can, and generally quote them right around 5%-10% less what the ROI sheet says they spent. So using the $30,000 figure above we quote them $27,000 per year ($2,250/Mon.) for Managed Services. We obviously remind them that that figure is still cheaper than hiring an internal IT staff.

    Granted this seems like a large figure. And it is. It is a tough sell to convince a company with 20 workstations and a server that they need to spend $2,000/month for your services (not including projects!). But the question is, how many $2,000/month clients do you need to be profitable? Not that many I'd imagine. The bonus is that they are all "A" clients and they get it. So you are now dealing with better clients and because you don't need as many clients to be profitable you don't need a huge staff.

    Say you are pricing by the device, to get that $2,000/month for that same client (20 workstations, one server) you would probably be pricing workstations @ $75/month and servers @ $500/month. Judging from what I have heard from other MSPs those figures would be nuts to ask. The average that I have found is around $45-$50 per workstation and around $199-$299 for servers. A Kaseya agent can cost as low as what...$4 for a workstation? Even less over time because agents are purchased not leased. It costs your company maybe $25/Mon to support a desktop including salary, insurance and other overhead.

    Now, you have to be absolutely on the ball regarding supporting these clients, that is why you only choose the "A" clients and leave the "B" and "C" clients for someone else to deal with. You now have a vested interest in keeping this client happy and their network running at all times because unhappy clients squeal like nobodies business. The "A" client knows that when you say "we recommend this firewall" that you mean business and they go ahead with it. Everyone is happy because you aren't spending loads of labor fixing and re-fixing something and they are "never" down (obviously, we can't promise zero downtime, but we can minimize the impact of downtime). Profit rises for both companies.

    Trust me, we aren't exactly "experts" at this whole MSP thing, it took us a while to figure and work this all out. We have been doing Managed Services for about a year, so take that as you will. It is entirely possible that we are well out of scope on the standard or common way of doing things, so you will really need to figure out what best fits you and your business. So far, every method of pricing, selling, supporting, and MSP model whether by device or "all you can eat, flat rate" has been proven to be extremely successful and profitable by at least one MSP out there. No single strategy will be perfect across the board though. Really the only thing I can truly recommend is to buy some books, read some blogs and talk to as many MSPs as possible.

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: CeruleanBlue
  • Just came across this post - and it's very insightful. I must admit, having mutliple support levels really complicates the selling process and also the ongoing relationship with the customer. We would love to have a fixed price approach. Any suggestions on a formula to come up with both profitable and competitive numbers/contracts?

    Legacy Forum Name: MSP General Discussion,
    Legacy Posted By Username: ivascu