5 steps to becoming a Managed Service Provider

Pricing Managed Services

As an IT service provider trying to price your Managed Services, have you been asking yourself:

  • Am I too expensive or worse too cheap?
  • How I calculate hourly rates and flat rates?
  • How do I create a win-win situation for my customers and my company?

5 steps to becoming an MSP: Pricing Managed Services

Pricing Managed Services does not come easy. Follow this five step guide to set up a successful strategy!

1. Be critical

Before you start your calculations, think about your company’s most important metrics, and examine your costs. Critically review each cost item again and again to discover potential savings. But don’t lie to yourself – if it takes seven hours to install a server, it will take seven hours, even if you’d prefer it to take five hours!

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If you are looking for a solution to standardise and scale your business, our Monitoring & Management is perfect for you

2. Determine hourly rate, costs and profits

Determine your hourly rate, costs and profits. How many hours can you actually bill for? How much time do you need to invest in further training? What internal activities do your staff spend their time on? What are the costs of people taking time off sick?
Keep a close eye on the workload of your staff and make sure that everyone is consistently recording their hours. This way, you can calculate the real cost per hour worked, calculate utilisation rates correctly and then add your margin on top.
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Channel Futures have written a really helpful, detailed article on this topic – read it here

3. Managed Services vs. Break/Fix

Set up comparison calculations between Managed Services and Break/Fix. Utilisation rates for your techs for Managed Services are much higher than for traditional offerings – as high as 90%. Industry counts for the number of devices that can be supported by one tech in a Break/Fix model range from 40 to 150. With standardised processes and automation, this number climbs significantly – one tech supporting 500 devices, or more.
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You can find more information on how to become a Managed Service Provider in our video “Getting Started”

4. Add value to your offer

You´re almost done! But before starting to offer your MSP services, you should consider expanding your package with other offerings that can add value to the customer. Always ask yourself what your customers need, and how they can benefit from your services. Do they need additional endpoint protection against cyber attacks over and above what a traditional antivirus solution can deliver? Could you expand into networking and offer managed firewall as part of your portfolio?
Add these extras to the calculation and your pricing will be complete.

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To get an overview of what additional offerings might be possible, take a look at our Managed Services Portfolio 

5. Numbers don’t lie!

Pricing Managed Services is not as easy as pricing Break/Fix. It’s not as straight-forward as slapping your margin on your hardware purchase price, and charging an hourly rate for one-off services. And once you’ve sold your first Managed Services contract, that price is locked in for the contract term, and increases after that can be very tricky.
Take the time to calculate your services properly, set up a spreadsheet and keep it up-to-date by regularly comparing calculations with what’s going on in reality. Numbers don’t lie!
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You can find more tips and tricks on Managed Services on our YouTube channel or get in touch with us

Where does SYNAXON Services come in?

At SYNAXON Services, we provide you with the knowledge and tools you need to kick-start or develop your Managed Services business, including sample calculations for pricing to give you a head start. So whether it’s RMM, backup, security, or navigating the Microsoft jungle, we’re here to support you, with out-of-the-box solutions, and ready-to-use contracts and marketing material so you can get started quickly and easily. Think of us as an extension of your team, to help you scale and grow.
Sounds good? Get in touch with us!

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