One of the questions that has been asked to me the most is how much to charge for managed services.
I feel this is a greatest hurdle IT providers face while making the transition to managed services. What it really comes down to is that there is no easy answer or formula to pricing managed services or product or service for that matter.
The end result for your MSP in most cases is make the most money possible for the least “risk”. By “risk”, I refer to the accountability to fix problems if they do occur. Some clients may pay you $2000.00 / month to manage their network when another client with the exact same network may only pay you $1000.00 / month.
What you need to figure out is if it is worth $1000.00 / month for you to accept that responsibility to manage their network.
I think we would all like an extra $1000.00 / month of recurring revenue as long as it does not cost us our precious time and sanity, both of which are finite resources.Obviously we would all like all of our clients to pay us $2000.00 / month, but if some clients are only willing to pay half that, it may still be worth it.
If it is an existing client, you should have a good idea how much support they require. Take a look at the number of tickets they open in a month, or a year. I have some clients on managed services contracts that we hear from less than once a month. We could charge a very low monthly price and still come out ahead.
It is hard to tell if a new client is going to be a strain on your resources, but you can usually tell from the first meeting. Trust your instincts. You can also setup your contracts to have a trial or probationary period where you can sit down and renegotiate your contract after a month or two or three.
In addition to this, investments in automation, proper SLAs and procedures will help mitigate the “risk” to your firm and hopefully make the contract profitable for your business.
Here is how I price my managed service contracts
I like to charge $350 / month for servers, $80 / month for workstations and about $15 / month for printers.
I use these prices as a guideline and under no circumstance do I let a client know this. I prefer to give a client one price for the entire contract. The reason I do this is so that I do not become a commodity for to my client. If I give them a price of $80.00 / month / workstation, then that is how I value myself to them. This kind of pricing allows a competitor comes in with a price of $70.00 / month / workstation. As a managed services provider, you do not want to compete on price!
When I said those prices are guidelines, I mean it! I then usually add or subtract the cost from depending how high or low maintenance a client is.I like to include unlimited onsite, remote, phone and email support as well as any anti-virus, spam and backup services I need to make my job easier. Obviously, if their backup or anti-virus needs are more costly, the price of the contract goes up.
The unlimited onsite, remote, phone and email support apply on Monday – Friday from 9:00 AM to 5:00 PM. After that, I charge half our hourly rate from Monday to Friday 5:00 PM – 9:00 PMand our full hourly rate from 9:00 PM to 9:00 AM. I also charge thefull rate on weekends.
So to sum everything up, charge what you can. A client who will only be willing to pay you $500.00 / month may still be a good fit for your managed services practice. Some clients may be willing to pay three or four times that price, so let them.