MSPs play a fundamental role in providing small and mid-sized businesses with the around-the-clock, ongoing support that they need to maintain their IT and telco infrastructure. One of the key advantages of the MSP business model is that it eliminates the need to lock into IT services at hourly rates; this offers significant cost savings to business owners and managers.

However, this set-up also is a double-edged sword. It’s important for MSPs to price their services in such a way that their end clients are getting better value for their money, but MSPs also have to maximize their own profit potential. Pricing services can be a tricky proposition, but the following three key strategies can help MSPs find the ideal balance between profitability and value.

The Power of Free Monitoring Licenses

One of the ways that MSPs can increase their value proposition is to offer free monitoring licenses through an established IT services company. These offerings can be entry-level in scope but, nonetheless, can provide SMBs with a suite of important remote monitoring and managing (RMM) services at no additional cost.

Then, once the MSP has earned the client’s trust and loyalty, the upselling process can begin. It offers a no-risk perk to the business owner, yet it puts the MSP in an excellent position to generate additional future revenue from the client.

Some of the upsell services could include these:

• Patch management
• Mobile support
• Data backup
• Compliance
• Managed IT security

Offer Add-Ons

MSPs that offer free monitoring licenses can step up their game by providing individual add-ons at one-off prices. This gives the client an opportunity to customize their service plans without paying for services they don’t need.

Licensing on Individual Devices

This is a more advanced strategy, which is built around the inherent characteristics of the MSP’s business model. MSPs earn money by pricing their services at a profit that is relative to what they pay for the technologies used to deliver their vended solutions. Applying that model on a per-device level helps MSPs maximize their profit potential while still safeguarding the end client from inflated costs.

Shifting towards this kind of managed services model also can be driven by the strategic use of reporting and summaries. By providing clients with ongoing evidence of the value of their investments, MSPs can build longer-term relationships with superior revenue potential. For example, MSPs could present clients with weekly or monthly reports detailing the number of security alerts they successfully resolved, or they can present data that shows that the IT stabilization they delivered is reducing operating costs.

These strategies may require MSPs to make fundamental shifts in how they do business, but MSPs simply have to adapt to the rapidly changing landscape. MSPs that embrace these strategies ahead of their competitors will put themselves in a better position to boost their profit margins, win and retain business, and stay a step ahead.