Popular Managed Services Pricing Models
For a startup managed service provider (MSP) or a business shifting to managed services from another model, pricing is crucial along with sales and service delivery. Deciding how to price your services is vital and needs careful thought. A mistake here can hurt a service provider’s growth and profitability.
The main managed services pricing models available include monitoring only, per device, per user, tiered pricing, all you can eat, and a la carte. The next sections explain each pricing model and its key features. Each has something to offer a new MSP business, but it’s important to match the model with how your customers prefer to buy services.
Monitoring-Only Pricing Model
Used in small and medium-sized businesses (SMBs) as well as midsize and larger companies, the monitoring-only pricing model offers network monitoring and alerting services by the MSP, the customer’s in-house IT team, or both.
In this setup, different service levels can be used. For example, an SMB-focused plan that includes operating system and software updates, antivirus updates, disk optimization, and backup monitoring for a flat monthly fee allows the MSP to charge for extra fixes found through remote monitoring. A midsize or enterprise plan might send all alerts to the customer’s in-house IT team only but lets MSPs handle all incident resolutions. Another level might involve the MSP in basic incident resolution or more advanced support.
Per-Device Pricing Model
The per-device pricing model is quite simple and many MSPs use it because of this simplicity. The idea is to set a flat fee for each type of device supported in a customer’s environment. For example, a basic per-device pricing model might charge $69 per desktop, $299 per server, $29 per network printer, and $99 per managed network.
The advantage of this approach is that it’s very easy to quote and show costs to a potential customer. It’s also easy for the MSP to adjust the monthly fee as the customer adds more devices.
However, this model can lead to selling managed IT services based more on price than benefits. Experienced MSPs will recognize this and adjust their sales pitch accordingly.
Per-User Managed Services Pricing Model
The per-user pricing model is similar to the per-device model but charges a flat fee per user per month and covers support for all devices used by each user. This could include an office PC, mobile devices like laptops or smartphones, a home PC, and connectivity from hotels while traveling.
Tiered Pricing Model
The tiered pricing model might be the most popular among MSPs. The idea is to create several bundled packages of services with each higher-priced package offering more services.
For instance, a “bronze” desktop managed services package might include basic phone support, remote support, patch management, and virus removal at an entry-level price. Moving up to the “silver” package might add on-site visits while the “gold” package could include emergency after-hours support at the highest price.
All-You-Can-Eat Pricing Model
The all-you-can-eat pricing model is very flexible and includes all remote support, on-site support, and lab time for an entire organization for a flat monthly fee. It might also offer 24/7 year-round support or limited hours with extra charges for services outside those times.
The main goal is to let customers budget their IT support costs over a year without unexpected billing changes.
A La Carte Pricing Model
The a la carte model is different from bundled pricing models. Here an MSP sells individual services that meet specific customer needs like disaster recovery or managed backup. This lets customers pick and pay for just what they need or combine several offerings into a custom package of IT services.
Choosing a Pricing Model
When it comes to MSPs and pricing models, there’s something for everyone. It’s up to each service provider to understand what they offer, identify their potential customers, and price accordingly.
A company new to managed services might start with limited monitoring offerings using the monitoring-only pricing model. A provider serving customers with multiple devices per employee could use the per-user approach. An MSP looking to attract new customers with basic offerings while building upsell opportunities could choose tiered-pricing.
You can also mix different models. For instance, using all-you-can-eat for most services but offering some add-ons with a la carte pricing.
