One of the biggest challenges managed services providers face is coming up with the right pricing for their services. We’ve talked about the pitfalls of underselling your managed services (see “Do You Make This Common MSP Sales Mistake?”), but during my recent conversation with Bob Lawson, product director at GFI Software, he shared some additional mistakes — 4 to be specific — that any MSP would be wise to avoid. Here they are:
1. Being too greedy. Let’s face it, it probably would be better for your customers to have all their IT hardware and software on a managed services plan with your company. But, according to Lawson, you should avoid ”Shooting for the home run – straight off.” Instead, start with an offer that’s easy for your customers to buy easily, like keeping a watch on their systems and flagging any problems early. After they have a chance to see the value you offer, then you can discuss moving them onto a “fix it” contract.
2. Not standardizing your services offering. This will help with efficient delivery (and cost management). It also will be much easier to focus your sales teams on the types of contracts you want them to find and make sure your techs who are delivering the service understand the SLAs and response times.
3. Vague contracts. Unless you have thought through your managed services contracts and scope of work ahead of time — and carefully defined what’s out of contract — it will cost you a lot of money in labor costs doing things you hadn’t planned to do for your customer. It kills any chance to upsell and move them from a basic plan to an intermediate plan, also.
4. Failing to understand what you’re signing up for. According to Lawson, A 24×7 fixed-price managed services contract means a transfer of risk from the customer to you, the MSP. If you don’t know the customer’s systems, you don’t know the risks and issues that lurk in the shadows.
September 19, 2012 at 5:49 pm
2,3,4 are good points. one of the measures of MSP maturity are their offerings, and how standardized they are. Starting out, everyone just wants the business, then gets things sorted out and standardized.
Point 1, is just wrong. Right service, right price, right customer. That is a formula for success in the MSP business. This serves our customers and allows the MSP to be able to serve the customers. Minimal recurring revenue for a slice of services means the MSP cannot afford to staff adequately, buy proper tools, etc… Low price = low service, which will lead to less customers, not more. Granted, you will charge for fixing things, but it isn’t predictable revenue that you can grow a business on.