Pricing Strategies to Profitability Grow Your Managed Services and Cloud Business

Per Device
With this approach, you charge for each device being serviced. So, for instance, if one employee has a laptop, desktop, iPad, and a cell phone, you’ll charge a separate line item for each device under manage. If your core service offering centers around device management, then this approach may make sense. However, many find this approach—both MSPs and customers alike—unnecessarily complicated and not aligned with the true price driver behind the customer relationship. If the latter is true, then a per-user model may be your best bet.

Per User
Unlike the previous model, this one is billed by user. So, if the same employee has seven devices, they’ll all be covered under one line item, which dramatically simplifies the recurring billing detail, reduces the hassle and cost of adding infrequently used devices. A per-user model also minimizes opportunities for confusion. That said, to protect yourself against being taken advantage of, consider putting a cap on the number and types of devices you’ll service under this type of a contract.

For instance, if you don’t have any in-house expertise servicing certain device types, require the client to either (a) update their solution to a standard item you service or (b) forgo coverage on that device. Furthermore, avoid having to service an unprofitable number of devices for any one individual by capping the number at around three-to-five devices per person.

Tiered
If you need to make a minimum amount per customer in order to maintain your profitability, a tiered-pricing strategy might make sense for your practice. You can set pricing brackets based on the number of seats or devices being serviced. For example, using a base per-user tier of $200 per-user per-month allows you to make money for customers with just a few employees. However, you can add a tiered discount when supporting more users. A reduced per-user rate for larger customers allows you to share scale efficiencies with your larger clients while also giving them incentive to add more users as a way to reduce their rate. 

A la carte
Some clients aren’t going to follow you into the full coverage, monthly recurring subscription model. They may not want to sign up for the premium recurring service package right from the start. To keep them aboard, you might have to have and a la carte offering to entice these prospective customers to start small while you build up your book of recurring business solutions.

Hybrid model
This model enables you to mix and match any of the aforementioned pricing models to achieve your version of success. For instance, you could aim to make 80 percent of your business recurring-revenue projects, but still take on occasional one-time-need projects to supplement your efforts.

Debt
Do you have business debt? If not, skip to #2. If you do, consider factoring this into your pricing model, earmarking certain funds to be used to pay down debt each month.

Resources
Are your technical resources only booking about 50-65 percent of their billable time each month because of internal meetings and paperwork? If that’s the case, is there a way you can free them up to spend more time on billable projects? Look at whether or not you need a dedicated dispatcher or technical resources manager to take administrative burdens off your highly skilled technical team.

Market
What can your current market bear? Could delivering services via the cloud expand your reach by removing geographic constraints into more profitable market locations where you can get a higher price for your services?

Differentiators
How is your offering unique? Is there something you can offer that no one else can? If that’s the case, use that to fetch a higher price for your services.

Proof
Has a client ever told you that your services helped them do something incredible—like increase the efficiency of a certain process by 200 percent? If so, talk about this. If you’re delivering a smooth customer experience that produce results that would make your competitors green with envy, charge accordingly. And build ROI reporting into every service plan, so you can demonstrate the cost savings your services deliver.