One of the most important factors for the success of any Managed IT Services Provider, along with the quality of its service delivery, is pricing. It affects an MSP’s profitability, therefore, it necessitates careful consideration of various factors. What attracts customers most is variety and pricing flexibility.
MSPs have come a long way starting off as break-fix vendors. Owing to this transition, MSPs were driven to create flexible offers and services. Over time, as the managed services sector developed, vendors’ pricing strategies became more complex and diversified.
Let’s have a look at the most common pricing models preferred by MSPs in the US.
- Pay For What You Use
- Tiered bundles for managed services
Monitoring-Only Pricing Model
The Monitoring-Only option is a basic managed service pricing model. This involves the managed services provider (MSP) maintaining a close watch on your server and/or network round-the-clock for any signs of threats.
If a threat is found, the client is automatically alerted. For an additional price, the MSP might also provide additional troubleshooting services. Typically, this approach is billed on a monthly or annual basis.
For businesses with tight budgets or internal IT teams, the monitoring-only pricing model is beneficial. It offers an affordable solution for proactive network protection.
Per Device Pricing Model
This model is straightforward for MSPs to implement and operate. It is also simple for clients to comprehend. The calculation is equally simple: each billing cycle, the client is charged a flat fee for each device.
The type of device and particular package of solutions provided to that user may affect the price of such managed IT services. Nevertheless, this model gives each user more transparency and makes it simpler to predict IT costs when work conditions change including laptops and mobile devices. The majority of MSPs have access to a variety of options, including the per-device model with one fixed monthly pricing.
Per User Pricing Model
This model is apt for highly connected businesses, in which a user needs multiple devices to complete tasks. Per-user MSP pricing, which charges a single monthly rate per user and covers all the devices they use, is a flexible and simple pricing approach. Individual endpoints, communication between endpoints, and other things are all covered by the managed services that are part of this pricing model.
Value-Based Pricing Model
Offering customers value and comprehensive solutions is the main goal of value-based pricing. In this model, MSPs provide a broad array of services to every client rather than multiple tier options. As a result under this model, the MSPs are referred to as the client’s outsourced IT department. Essentially a one-size-fits-all method, this model offers all clients comprehensive services and assistance.
Value-based MSPs charge a set monthly fee for all the support they offer and base their payment on the value their services provide to the customer. Under this paradigm, MSPs are required to provide their “complete range of services,” hence they must have extensive experience providing complete packages of solutions. Once clients are aware of the benefits of the services they may agree to pay more for value-based pricing services offered by MSPs.
Pay For What You Use Pricing Model
This method of billing is precisely what it claims it is. The client selects the services they need and is billed separately for each one.
This offering may seem ideal to some clients. They receive their preferred result. The issue is that clients usually lack IT expertise and are unsure of their specific needs. It may not be a perfect fit for their needs if you let them decide on their own. Additionally, they might neglect other requirements in an effort to save money.
The main concern for the MSP is that the client may have higher expectations than you can meet. For instance, they might only pay you for help desk support. However, whether it is stated in your agreement or not, your client will 99% of the time expect you to manage the backups if their server crashes. It may lead to serious conflicts. MSPs offering this pricing model have stated that it has also contributed to time-consuming contract talks with potential clients.
Tiered Pricing Model
In order to keep the pricing of this model simple, some MSPs prefer to offer tiered pricing while segmenting advanced services into optional offers. The majority of MSPs offer services including maintenance, single offer support, and Remote Monitoring & Management (RMM). Resources for backup, disaster recovery, archiving, and surveillance may be offered by external third parties; such services come at an additional expense.
How Can XO Help
XO’s managed IT service offers you complete flexibility to keep up with your business requirements as your business grows. If you need to reduce your users for whatever reason, your costs for IT assistance will decrease. Similarly, as your company grows, so will your IT requirements and support. Our pricing models and support services will be determined by your needs. Contact our team of experts today!