Worldwide Average Standard Hourly Rates Increased from 2013
The overall average standard hourly rates MSPs charge for their engineers and technicians went up by about $10 per hour between 2013 and 2014 according to the results of the last two Kaseya MSP Pricing Surveys. In our 2014 survey we asked about pricing for three tiers of technician support – level 1, level 2, and level 3 – whereas the previous survey simply asked about “average” hourly rates. However, despite various differences in the number and size of respondents between this survey and the previous one, the results were generally consistent. Rates in the United States and Australia were the highest followed by rates in Europe, Canada, New Zealand and South Africa. Hourly rates were lowest in India – see the table later in the post that highlights the differences on a regional basis.
The general increase in average rates also corresponds well with the move to value-based pricing and bundled services. We asked survey respondents if they include a number of onsite hours with their managed services packages. The results show that while about half do not, there is a significant increase in those who are bundling more than 8 hours of onsite service. By including onsite hours as part of contracted managed services the demand for adhoc support services is likely reduced, taking the pressure off of pricing and allowing rates to rise somewhat.
The table below shows that US MSPs are charging an average of $109 per hour compared to an average rate of about $97 to $98 in the rest of the world. The range of rates between different levels of technical staff is much larger in AsiaPac than in the US or EMEA. As previously indicated, this is largely because of significant differences between the rates charged in Australia and India, the two major countries in the AsiaPac region. The average hourly rates for level 1, 2 and 3 technicians in India reported in the survey are $27, $55, and $75, respectively. For Australia the equivalent rates are $80, $99 and $145. While average US level 1 and level 2 technician rates are higher on than those in Australia at $95 and $108, respectively, rates for level 3 technicians are higher in Australia. The average level 3 rate charged in the US is $122.
High growth MSPs obtain consistently higher rates
As we have described in previous blog posts, faster growing MSPs are achieving consistently higher rates. The chart below depicts the average technician rate differences between MSP survey respondents whose monthly recurring revenues (MRRs) grew at greater than 10% per annum over the past three years and those whose MRRs grew at less than 10% per annum. It shows that those in the higher growth segment received an average of $6 per hour more for level 1 technicians, $12 per hour more for level 2 technicians and $9 per hour more for their level 3 technicians. It is possible that there were differences in skill levels between the technicians of each growth segment but the more likely explanation is that the tiered service pricing strategies of higher growth companies supported higher technician pricing for additional service support, whereas the a-la-carte and cost-based pricing of lower growth MSPs experienced greater price pressure.
Although average managed services and technician rates do vary significantly from country to country around the globe, managed services market trends remain remarkably consistent. In almost every circumstance documented within the Kaseya MSP Pricing Survey Report higher growth MSPs were able to achieve higher prices, adopted a value-based pricing strategy and supported the growing demand from their customers for bundled service solutions.
Pricing MSP services for growth and profitability
These topics and much more are discussed in detail in our webinar Pricing MSP Services for Growth and Profitability. The webinar highlights the results of the Kaseya 2014 MSP Pricing Survey which was completed in September 2014.
Author: Ray Wright