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.

1. Quick-Start Guide to Pricing &
Packaging Managed IT Services

2. For managed IT services providers,
pricing and packaging is all about margins.

3. There’s no shortage of available pricing models today,
and there are many factors that can impact pricing strategies.

4. So which approach
is the right one?

5. Spoiler alert!
There’s no one-size-fits-all pricing
method that can guarantee success.

6. And that isn’t necessarily a bad thing.

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

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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. 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. Typical Margins Per Service
Hardware Security Network
Management
Cloud/
Virtualization
Network
Monitoring
23% 28% 29% 32% 33%

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. 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. So what are they key differences
between today’s popular pricing
strategies?

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. 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. 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. PS – Learn more about MSP pricing and packaging strategies in
this informative article – part of our MSPedia library!
MSPedia

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. 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. 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. 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. 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. 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. “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. 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. 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. So what do your peers think about
their financial futures?

29. For MSPs, the Future is Bright!
67 percent of survey respondents
reported an expected revenue increase
in 2016!

30. For MSPs, the Future is Bright!
With an average
increase of 23 percent!

31. For MSPs, the Future is Bright!
And only 3 percent of MSPs reported
an expected decrease.

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. 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.
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